EXHIBIT 99.2

                            COMMERCE GROUP CORP.
                            6001 NORTH 91ST ST.
                         MILWAUKEE, WI  53225-1795
                      414-462-5310 . FAX 414-462-5312
                     E-MAIL info@commercegroupcorp.com
                    WEBSITE  www.commercegroupcorp.com

AND/OR COMMERCE/SANSEB JOINT VENTURE (Joint Venture)
AND/OR HOMESPAN REALTY CO., INC. (Homespan)
AND/OR ECOMM GROUP INC. (Ecomm)
AND/OR SAN LUIS ESTATES, INC. (SLE)
AND/OR SAN SEBASTIAN GOLD MINES, INC. (Sanseb)
AND/OR UNIVERSAL DEVELOPERS, INC. (UDI)
ALL LOCATED AT THE SAME ADDRESS

May 9, 2005

Mr. Edward L. Machulak
903 West Green Tree Road
River Hills, Wisconsin  53217

Dear Mr. Machulak:

At today's Commerce Group Corp. (Commerce) Directors' meeting, the
Directors were informed about the annual confirmation, disclosure and
status letter that you requested from Commerce and its affiliates to
establish and confirm the amount due and the collateral pledged along
with any other Commerce obligations or agreements made to Edward L.
Machulak (ELM and/or Lender) as an individual and not as a Director or
Officer of Commerce or its subsidiaries or as the authorized designee of
the Joint Venture as of Commerce's fiscal year ended March 31, 2005.
Today, Commerce's Directors, by unanimous consent, approved, ratified and
confirmed the contents of this letter and authorized me to submit its
understanding of your status with Commerce, which is as follows:

1.  Promissory Notes and Other Obligations

    a.  An open-ended, secured, on-demand promissory note (Note) dated
        October 1, 1989 in which all of the prior promissory notes were
        consolidated into this single Note amounted to $490,217.19 as of
        that date.  All future advances and interest, not paid, are added
        to this Note, and payments to ELM reduce the amount owed.  This
        Note, together with cash and other advances and interest as of
        March 31, 2005, amounts to $7,909,685.66.  This Note bears
        interest, payable monthly, at the rate of 2% over the prime rate
        established from time to time by the First National Bank of
        Chicago, Chicago, Illinois, (then Bank One; now the prime rate
        published in the Wall Street Journal), but not less than 16% per
        annum (Schedule of Principal and Interest for the year ended
        March 31, 2005, Exhibit A).  Commerce is no longer issuing
        monthly notes for the payment of interest, etc., but pursuant to
        our understanding, Commerce is augmenting all additions and
        advances made by ELM, and it will deduct any payments or credits
        made by Commerce to the current open-ended, secured, on-demand,
        outstanding promissory note(s) issued or obligations owed to ELM.

<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 2 of 15 Pages

        However, on this date, Commerce's Directors have authorized its
        Officers to issue renewed annual note(s) (Exhibit B) so that the
        Lender will have a current substituted dated debt instrument.
        The Directors acknowledged that the issuance of note(s) for each
        transaction are too cumbersome and are not practicable to manage.
        Also, the length of time involved and the number of transactions
        make it impractical to devote the time and effort to issue a note
        for each transaction.  Therefore, the Directors have unanimously
        agreed to the following resolution, which was adopted on May 9,
        2005:

             WHEREAS, in the past 20 years or more the following parties:
        General Lumber & Supply Co., Inc. (GLSCO); Edward L. Machulak  as
        an individual and not as a Director or Officer of Commerce (ELM);
        the Edward L. Machulak Rollover Individual Retirement Account
        (ELM RIRA), the Sylvia Machulak Rollover Individual Retirement
        Account (SM RIRA), and Sylvia Machulak, as a consultant and as an
        individual (SM), hereafter collectively and individually
        identified as the Lender(s), have accounted for advancing cash
        funds, earning accrued interest, and for appropriate credit which
        was reconciled to the open-ended, secured, on-demand notes(s);
        and

             WHEREAS, the Directors desire to minimize the record keeping
        in these transactions without jeopardizing, diminishing,
        altering, changing or losing any rights that the Lenders have by
        changing the procedures in handling the recording of any notes(s)
        issued or to be issued; and

             WHEREAS, in order to provide an easier accounting facility
        by renewing the notes(s) on an annual basis to coincide with the
        Company's fiscal year (which presently ends on March 31) and to
        incorporate said renewed note(s) with the annual confirmation
        agreement(s); and

             WHEREAS, prior to the change to issue substituted renewed
        note(s), the initial promissory note(s) were considered to be
        open-ended, secured, on-demand and the additions and deductions
        were recognized by separate accounting records; therefore, be it

                  RESOLVED, That the Directors authorize and empower the
             Officers to substitute and issue renewed consolidated
             promissory note(s) at the end of each fiscal year beginning
             with the Company's fiscal year ended March 31, 2005 to the
             following: General Lumber & Supply Co., Inc. (GLSCO); Edward
             L. Machulak  as an individual and not as a Director or
             Officer of Commerce (ELM); the Edward L.  Machulak Rollover
             Individual Retirement Account (ELM RIRA), the Sylvia

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Mr. Edward L. Machulak
May 9, 2005
Page 3 of 15 Pages


             Machulak Rollover Individual Retirement Account (SM RIRA),
             and Sylvia Machulak, as a consultant and as an individual
             (SM), hereafter collectively and individually identified as
             the Lender(s); and

                  BE IT FURTHER RESOLVED, That the Officers of the
             Company are authorized and empowered to assure the Lender(s)
             that by substituting and consolidating the existing note(s)
             and issuing the renewed note(s) on the last day of the
             Company's fiscal year beginning with March 31, 2005 with the
             understanding that the intention is that the Lender(s) will
             not jeopardize, lose, diminish, risk, alter or change any
             rights, including the pledge of collateral, that are
             inherent with the initial note(s) by the issuance of annual
             renewed open-ended, secured, on-demand promissory note(s);
             and

                  BE IT FURTHER RESOLVED, That the Directors acknowledge
             that the only purpose of the change and substitution to
             issue annual renewed notes(s) is for the convenience,
             reduced accounting and reducing the paperwork involved; and

                  BE IT FURTHER RESOVED, That the Officers are authorized
             and empowered to perform any act that they deem necessary to
             accommodate the purpose of issuing annual renewed note(s).

    b.  Salaries, vacation pay

        In addition, Commerce owes ELM the following for accrued salaries
        and vacation:
                                                 Annual
                   Period                Years   Salary       Total
                   ------                -----   ------       -----
        April 1, 1981 - March 31, 1992   11.00  $ 67,740  $  745,140
        April 1, 1992 - Sept. 30, 1996    4.50  $114,750     516,375
        Oct. 1, 1996 - March 31, 2005     8.50  $165,000   1,402,500
                                         -----            ----------
          Balance                        24.00            $2,664,015

                Vacation Pay            Months   Payment
                ------------            ------   -------
        April 1981 - March 31, 2005         24  $ 13,750     330,000
                                                          ----------
         Total Due                                        $2,994,015

        At Commerce's Annual Board of Directors' Meeting held on October
        19, 2001, the Directors adopted a resolution to compensate ELM
        for vacation pay based on one month for each year of service
        beginning on April 1, 1981, and also the following resolution,
        which in part states:

<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 4 of 15 Pages


                  "BE IT FURTHER RESOLVED, That the Directors agreed that
        on the day the compensation will be paid to Edward L. Machulak,
        an adjustment will be made to compensate him for the loss of the
        dollar purchasing value caused by inflation and other economic
        factors;"

    c.  ELM Bonus agreement

        On February 16, 1987, by a Consent Resolution of all of the
        Directors, ELM was awarded as a bonus compensation, the
        following:  for a period of 20 years, commencing the first day of
        the month following the month in which Commerce begins to produce
        gold from its El Salvadoran gold mining operations, Commerce will
        pay annually to ELM, 2% of the pre-tax profits earned from these
        operations.  Reference is made to Exhibit 11 included in the
        April 9, 1990 confirmation letter.

    d.  Share loans

        To infuse funds into Commerce, Commerce borrowed ELM's free
        trading common shares of Commerce and ELM sold these shares as
        designee for Commerce's benefit with Commerce receiving all of
        the proceeds.  For these share loans, Commerce has agreed to pay
        ELM interest at the rate of prime plus 3%, payable monthly with
        payment by issuing Commerce's restricted common shares and based
        on the Commerce shares due to ELM.  Interest is also due and
        payable monthly with Commerce's restricted common shares for the
        shares pledged by ELM as collateral to others, all for the
        Company's best interest and benefit.  All share loans and
        interest are to be paid annually on or before March 31 of each of
        Commerce's fiscal years.  An accounting of the Commerce common
        shares due and/or paid to ELM as of March 31, 2005, pursuant to a
        series of Director-approved, open-ended, on-demand loan and
        promissory note agreements by and between Commerce and ELM dated
        April 1, 1990, May 17, 1989, October 14, 1988 and June 20, 1988,
        and for certain continuous loans and/or pledges of ELM's
        securities that have taken place and continued to occur during
        the fiscal year ended March 31, 2005 is as follows:

        1.  Share loans                                           None
        2.  Interest shares due on shares pledged to banks for
            an open line of credit                                None
        3.  Interest shares due on shares sold for the benefit
            of Commerce                                           None
            Total Commerce restricted common shares paid and
            issued for the fiscal period ended March 31, 2005
            to ELM                                                None


<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 5 of 15 Pages


    e.  Open ended loan agreements

        Reference is made to four Director-approved, open-ended loan
        agreements dated June 20, 1988, October 14, 1988, May 17, 1989
        (Exhibits B, C and D of the April 12, 1993, confirmation letter)
        and April 1, 1990 (Exhibit 2 of the April 9, 1990 confirmation
        letter).

    f.  Misanse share ownership disclosure

        On October 23, 1993, in order to comply with the El Salvador
        Government's minimum capital requirements, the shareholders of
        Mineral San Sebastian S.A. de C.V. (Misanse) voted to increase
        Misanse's capitalization from 119,500 colones to 260,000 colones.
        This was accomplished via a shareholders' rights offering on the
        basis of purchasing one share for each share owned with the
        rights expiring on December 10, 1993.  According to Misanse's
        by-laws, the rights not exercised would be offered
        proportionately to the shareholders who did exercise their
        rights.

        In addition to the rights offering, the Misanse shareholders
        authorized the sale of 210 additional common shares to the
        following:  ten shares to each of the four officers/directors (40
        shares), five shares to each of the remaining six directors (30
        shares), three shares to each of the ten supplemental directors
        (30 shares), (the President and the Secretary of the Company, who
        are directors of Misanse, had the right and they purchased ten
        and three shares respectively), and 110 shares were sold  to the
        Company over and above the amount of shares it was entitled to by
        the rights offering so that it would retain its 52% ownership
        after the issuance of the shares under the rights offering.  When
        the Company obtained the concession in 1987, it agreed with the
        El Salvador Ministry of Economy's office not to increase its 52%
        ownership of Misanse.  Therefore, after the rights offering, the
        Company owned approximately 52%.

        On the closing date of December 10, 1993 of this rights offering,
        there were 264 shares that were not subscribed and purchased.
        The Company would have been entitled to purchase 137 shares (264
        x 52%).  However, the Company had been prohibited to purchase
        these shares as it would have exceeded its 52% ownership of
        Misanse shares.  The 137 shares were acquired by ELM with prior
        approval of Commerce's directors.  He acquired an additional four
        shares by virtue of his proportionate ownership in the remaining
        unsold shares.  A Misanse Director-approved drawing was held to
        sell the unsubscribed shares.  In order to close the sales, 52
        shares were purchased by ELM which he agreed in writing to hold
        these shares in escrow for a period of one year for the purpose


<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 6 of 15 Pages


        of providing certain named El Salvador Misanse shareholders time
        to obtain funds to purchase these shares at his cost.  None were
        purchased by the Misanse shareholders.

        During June 1995, ELM personally purchased an additional 264
        Misanse common shares from a Misanse shareholder in an
        arms-length transaction.  Therefore ELM presently owns a total of
        467 Misanse common shares or approximately 17.96% of the total
        2,600 Misanse common shares issued and outstanding.

2.   Collateral Pledged

     The collateral specifically pledged to ELM or as otherwise noted is
     as follows:

     a.  A Collateral Pledge Agreement dated October 14, 1981 granted to
         ELM by Commerce pledging the following collateral:  2,002,037
         shares of Sanseb common stock, par value $0.10 per share and
         1,346 shares of Mineral San Sebastian, S.A. de C.V. common
         stock, par value one hundred colones ($11.43) per share.  The
         shares pledged are as follows:  the 618 shares originally owned
         by Commerce, and the 618 shares plus 110 shares purchased from
         the October 23, 1993 Misanse rights offering.  Reference is made
         to Exhibit 4 included in the April 9, 1990 confirmation letter.

     b.  A Collateral Pledge Agreement dated February 24, 1983, by
         Commerce, SLE and UDI collectively and individually, pledging
         the following collateral:

         300 shares of no par value common shares of Homespan (formerly
         known as Trade Realty Co., Inc.), Certificate No. 7 dated
         January 21, 1974, being 100% of its issued and outstanding
         shares.  Homespan and Commerce agree that no additional shares
         of Homespan will be issued as long as there are any obligations
         due to ELM; 1,800 shares of no par value (UDI) capital stock
         Certificate No. 17 dated September 15, 1972, representing 100%
         of the shares issued and outstanding.  UDI and Commerce agree
         that no additional shares of UDI will be issued as long as there
         are any outstanding obligations due to ELM.  Reference is made
         to Exhibit 5 included in the April 9, 1990 confirmation letter.

     c.  Collateral Pledge Agreement dated July 13, 1983 granted to
         General Lumber & Supply Co., Inc. (GLSCO) and ELM by Commerce,
         SLE, and Ecomm, individually and collectively, pledging the
         following collateral:

<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 7 of 15 Pages

         One voting membership certificate of San Luis Valley Irrigation
         Well Owners, Inc., Membership Certificate No. 871, dated
         November 27, 1979; Certificate No. 312, Membership No. 871,
         consisting of .001447 units of Augmentation Plan Number One of
         San Luis Valley Irrigation Well Owners, Inc. dated February 8,
         1980;

         100 common shares of $0.10 par value, Piccadilly (now Ecomm),
         Certificate No. 1, dated July 23, 1974.  Ecomm and Commerce
         agree that no additional shares of Ecomm will be issued as long
         as there are any outstanding obligations due to ELM. Reference
         is made to Exhibit 6 included in the April 9, 1990 confirmation
         letter.

     d.  A Deed of Trust dated November 3, 1983 by and between Homespan,
         as party of the first part, and Ronald K. Carpenter, Esq.
         (Trustee), as party of the second part, for the benefit of ELM
         and GLSCO, as party of the third part.  The Deed of Trust is in
         favor of ELM and GLSCO and is open-ended to secure the
         promissory note(s) due to ELM and GLSCO and to further secure
         any future obligations that Commerce or Homespan may incur from
         them.  This Deed of Trust is issued to Ronald K. Carpenter,
         Esq., Trustee for the benefit of ELM and GLSCO and is a first
         lien on the 331-acre Standing Rock  Campground located in
         Camdenton, Missouri.  The Deed of Trust was recorded on November
         5, 1984 in Camden County, Missouri at 1:24 p.m. in Book 122,
         Page 200.  Reference is made to Exhibit 7 included in the April
         9, 1990 confirmation letter.  On August 14, 2000, with the
         Directors' approval, this property, via an agreement, was
         conveyed to GLSCO in consideration of the cancellation of
         $1,249,050 of debt owed to GLSCO and for other consideration
         contained in the said agreement.

     e.  Commerce/Sanseb Joint Venture (Joint Venture)

         Commerce and Sanseb agree that ELM (the other Lenders were
         included later) has as collateral, the assignment and pledge of
         all of their rights, titles, claims, remedies, and interest
         whatsoever in the Joint Venture which was formed on September
         22, 1987.  In the event of default, whatever interest Commerce
         and Sanseb have in the Joint Venture will be transferred to ELM
         and it will include whatever assets are owned by the Joint
         Venture, including, but not limited to the precious metal ore
         reserves.  Reference is made to Exhibit C included in the April
         8, 1991 confirmation letter.

<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 8 of 15 Pages


     f.  Uniform Commercial Code Filing - all other specific assets

         ELM's interest with GLSCO in filing financing statements under
         the Uniform Commercial Code by an assignment and pledge of all
         corporate assets, such as but not limited to the property of
         Commerce, Joint Venture, SLE, and Homespan, wherever located,
         now owned or hereafter acquired is as follows:  all accounts,
         all land contract receivables, contract rights, instruments and
         chattel paper; all inventory, all jewelry and precious stones,
         and all documents relating to inventory, including all goods
         held for sale, lease or demonstration, to be furnished under
         contracts of service, and raw materials, work in process and
         materials and supplies used or consumed in the business of
         Commerce, the Joint Venture, SLE, and Homespan; all office
         furniture, fixtures and all other equipment; all general
         intangibles, all stock and securities of any kind, and all
         rights, titles and interest in the Commerce Group Corp./San
         Sebastian Gold Mines, Inc. Joint Venture, and all additions and
         accessions to, all spare and repair parts, special tools,
         equipment and replacements for all returned or repossessed goods
         the sale or lease of which gave rise to, and all proceeds and
         products of the foregoing.  Reference is made to the Wisconsin
         Department of Financial Institutions Uniform Commercial Code
         filing, Exhibit 10, included in the April 9, 1990 confirmation
         letter, the renewed UCC-1 filing on December 23, 1996, Exhibit
         B, included in the April 14, 1997 confirmation letter, and the
         UCC-4 continuation filing on June 27, 2001 at 8:55 a.m., Filing
         #02078155 (Exhibit B of the May 13, 2002 confirmation letter).

     g.  Acknowledgement of previously recorded collateral provided to
         the Lenders

         Historical information - San Sebastian Gold Mine Concession

         GLSCO, ELM, the Edward L. Machulak Rollover Individual
         Retirement Account (ELM RIRA) and the Sylvia Machulak Rollover
         Individual Retirement Account (SM RIRA) collectively and
         individually identified as the Lender(s), have been assigned on
         October 19, 1987, all of the rights, titles, claims, remedies
         and interest in the Joint Venture, and to the mine concession
         granted by the Government of El Salvador to Mineral San
         Sebastian, S.A. de C.V (Misanse) on July 23, 1987, and
         thereafter from time to time amended, and which Misanse then
         assigned to the Joint Venture on September 22, 1987.  This
         collateral specifically includes, but is not limited to, all of
         the San Sebastian Gold Mine (SSGM) precious metal ore reserves.
         Commerce and the Joint Venture have the right to assign this and
         any subsequent concession agreement.  Reference is made to
         Exhibit 9 included in the April 9, 1990 confirmation letter.

<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 9 of 15 Pages


         The following collateral has been previously assigned to the
         Lenders pursuant to resolutions adopted by the Directors:

         (1)  Commerce/Sanseb Joint Venture (Joint Venture)

              Both Commerce and San Sebastian Gold Mines, Inc. have
              assigned all of the rights, title, claims, remedies and
              interest that each has in the Joint Venture to the Lenders.
              Reference is made to Historical information - San Sebastian
              Gold Mine Concession.

         (2)  New SSGM Exploration Concession/License (New SSGM) -
              approximately 40.7694 square kilometers (10,070 acres)
              Government of El Salvador Resolution No. 27.

              On October 20, 2002, the Company applied for the New SSGM,
              which covers an area of 42 square kilometers and includes
              approximately 1.2306 square kilometers of the Renewed SSGM.
              The New SSGM is in the jurisdiction of the City of Santa
              Rosa de Lima in the Department of La Union and in the Nueva
              Esparta in the Department of Morazan, Republic of El
              Salvador, Central America.  On February 24, 2003, the El
              Salvador Department of Hydrocarbons and Mines (DHM) issued
              the New SSGM for a period of four years starting from the
              date following the notification of this resolution which
              was received on March 3, 2003.  The New SSGM may be
              extended for two two-year periods, or for a total of eight
              years.  Besides the San Sebastian Gold Mine,  three other
              formerly operative gold and silver mines known as the La
              Lola Mine, the Santa Lucia Mine, and the Tabanco Mine are
              included in the New SSGM and are being explored.  The
              Company has complied as required by filing its annual
              activity report and it paid the annual surface tax.  This
              concession had been assigned collectively to all of the
              Lenders named herein on May 12, 2003 and the assignment was
              included in the May 12, 2003 confirmation agreement as
              Exhibit B.

         (3)  Lease agreement by and between Mineral San Sebastian
              Sociedad Anomina de Capital Variable (Misanse) and Commerce
              dated January 14, 2003

              The term of this lease agreement coincides with the term of
              the Renewed San Sebastian Gold Mine Exploitation Concession
              and consists of 1,470 acres owned by Misanse.  This lease
              agreement has been assigned to all of the Lenders named
              herein on May 12, 2003 and the assignment was included in
              the May 12, 2003 confirmation agreement as Exhibit B.

<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 10 of 15 Pages


         (4)  Renewed San Sebastian Gold Mine Exploitation
              Concession/License (Renewed SSGM) - approximately 1.2306
              square kilometers (304 acres), Department of La Union, El
              Salvador, Central America (pledged and assigned as
              collateral on May 10, 2004) Government of El Salvador
              Agreement No. 591.

              On September 6, 2002, at a meeting held with the El
              Salvadoran Minister of Economy and the DHM, it was agreed
              to submit an application for the Renewed SSGM for a 30-year
              term and to simultaneously cancel the concession obtained
              on July 23, 1987.  On September 26, 2002, the Company filed
              this application.  On February 28, 2003 (received March 3,
              2003) the DHM admitted to the receipt of the application
              and the Company proceeded to file public notices as
              required by Article 40 of the El Salvadoran Mining Law and
              its Reform (MLIR).  On April 16, 2003, the Company's El
              Salvadoran legal counsel filed with the DHM notice that it
              believed that it complied with the requirements of Article
              40, and that there were no objections; and requested that
              the DHM make its inspection as required by MLIR Article 42.
              The Company then provided a bond which was required by the
              DHM to protect third parties against any damage caused from
              the mining operations, and it simultaneously paid the
              annual surface t ax.  On August 29, 2003 the Office of the
              Ministry of Economy formally presented the Company with the
              twenty-year Renewed SSGM which was dated August 18, 2003.
              This Renewed SSGM replaces the collateral that the same
              parties held with the previous concession.  On May 20, 2004
              (delivered June 4, 2004) the Government of El Salvador,
              under their Agreement Number 591, extended the exploitation
              concession for a period of 30 years.  A copy of the
              assignment dated May 10, 2004, is attached to the May 10,
              2004 confirmation letter as Exhibit B and the Renewed SSGM
              agreement is attached to Exhibit B and referred to as
              Exhibit 1.

         (5)  San Cristobal Mill and Plant (SCMP) three-year lease by and
              between Commerce and Corporacion Salvadorena de Inversiones
              (Corsain), an El Salvadoran governmental agency, executed
              on Monday, April 26, 2004, retroactive to November 13,
              2003.  Pledged and assigned as collateral on May 10, 2004.

              The renewed three-year SCMP lease for the property located
              near the City of El Divisadero was finalized and executed
              on Monday, April 26, 2004, and is retroactive to November
              13, 2003.  This May 10, 2004 assignment is included in the
              May 10, 2004 confirmation letter as Exhibit B and the lease
              agreement is attached to Exhibit B and referred to as
              Exhibit 2.

<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 11 of 15 Pages



     h.  Acknowledgment of collateral provided through May 9, 2005

         Commerce's Directors have on May 9, 2005 authorized and directed
         Commerce's Officers to assign all of the rights, titles, claims,
         remedies and interest it has to GLSCO, ELM, the ELM RIRA, the SM
         RIRA and SM, collectively and individually referred to as
         Lenders, as additional collateral for all of the outstanding
         loans and obligations as of March 31, 2005, including all future
         advances of any kind.  Collateral that has been provided through
         May 9, 2005 is:

         Nueva Esparta Exploration Concession/License (Nueva Esparta) -
         45 square kilometers (11,115 acres) Resolution No. 271

         On or about October 20, 2002, the Company filed an application
         with the DHM for the Nueva Esparta Exploration
         Concession/License which consists of 45 square kilometers and is
         located north and adjacent to the New SSGM.  On May 25, 2004 the
         Government of El Salvador, under their Resolution No. 271,
         issued the Nueva Esparta Exploration Concession/License for a
         period of four years starting from the date following the
         notification of this resolution which was received on June 4,
         2004.  This concession/license may be extended for two two-year
         periods or for a total of eight years.  This rectangular area is
         in the Departments of La Union (east) and Morazan (west) and in
         the jurisdiction of the City of Santa Rosa de Lima, El Salvador,
         Central America.  Included in the Nueva Esparta are eight other
         formerly operated gold and silver mines known as:  the Banadero
         Mine, the Carrizal Mine, the Copetillo Mine, the Grande Mine,
         the La Joya Mine, the Las Pinas Mine, the Montemayor Mine, and
         the Or o Mine.  A copy of the assignment dated May 9, 2005 is
         attached to this document (Exhibit C) and the Nueva Esparta
         Exploration Concession is attached to Exhibit C and referred to
         as Exhibit 1.

3.  Cross Pledge Collateral Agreement

    GLSCO, ELM, the ELM RIRA, the SM RIRA and SM individually are
    entitled to specific collateral that has been pledged to them by
    Commerce, its subsidiaries, affiliates and the Joint Venture.  Upon
    default by Commerce, or its subsidiaries or affiliates or the Joint
    Venture, then GLSCO, ELM, the ELM RIRA, the SM RIRA and SM have the
    first right to the proceeds from the specific collateral pledged to
    each of them.  Commerce, its subsidiaries, affiliates, and the Joint
    Venture also have cross-pledged the collateral without diminishing
    the rights of the specific collateral pledged to each of the
    following:  GLSCO, ELM, the ELM RIRA, the SM RIRA and SM.  The
    purpose and the intent of the cross pledge of collateral is to assure
    GLSCO, ELM, the


<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 12 of 15 Pages


    ELM RIRA, the SM RIRA, and SM, that each of them would be paid in
    full; thus, any excess collateral that would be available is for the
    purpose of satisfying any debts and obligations due to each of the
    named parties.  The formula to be used (after deduc ting the payments
    made from the specific collateral) is to total all of the debts due
    to GLSCO, ELM, the ELM RIRA, the SM RIRA and SM, and then to divide
    this total debt into each individual debt to establish each
    individual's percentage of the outstanding debt due.  This percentage
    then will be multiplied by the total of the excess collateral to
    determine the amount of proceeds each party should receive from the
    excess collateral.  Then the amount due to each of them would be
    distributed accordingly.

4.  Cancellation of Inter-Company Debts Upon Default

    Since certain of the collateral specifically or collectively pledged
    to GLSCO, ELM, the ELM RIRA, the SM RIRA and SM consists of the
    common stock of Homespan, Ecomm, Sanseb, SLE, Misanse, UDI and the
    interest in the ownership of the Joint Venture, Commerce agreed, upon
    default of the payment of principal or interest to any of the
    individual Lender(s) mentioned herein, that it will automatically
    cancel any inter-company debts owed to Commerce by any of its
    wholly-owned subsidiaries or affiliates or the Joint Venture at such
    time as any of the stock or Joint Venture ownership is transferred to
    the collateral holders as a result of default of any promissory note.

5.  Guarantors

    This agreement further confirms that Commerce and all of the
    following are guarantors to the obligations due to ELM and to the
    loans made by ELM to Commerce:  Joint Venture, Homespan, Ecomm, SLE,
    Sanseb and UDI.  They jointly and severally guarantee payment of the
    note(s) that they caused to be issued and also agree that these
    note(s) may be accelerated in accordance with the provisions
    contained in the agreement and/or any collateral or mortgages
    securing these notes.  Also, Commerce, all of its subsidiaries and
    the Joint Venture agree to the cross pledge of collateral for the
    benefit of GLSCO, ELM, the ELM RIRA, the SM RIRA, and SM.  Reference
    is made to Exhibit 12 included in the April 9, 1990 confirmation
    letter.

6.  Re-Execution Agreement(s)

    In the event ELM deems that it is necessary or advisable for him to
    have Commerce re-execute any document(s) entered into, including, but
    not limited to the promissory note(s) or collateral agreement(s),
    Commerce will re-execute such document(s) reasonably required by ELM.
    Commerce also acknowledges that Commerce may be liable to pay certain
    costs related to any of the transactions entered into with ELM.  If
    at a later date ELM determines that an error has been made in the
    payment of such

<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 13 of 15 Pages


    costs to him then he may demand payment and Commerce does hereby
    agree to make such payment forthwith.  All requests for corrections
    of any errors and/or payment of costs shall be complied with by
    Commerce within seven (7) days of ELM's written request.  The failure
    of Commerce to comply with Commerce's obligation(s) hereunder shall
    constitute a default and shall entitle ELM to the remedies available
    for default under any provisions of the agreements including, but not
    limited to the promissory no te(s) and/or the collateral pledge
    agreement(s) and/or any other Commerce obligation(s).

7.  Omissions

    Commerce believes that it has included all of its obligations, monies
    due and has listed all of the collateral due to ELM, however, since
    these transactions have taken place over  a long period of time in
    which changes could have taken place, it is possible that
    inadvertently some item(s), particularly collateral, could have been
    omitted.  If that should prove to be a fact, then Commerce, the Joint
    Venture, Homespan, Ecomm, SLE, Sanseb, and UDI agree that those
    omissions of collateral, if any, are meant to be included as
    collateral under this confirmation agreement.

8.  Real Estate Ownership Adjacent to San Sebastian Gold Mine, Inc.
    (SSGM)

    Commerce acknowledges that ELM personally owns the real estate he
    purchased in January of 1988 which is adjacent to and bordering the
    north boundary line of the SSGM located in the Republic of El
    Salvador, Central America, and that Comseb is performing certain
    exploration and exploitation on this property.  These costs are to be
    payable by an offset to the amounts due to ELM.  Commerce also agrees
    to sell, assign and transfer at no cost to ELM, the exploration
    concession rights included in the New SSGM Exploration
    Concession/License rights granted by the GOES under Resolution No. 27
    dated February 24, 2003 (delivered March 3, 2003) and the
    exploitation rights granted by the GOES under Agreement No. 591 dated
    May 20, 2004 (delivered June 4, 2004) pertaining to this parcel of
    land.  (Reference is made to Exhibit B, "Concesion de Exploracio El
    Paraiso" - plat map that identifies the ELM (Macay) "92.13
    Hectareas," (more or less) in the April 13, 1998 confirmation
    letter).


<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 14 of 15 Pages

If you are in agreement with the contents of this letter, please sign
below and return one copy to Commerce.

Very truly yours,

COMMERCE GROUP CORP.

/s/ Edward A. Machulak

Edward A. Machulak
Secretary


<PAGE>

Mr. Edward L. Machulak
May 9, 2005
Page 15 of 15 Pages


The contents of this letter are agreed by the following:

COMMERCE/SANSEB JOINT VENTURE               HOMESPAN REALTY COMPANY, INC.
as Guarantor (Joint Venture)                as Guarantor (Homespan)

/s/ Edward L. Machulak                      /s/ Edward L. Machulak
_______________________________________     __________________________________
By:  Edward L. Machulak, Auth. Designee     By:  Edward L. Machulak, President


ECOMM GROUP INC.                            SAN LUIS ESTATES, INC.
as Guarantor (Ecomm)                        as Guarantor (SLE)

/s/ Edward A. Machulak                      /s/ Edward L. Machulak
____________________________________        __________________________________
By:  Edward A. Machulak, President          By:  Edward L. Machulak, President


SAN SEBASTIAN GOLD MINES, INC.              UNIVERSAL DEVELOPERS, INC.
as Guarantor (Sanseb)                       as Guarantor (UDI)

/s/ Edward L. Machulak                      /s/ Edward L. Machulak
____________________________________        __________________________________
By:  Edward L. Machulak, President          By:  Edward L. Machulak, President


Accepted by:

/s/ Edward L. Machulak
__________________________________________
Edward L. Machulak, as an Individual and
not as a Director or Officer of any of the
Corporations mentioned in this letter.
Date:  May 9, 2005

<PAGE>

                           Exhibit A to Exhibit 99.2
                   (Schedule of Principal, Interest, Advances
                      and Withdrawals as of March 31, 2005
                has been purposely omitted as it only reflects
                the calculations of the principal and interest.)


<PAGE>
                           Exhibit B to Exhibit 99.2

                            RENEWED PROMISSORY NOTE


Borrower: Commerce Group Corp.           Lender:  Edward L. Machulak
          6001 North 91st Street                  903 West Green Tree Rd.
          Milwaukee, WI  53225                    Milwaukee, WI  53217

Principal Amount:      $7,909,685.66
Initial Rate:          2.000% + prime rate, but not less than 16.000%
Date of Renewed Note:  March 31, 2005

PROMISE TO PAY.  COMMERCE GROUP CORP. ("Borrower") promises to pay to
EDWARD L. MACHULAK ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Seven Million Nine Hundred
Nine Thousand Six Hundred Eighty Five and 66/100 Dollars ($7,909,685.66),
together with interest, paid monthly, on the unpaid principal balance
from March 31, 2005, until paid in full.

PAYMENT.  This is an open-ended, secured, on-demand payment, renewed
promissory note.  Interest is to be paid monthly.  The Lender, at its
discretion, can add the monthly interest due to the principal balance.
Unless otherwise agreed or required by applicable law, payments will be
applied first to any accrued unpaid interest; and then to principal.  The
annual interest rate for this Note is computed on a 365/360 basis; that
is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding and the
interest is payable monthly.  Borrower will pay Lender at Lender's
address shown above or at such other place as Lender may designate in
writing.

VARIABLE INTEREST RATE.  The interest rate on this Note is subject to
change from time to time based on changes in the prime rate as quoted in
the Wall Street Journal plus two percent, but not less than sixteen
percent per annum.  Borrower understands that Lender may make loans to
the Borrower based on other rates as well.  The prime rate currently is
5.750% per annum.  The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 2.000 percentage
points over the prime rate, but not less than 16.000% per annum.  NOTICE:
Under no circumstances will the interest rate on this Note be less than
16.000% per annum or more than the maximum rate allowed by applicable
law.

PREPAYMENT.  Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due.  Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower's obligation
to pay on demand, the entire amount due.  Rather, any payment will reduce
the principal balance due.  Borrower agrees not to send Lender payments
marked "paid in full," "without recourse," or similar language.  If
Borrower sends such a payment, Lender may accept it without losing any of
Lender's rights under this Note, and Borrower will remain obligated to
pay any further amount owed to Lender.

INTEREST AFTER DEFAULT.  Upon default, including failure to pay on
demand, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 6.000 percentage
points over the prime rate or over the 16.000% rate, whichever is higher.
The interest rate will not exceed the maximum rate permitted by
applicable law.

DEFAULT.  Each of the following shall constitute an event of default
("Event of Default") under this Note:

     Payment Default.  Borrower fails to make any payment when demand is
     made under this Note.

     Other Defaults.  Borrower fails to comply with or to perform any
     other term, obligation, covenant or condition contained in this Note
     or in any of the related documents or to comply with or to perform
     any term, obligation, covenant or condition contained in any other
     agreement between Lender and Borrower.

<PAGE>

     Default in Favor of Third Parties.  Borrower or any Grantor defaults
     under any loan, extension of credit, security agreement, purchase or
     sales agreement, or any other agreement, in favor of any other
     creditor or person that may materially affect any of Borrower's
     property or Borrower's ability to repay this Note or perform
     Borrower's obligations under this Note or any of the related
     documents.

     False Statements.  Any warranty, representation or statement made or
     furnished to Lender by Borrower or on Borrower's behalf under this
     Note or the related documents is false or misleading in any material
     respect, either now or at the time made or furnished or becomes
     false or misleading at any time thereafter.

     Insolvency.  The dissolution or termination of Borrower's existence
     as a going business, the insolvency of Borrower, the appointment of
     a receiver for any part of Borrower's property, any assignment for
     the benefit of creditors, any type of creditor workout, or the
     commencement of any proceeding under any bankruptcy or insolvency
     laws by or against Borrower.

     Creditor or Forfeiture Proceedings.  Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower or by
     any governmental agency against any collateral securing the loan.
     However, this Event of Default shall not apply if there is a good
     faith dispute by Borrower as to the validity or reasonableness of
     the claim which is the basis of the creditor or forfeiture
     proceeding and if Borrower gives Lender written notice of the
     creditor or forfeiture proceeding and deposits with Lender monies or
     a surety bond for the creditor or forfeiture proceeding, in an
     amount determined by Lender, in its sole discretion, as being an
     adequate reserve or bond for the dispute.

     Events Affecting Guarantor.  Any of the preceding events occurs with
     respect to any Guarantor of any of the indebtedness or any Guarantor
     disputes the validity of, or liability under, any guaranty of the
     indebtedness evidenced by this Note.

     Adverse Change.  A material adverse change occurs in Borrower's
     financial condition, or Lender believes the prospect of payment or
     performance of this Note is impaired.

     Insecurity.  Lender in good faith believes itself insecure.

LENDER'S RIGHTS.  Upon default or upon demand, the Lender may declare the
entire unpaid principal balance on this Note and all accrued unpaid
interest immediately due, and then Borrower will pay that amount.

COLLATERAL.  Borrower acknowledges this Note is secured by all security
agreements, guarantees, mortgages, and other security instruments
previously granted, contemporaneously granted, and granted in the future,
and it has the collateral and other rights all as contained in a certain
confirmation agreement dated May 10, 2004 between all parties contained
therein, and as subsequently amended and updated from time to time.

ATTORNEYS' FEES; EXPENSES.  Lender may hire or pay someone else to help
collect this Note if Borrower does not pay.  Borrower will pay Lender
that amount.  This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses, whether or not
there is a lawsuit, including attorneys' fees, expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals.  If not prohibited by applicable law, Borrower
also will pay any court costs, in addition to all other sums provided by
law.

GOVERNING LAW.  This Note will be governed by, construed and enforced in
accordance with the laws of the State of Wisconsin.  This Note has been
accepted by Lender in the State of Wisconsin.

<PAGE>

OTHER LOAN AGREEMENTS.  If Borrower and Lender have either previously or
contemporaneously entered into a Loan or Confirmation Agreements, it is
agreed that this Note is subject to the terms and conditions of such Loan
or Confirmation Agreements.  For purpose of this provision, Loan or
Confirmation Agreements shall include, but not be limited to, a Business
Loan Agreement or any other Loan or Confirmation Agreements.

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon
Borrower, and upon Borrower's successors and assigns, and shall inure to
the benefit of Lender and Lender's heirs, executors, administrators,
successors and assigns.

GENERAL PROVISIONS.  This Note benefits Lender and its successors and
assigns, and binds Borrower and Borrower's successors, assigns, and
representatives.  Lender may delay or forgo enforcing any of its rights
or remedies under this Note without losing them.  Borrower and any other
person or corporation who signs, guarantees or endorses this Note, to the
extent allowed by law, waive presentment, demand for payment, and notice
of dishonor.  Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be
released from liability.  All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan or release any
party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; and take any other
action deemed necessary by Lender without the consent of or notice to an
yone.  All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom
the modification is made.  The obligations under this Note are joint and
several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE INTEREST RATE PROVISIONS.
BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

COMMERCE GROUP CORP.


/s/ Edward L. Machulak
______________________________________________
By:  Edward L. Machulak, President


/s/ Edward A. Machulak
_____________________________________________________
By:  Edward A. Machulak, Vice President and Secretary

<PAGE>

                         Exhibit C to Exhibit 99.2

                                Assignment

     For and in consideration of the sum of One Dollar ($1.00) and other
good and valuable consideration such as, but not limited to, the
continuance of extending the existing substituted, consolidated
open-ended, secured, on-demand promissory note(s) issued by Commerce
Group Corp. (Commerce), a Wisconsin corporation located at 6001 North
91st Street, Milwaukee, Wisconsin  53225, in hand paid, the receipt of
which is hereby acknowledged, Commerce does hereby sell, assign and
transfer to General Lumber & Supply Co., Inc., a Wisconsin corporation,
Edward L. Machulak, as an individual and not as a Director or Officer of
Commerce, the Edward L. Machulak Rollover Individual Retirement Account,
the Sylvia Machulak Rollover Individual Retirement Account, and Sylvia
Machulak, as an individual, and their heirs, executors, administrators,
successors and assigns, all who reside in the  County of Milwaukee, State
of Wisconsin, United States of America, individually and collectively
referred to as "Le nders," all of Commerce's rights, titles, claims,
remedies, and interests whatsoever in and to the exploration concession
identified as the Nueva Esparta Exploration Concession/License which was
granted by the Office of the Government of El Salvador Ministry of
Economy's office and the Director of Hydrocarbons and Mines under its
Resolution No. 271 dated May 28, 2004 (delivered June 4, 2004) to
Commerce Group Corp. consisting of an area of 45 square kilometers
identified as Cartographic Sheet Number 2657-111 (scale 1:50000) located
in the municipality of Santa Rosa de Lima, in the Departments of Morazan
and La Union, Republic of El Salvador, Central America, and more fully
described in the attached Spanish and English Resolution No. 271 (Exhibit
1) which is made an integral part of this assignment.

     Said claims, rights, title and interest are pledged, sold, assigned
and transferred to the Lenders as collateral security for loans made and
for loans to be made by the Lenders to Commerce and also as collateral
security for any and all liabilities, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising from
Commerce to the Lenders.

     Commerce further acknowledged that Commerce's Directors unanimously
adopted this Assignment by a resolution on May 9, 2005, and that the
purpose of this Assignment is to provide additional collateral to the
above-described Lenders.

     This Assignment shall extend to the full term remaining on the above
concession and license or lease and in any amendments, renewals, changes
or extensions thereof.

     In Witness Whereof, Commerce has caused this instrument to be
signed, sealed and delivered by its proper officers thereunto duly
authorized this 9th day of May 2005.

ATTEST:

COMMERCE GROUP CORP.                  COMMERCE GROUP CORP.

/s/ Edward L. Machulak                /s/ Edward A. Machulak

-----------------------------         -----------------------------
Edward L. Machulak, President         Edward A. Machulak, Secretary


State of Wisconsin  )
                    )  ss.
County of Milwaukee )

     On this 9th day of May, 2005, before me, personally appeared Edward
L. Machulak, President and Edward A.  Machulak, Secretary of Commerce
Group Corp., to me known to be the persons described in, and who executed
the foregoing instrument, and acknowledged that they executed the same as
their free act and deed.

                                      /s/ Sylvia Machulak
                                      -----------------------------------
                                      Sylvia Machulak
                                      Notary Public, Milwaukee County, WI
                                      My commission expires June 11, 2006

<PAGE>

                 Exhibit 1 to Exhibit C of Exhibit 99.2

           [English translation of attached Spanish document.]

MINISTRY OF ECONOMY
Republic of El Salvador

                             RESOLUTION No. 271

Ministry of Economy:  San Salvador, at 9:05 AM of the day May 25, 2004.

In view of the Recourse of Appeal introduced into the Directorate of
Hydrocarbons and Mines, on December 19, 2003, before the Minister of
Economy, by Sr. Jose Antonio Alfaro Castro, Lawyer, of this domicile,
acting in his capacity of General Power of Attorney for the Company
"COMMERCE GROUP CORP" of this domicile, against Resolution No. 178 issued
at 14:10 on December 1, of the same year by the cited Directorate, that
declares without standing the request for Exploration License that later
on will say, and,

HAVING READ THE ARGUMENTS AND CONSIDERING:

I.   That through the referenced Resolution the Directorate of
     Hydrocarbons and Mines of this Ministry declared without standing
     the Minerals Exploration License especially for gold an silver that
     Dr. Jose Antonio Alfaro Castro requested in the name of his
     mentioned grantor of Power on October 30, 2002 for the area called
     NUEVA ESPARTA for a surface extension of 45 square kilometers
     identified in cartographic sheet number 2657-III, scale 1 : 50,000
     located in the municipality of Santa Rosa de Lima, in the
     Departments of Morazan and La Union respectively.

II.  That having admitted the Recourse, the files were transferred to the
     Secretary of State with prior notification to the referenced Company
     and receiving it, was sent to be heard for the term of the Law, on
     completing the hearing through the mentioned Power holder, expressed
     that based on Article 45 second line item in the Mining Law, he
     requested an opening of proofs, which was done and as well the
     applicant presented a document in which he stated that the
     Directorate of Hydrocarbons and Mines on issuing the referenced
     Resolution founded it on the following arguments: a) little
     geological investigation of the exploitation program presented
     (SIC); b) lack of sufficient technical capacity to develop the
     project on the part of the professionals proposed by the applying
     Company; c) That the applying Company did not fulfill the
     requirements in the first line item of Article 9 of the Mining Law;
     requirements that refer to the technical and financial capacity to
     develop mining projects.

<PAGE>

III. That in the referred to period of Proof, the applicant presented a
     new work plan prepared by known technicians in the material, in
     which a program of activities is reflected that complies with the
     requirements for this kind of project to be developed in the first
     four years by stages, projecting activities like geological mapping,
     opening of trenches, geochemistry, laboratory analysis; and the
     costs of investment in each stage.  Presenting besides, the
     documents that contain the names of the companies that will
     participate in the Project; as well as the CV's of the companies
     that will participate in it, and the CV's of the technicians in the
     material that have the required qualifications, and the chart of
     investment, costs and expenses of the applying company, copy of the
     correspondence in which is sketched the financial capacity, in which
     for now the invested money has been for the payment of
     administrative expenses and in a lesser scale for investment in
     exploration, referring that it will be increased as reflected in the
     related project; with that it proves compliance with what is
     established in article 9 of the Mining Law.  That with what is
     explained and with the documental proof that is presented, it
     overcomes the deficiencies expressed by the Directorate for
     Hydrocarbons and Mines, who asks that the Declaration Without
     Standing be reconsidered and grant the Exploration License
     requested.

IV.  Upon analyzing the resolution that is impugned, it is warned that in
     it conclusions were expressed in the sense that: " a) little
     geological investigation of the exploitation (sic) program
     presented"; b) "lack of technical capacity sufficient to develop the
     project on the part of the professionals proposed by the requesting
     company", without the argumentation, the criteria or the factual
     reasons being laid out in it that allows any analysis to arrive to
     said conclusions, therefore the reasoning is completely transparent
     in regard to valuing the documents presented with the application.


V.   Consequent with what is expressed, in matters of Exploration
     Licenses it is necessary to understand:  That the text and spirit
     with which the Mining Law was issued, just as it was established in
     the Considering and in its articles 8 and 9, was that of granting
     Exploration Licenses and subsequently a concession for the
     exploration of minerals, to those companies that carry out this
     activity through the application of modern systems that allow fully
     to take advantage of the minerals, having conditioned as a
     requirement to acquire mining rights, the ideal; determining as
     ideal those who proved to have the technical and financial capacity
     to develop mining projects;  that on reviewing the documents
     presented by the appellant as proof are: the new work plan for the
     Nueva Esparta Exploration project; program of exploration for the
     mining project, the program to be developed in four years and in
     four stages, one per year; letter and summary of Financial
     Statements, report of the Public A ccountant of the investment,
     costs and expenses made since January 1, 1999 to June 30, 2003,
     certified Balance Sheets and Financial Statements by

<PAGE>

     the Public Auditor, documentation that has value as proof.  With
     respect to the technical capacity, the names of companies are
     presented with letters of commitment that they will work in the
     exploitation; and curriculum vitae of the technicians that will
     participate in the project. From the latter it is concluded that the
     applying company indeed has a geological exploration project for an
     area with mining background and counts with technical personnel with
     technical capacity to develop the project, for which reason this
     Ministry considers that the applying company complies with the
     requirements that for that purpose the Law establishes in article 9,
     such as having technical and financial capacity to develop the
     mining project and resolves the recourse (of appeal) presented has
     standing.

Therefore,

In use of my legal faculties and based on what is established in Article
45 of the Mining Law and the considerations expressed;

RESOLVE:

1.  The Recourse of Appeal presented December 19, 2003 by Dr. Jose
    Antonio Alfaro Castro in his capacity as Power of Attorney for the
    Company COMMERCE GROUP CORP has standing; and leaves without effect
    Resolution 178 issued by the Directorate of Hydrocarbons and Mines of
    this Ministry at 14:00 hours of the day December 1, 2003.

2.  Returns the present archives to their place of origin to the end of
    granting the License requested.

3.  The Directorate of Mines and Hydrocarbons will proceed to carry out
    the corresponding monitoring to the end of assuring the fulfillment
    of the obligations on the part of the beneficiary under the pain of
    applying the sanctions that are legally applicable.

                             MIGUEL E. LACAYO
                                MINISTER

                    [Seal of the Ministry of Economy]



MINISTERIO DE ECONOMIA
Republica de El Salvador, C.A.


                              RESOLUCION No. 271

MINISTERIO DE ECONOMIA:   San Salvador, a las nueve horas con cinco
minutos del dia venticinco de mayo de dos mil cuatro.

Visto el Recurso de Apelacion interpuesto en la Direccion de
Hidrocarburos y Minas, el diecinueve de diciembre de 2003, para ante el
Ministro de Economia, por el Doctor Jose Antonio Alfaro Castro, Abogado
de esta domicilio, actuando como apoderado de la Sociedad COMMERCE GROUP
CORP., en contra de la Resolucion No. 178 emitada a catorce horas con
diez minutos del uno de diciembre del mismo ano de la citada Direccion,
que declara sin lugar solicitud de Licencia de Explotacion que adelante
se dira y,

LEIDOS LOS AUTOS Y CONSIDERANDO:

I.    Que mediante la Resolucion recurrida, la Direccion de Hidrocarburos
      y Minas de este Ministerio, declaro sin lugar la Licencia de
      Exploracion de Minerales especialmente oro y plata que en nombre de
      su mencionado poderdante solicito el Doctor Alfaro Castro, el 30 de
      octubre del 2002, en el area denominada NUEVA ESPARTA, de una
      extension superficial de 45 kilometros cuadrados, identificada en
      la hoja cartografica numero 2657-III escala 1:50 ubicada, en los
      municipios de Sociedad y Santa Rosa de Lima, en los departamentos
      de Morazan y La Union respectivamente.

II.   Que admitido el Recurso, fueron trasladadas las diligencias a esta
      Secretaria de Estado, previa notificacion a la Sociedad recurrente;
      y recibidas las mismas se le mando a oir por el termino de Ley,
      quien al evacuar la audiencia por medio del mencionado Apoderado,
      expreso que en base al articulo 45 inciso segundo de la Ley de
      mineria, solicitaba se abriera a pruebas; por lo que asi se hizo, y
      en el mismo, el recurrente presento un escrito en el que manifiesta
      que la Direccion de Hidrocarburos y Minas al emitir la Resolucion
      recurrida, la fundamento en los argumentos siguientes:  a) poca
      investigacion geologica del programa de explotacion presentado;  b)
      falta de capacidad tecnica suficiente para desarrollar el proyecto
      de parte de los profesionales propuestos por la sociedad
      solicitante; c) Que la Sociedad solicitante no llena los requisitos
      senalados en el inciso primero del articulo 9 de la Ley de Mineria;
      requisitos que se refiere a la capacidad tecnica y financiera para
      desar rollar proyectos mineros.

<PAGE>

III.  Que en el referido periodo de Prueba, el recurrente presento un
      nuevo plan de trabajo elaborado por tecnicos conocedores de la
      materia en donde se refleja un programa con actividades que cumplen
      los requisitos para esta clase proyectos a desarrollar en los
      primeros cuatro anos por etapas, proyectando actividades como mapeo
      geologico, apertura de trincheras geoquimicas, analisis de
      laboratorio; y los costos de inversion en cada etapa.  Presentando
      ademas los documentos que contienen los nombres de las empresas que
      participaran en el Proyecto, asi como los curriculos de las
      empresas que participaran en el mismo, y los curriculos de los
      tecnicos en la materia que reunen los requisitos requeridos, y el
      cuadro de inversion, costos y gastos de la Sociedad solicitante,
      copia de correspondencia en donde se esboza la capacidad
      financiera, en la cual por ahora, el dinero invertido ha sido para
      el pago de gastos administrativos y en menos escala para inversion
      en exploracion refiriendo que se aumentara como se refleja en el
      proyecto relacionado:  con lo que comprueba darle cumplimiento a lo
      que establece el articulo 9 de la Ley de Mineria.  Que con lo
      expuesto y la prueba documental que presenta superan las
      deficiencias expresadas por la Direccion de Hidrocarburos y Minas y
      se pide se reconsidera la Declaratoria sin lugar y se otorgue la
      Licencia de exploracion solicidata.

IV.   Al analizar la resolucion que se impugna, se advierte que en la
      misma se expresaron conclusiones en el sentido que:  "a) poca
      investigacion geologica del programa de explotacion presentado; b)
      falta de capacidad tecnica suficiente para desarrollar el proyecto
      de parte de los profesionales propuestos por la sociedad
      solicitante," sin que se expongan en la misma, la argumentacion,
      los criterios o razones facticas que permitan en cualquier
      analisis, llegar a dichas conclusiones, de manera que el
      razonamiento sea completamente transparente en cuanto a la
      valoracion de los documentos presentados con la solicitud.

V.    Consecuente con los expuesto en materia de Licencias de Exploracion
      ha de entenderse:  Que el texto y el espiritu con que se emitio la
      Ley de Mineria, tal como se dejo establecido en el considerando I y
      articulo 8 y 9 de la misma, fue la de otorgar Licencias de
      Exploracion y subsiguiente concesion para la Exploracion de
      Minerales, a aquellas empresas que realicen esa actividad mediante
      la aplicacion de sistemas modernos que permitan el aprovechamiento
      integral de los minerales, habiendo condicionado como requisito
      para adquirir derechos mineros, la idonidad; determinado como
      idoneas quienes comprobaran tener capacidad tecnica y capacidad
      financiera para desarrollar proyectos mineros:  que al revisar los
      documentos presentados por el apelante como prueba, son nuevo plan
      de trabajo de proyecto de exploracion Nueva Esparta, programa de
      exploracion del proyecto minero, el programa a desarrollar en los
      cuatro anos en cuatro etapas, una por ano:  carta y resumen de
      Estados Financieros, informe de Contador Publico de la inversion,
      costos, y gastos efectuados desde el 01 de enero de 1999 al 30 de
      junio de 2003, Balance y Estados Financieros certificados por

<PAGE>

      Auditor Publico, documentacion que tiene valor probatorio.
      Respecto a la capacidad tecnica presenta los nombres de empresas
      con cartas compromiso de que trabajaran en la exploitacion
      curriculun vitae de los tecnicos que participaran en el proyecto.
      De lo antes expuesto se concluye que la empresa solicitante si
      tiene un proyecto de exploracion geologica para un area con
      antecedentes mineros, y cuenta con personal tecnico con capacidad
      para desarrollar el proyecto, por lo que este Ministerio considera
      que la Sociedad solicitante cumple con las exigencias que  al
      efecto establece la Ley en el articulo 9, como es el tener
      capacidad tecnica y financiera para desarrollar el proyecto minero
      y resuelve ha lugar al recurso interpuesto.

Por tanto,

En uso de mis facultades legales, y con base a lo establecido en el Art.
45 de la Ley de Mineria y las consideraciones expuestas.

RESUELVO:

1.  Ha lugar el recurso de Apelacion interpuesto el 19 de diciembre de
    dos mil tres, por el Doctor Alfaro Castro en calidad de Apoderado de
    la Sociedad COMMERCE GROUP CORP.; y Dejase sin efecto la
    resolucion178 emitada por la Direccion de Hidrocarburos y Minas de
    este Ministerio, a las catorce hora del dia uno de diciembre de dos
    mil tres.

2.  Vuelvan las presentes diligencias a su lugar de origen a fin que se
    otorgue la licencia solicitada.

3.  La Direccion de Minas e Hidrocarburos procecera a realizar el
    moniloreo correspondiente, a fin de asegurar el cumplimiento de las
    obligaciones por parte del beneficiario so pena de aplicar las
    sanciones que legalmente sean procedentes.

                 Firma por:  MIGUEL E. LACAYO, MINISTRO