We are engaged in minerals industry related operations in Bolivia and Nevada and seek to generate revenues, income and cash flows from the sale of gold and copper and the operation of milling and processing facilities. We generated $19,307 in gold sales from our C Zone mine and mill in Bolivia during the quarter ending December 31, 2008. We also generated $577,136 in revenues from the operation of the Jerritt Canyon mill during the four-month period ending December 31, 2008. Prior to the revenues here referenced, we had not generated any operating revenues since November 2004. Since inception, our operations have been severely impacted from a lack of working capital and financing. Additionally, our operations have experienced additional cost and time delays due to the remote location of our Bolivian properties and our headquarters being more than 4,000 miles from our corporate offices.

From our inception, we have not been profitable. We have financed our operations through debt and equity placements to accredited investors. These placements have diluted the interests of our existing shareholders, but have allowed us to continue the development necessary to commence and continue our production at our Cangalli claims and to acquire and maintain our other prospects, in addition to allowing us to complete our administrative obligations. We have at times encountered difficulties in meeting our obligations to pay our bills timely. To the extent that we have been able to do so, we have paid most of our bills through the present through equity and debt financing, with the exception of currently due obligations and about $145,218 in obligations that are more than 60 days past due as of December 31, 2008.

Uncertainties and Trends

Our revenues are dependent now, and in the future, upon the following factors:

o Price volatility in worldwide commodity prices, including gold, copper and other minerals, which is affected by: (a) interest rates; (b) currency exchange rates; (c) currency exchange rates; (c) inflation or deflation; and
(d) speculation;

o Global and regional supply and demand of gold, copper and other minerals, including investment, industrial and jewelry demand;

o Political and economic conditions of major gold, copper or other mineral-producing countries; and

o Threatened and actual changes to the Bolivia Mining Law and taxation scheme that may cause increased regulations, greater controls over our mining activities, or other unanticipated consequences, and related increased costs of conducting operations in Bolivia

The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and notes thereto.

(a) Liquidity and capital resources - 2008 and 2007

(a)(1) Continuing working capital deficit

Our working capital deficit for at least the past five years has limited our ability to expand our operations and pursue our business plan. The following table sets forth our continuing working capital at December 31, 2008 and 2007.

                Years ended December 31,         2008        2007
                --------------------------------------------------
                Current Assets             $  209.392   $  96,792
                Current Liabilities        (1,326,991)   (913,735)
                --------------------------------------------------

Our current assets increased by $112,601 from $96,792 as of December 31, 2007 to $209,392 for the comparable 2008 period. The increase was due to a $52,141 increase in cash and a $24,022 decrease in prepaid expenses and an increase of $84,482 in accounts receivable related to our Jerritt Canyon operations.

Our working capital deficit increased by $300,656 to $1,117,599 as of December 31, 2008, from $816,943 for the comparable 2007 period. Accounts payable and accrued expenses increased to $281,232 on December 31, 2008 from $193,558 on December 31, 2007. Accounts payable and accrued expenses increased primarily as a result of our operations at Jerritt Canyon for which we expect to receive reimbursement from Queenstake USA.

Other notes payable increased to $468,285 as of December 31, 2008, from $214,111 on December 31, 2007. The increase was primarily due to a new $220,000 note payable to Casco Credit which we incurred on December 24, 2008; we used the proceeds from this note for working capital, to pay salaries and to reduce other debt instruments.

Related party debt decreased to $57,525 as of December 31, 2008 from $92,350 on December 31, 2007.

A convertible debenture that we issued in 2007 remained constant in 2008 at $249,000. This convertible debenture matured on May 2, 2008; however, we entered into an agreement with the debenture holder to extend the maturity date until May 2, 2009. We are unsure whether we will be able to pay this debenture and accrued interest when due. In order to do so, we will need additional financing, which may consist of the $500,000 loan anticipated from Queenstake USA, or we may have to seek other financing sources or negotiate with the creditor to extend again the due date of the debenture.

As of December 31, 2008, we owed $17,270 in past due interest on this debenture. We entered into an additional 15 debenture agreements totaling $363,500 during 2008. As of December 31, 2008 $139,500 of these debentures had converted into common stock during 2008 leaving an outstanding balance of $224,000. These debentures have two year maturity dates from the date of the debenture and mature between May and September of 2010 and may be converted into our common stock.

Accrued interest decreased to $65,857 as of December 31, 2008, from $110,187 as of December 31, 2007. The decrease was due to the accrual of interest on the outstanding notes less payments in cash and the conversion of interest into common stock.

Deferred wages for employees both in the U.S. corporate offices and in Bolivia increased to $205,092 as of December 31, 2008, from $54,529 as of December 31, 2007. We also owe past-due salary obligations to our president, Terry C. Turner. Mr. Turner has, in the past years, waived certain salary obligations without receiving any consideration from the Company:

o During 2008, Mr. Turner waived $60,000 of his salary accrual that was past due.

o On December 31, 2004, 2005, and 2006, Mr. Turner waived $60,000 each year (a total of $180,000); and

o In 2003 and 2001, Mr. Turner waived $36,457 and $443,772 respectively.

We continue to owe Mr. Turner $216,783 in back salary in addition to the foregoing waivers; however, he has agreed with us that this liability bears no interest. During the period preceding the passage of the Sarbanes-Oxley Act of 2002 and its included prohibition against loans to executive officers, we loaned Mr. Turner $216,783 on an irregular basis to assist him in meeting his personal obligations because we were not able to pay him his salary on a consistent basis. The receivable from Mr. Turner and payable to Mr. Turner are netted out to a zero balance and do not appear on our balance sheet.

We continue to focus on conserving cash, setting priorities for our most important obligations and seeking other means to pay or defer any obligations as necessary as a result of our continuing working capital deficit.

(a)(2) Property and equipment

During 2008, we increased our property and equipment net of depreciation and impairment by $261,834, or 5.6%, to $5,914,522 at December 31, 2008 as compared to $5,652,688 at December 31, 2007. Mining equipment increased by $138,163 to $733,353 as of December 31, 2008 from $595,190 as of December 31, 2007. The majority of this increase came from the build out of our C Zone gold processing mill in eastern Bolivia. Additionally, we impaired $246,845 of our Precambrian property as a result of our decision on March 1, 2009 to allow certain of our Precambrian claims to expire.

   Years ended December 31,                                 2008         2007
   ---------------------------------------------------------------------------
   Mining equipment                                   $  733,353   $  595,190
   Gold Bar Mill and Plant - idle                      3,980,000    3,980,000
   Mine development costs                                752,339      336,260
   Mining properties                                   1,414,997    1,356,948
   Office equipment                                      137,356      110,710
   Vehicles                                              116,182      110,018
   Accumulated depreciation, depletion and impairment  1,219,705     (836,438)
   ---------------------------------------------------------------------------
   Fixed assets net                                   $5,914,522  $ 5,652,686

(a)(3) Capital commitments

Our capital commitments are set out below:

                                                   Less than 1    1 to 3    3 to 5
 Contractual Cash Obligations                Total        year     years     years
 ---------------------------------------------------------------------------------
 Accounts payable and accrued expenses $  281,232  $  281,232  $      -  $      -
 Deferred wages                           145,092     145,092         -         -
 Other notes payable                      468,285     468,285         -         -
 Related party payable                     57,525      57,525         -         -
 Accrued interest                          65,857      65,857         -         -
 Debentures payable                       473,000     249,000   224,000         -
 Exploration & production Buen Futuro     301,000           -   301,000         -
 Production penalties consulting fees     180,000      36,000    72,000    72,000
 Mining claim fees                        246,860      49,372    98,744    98,744
 Building leases                            6,382       6,382         -         -
 ---------------------------------------------------------------------------------
 Total contractual cash obligations    $2,225,233  $1,358,745  $695,744  $170,744

We have material capital commitments that will require us to obtain adequate financing to meet our obligations and are subject to risks of default and forfeiture of property and mining claim rights. The occurrence of any such risks will negatively affect our operations and potential revenues. These commitments are:

1. Our accounts payable and accrued expenses of $281,232, which include trade payables and general obligations. These obligations will either become due within the next month, are currently due, or are in some cases more than 90 days past due. The increase in accounts payable is primarily related to accounts and wages payable at Jerritt Canyon.

2. We have notes payable, including:

a. A note totaling $202,840 payable to a Bolivian resident with an interest rate of 8% per annum maturing on December 31, 2009.

b. A note totaling $39,945 payable to a Bolivian resident with an interest rate of 8% per annum maturing on December 31, 2009.

c. A note totaling $5,500 payable to Lonestar Equity Group with an interest rate of 8% maturing on December 31, 2009.

d. A note totaling $220,000 payable to Casco Credit with and interest rate of 12% maturing on March 24, 2009.In the event of default, this note at the option of the holder become due and payable and the amount due shall accrue interest at a default rate of 5% per month. This note is secured by the Gold Bar mill located 25 miles north of Eureka, Nevada.

e. On April 11, 2007, we entered into a convertible note with our Chief Financial Officer with an effective date of February 6, 2007, which represents the date we verbally made this commitment. The note covered the payment of contractual retention bonuses payable in our common shares to our Vice President for U.S. Administration, Tracy A. Madsen. This note was for $50,000, had a term of 2 years, and was convertible into 5,555,555 shares of our common stock at the closing price for our common stock on February 6, 2007, which was $.009. As the market price and the conversion price on the date of commitment were the same, no beneficial conversion feature was applied. Our Board of Directors elected to use a convertible promissory note to meet this retention bonus commitment because we did not have sufficient common stock available and any grant of our Series B shares to this officer would have granted him a favorable treatment and a beneficial conversion interest that would have violated our Code of Conduct and Ethics. As of December 31, 2008 we accrued interest totaling $7,559. On February 6, 2009 this note was extended until May 9, 2009.

3. A debenture payable to a shareholder, Aloha Holdings, Inc., in the amount of $249,000, which bears interest at 7% per annum with a default rate of 10% per annum which matured on May 2, 2007, and is convertible into our common stock at $0.025 per share. We have elected to extend the maturity date of this note to May 2, 2009. We are currently in default on this note due to the failure to pay interest in a timely manner and as of December 31, 2008 we owe $17,270 in accrued interest.

4. As of December 31, 2008, we have 9 Convertible Debentures outstanding totaling $224,000. Each of these debentures carries an interest rate of 8% per annum payable at maturity and matures two years from the date of the debenture. Each debenture, and its accrued interest, is convertible into restricted shares of our common stock at any time by the holder of the debenture. If converted into restricted common stock, the conversion shall be at 50% of the average closing price of our common stock for the five trading days prior to the date of the debenture, or 50% of the average closing price for our common stock for the five trading days prior to the notice of conversion within the first 120 days immediately following the purchase of the debenture, whichever is less provided that the minimum conversion price is not less than $.002 per share. These debentures are convertible into 112,000,000 shares of our restricted common stock. As these debentures carry a conversion rate that is less than market rate the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the debenture, which in this case is 24 months. The face amount of the outstanding debentures is $224,000. On the balance sheet they have been discounted by $162,395 to $61,605. The discounted amount is accreted over the twenty-four month period or in its entirety if the debenture is converted during the term. As of December 31, 2008, $222,554 has been accreted to financing costs.

5. Our obligation to pay accrued interest on Items 1-4 in the amount of $65,857. Interest on these notes is expensed each quarter and accrued.

6. On December 29, 2008 we received from Golden Eagle Mineral Holdings, Inc. ("GEMH") the tender of, and our board of directors approved the receipt by us into treasury of, 487,746,250 shares of our common stock owned by GEMH in exchange for one share of our Series C contingent convertible preferred stock. As a result of the conversion of 487,746,250 common shares into one Series C Preferred share we reduced the number of common shares outstanding by 487,746,250.

7. Our obligation for monthly lease payments of $1,563 per month for our Salt Lake City, Utah office, which terminates on July 31, 2009. We have the option of canceling the remaining lease by paying of one additional month's rent. Additionally, we have an obligation to make monthly lease payments of $188 per month for our Santa Cruz, Bolivia office until February 15, 2009. We are also obligated to pay $200 per month for our Santa Cruz, Bolivia warehouse rent until June 1, 2009.

8. Our obligation to pay to the Bolivian government mining claim fees for 2009 through 2014. We paid the 2009 claim fees in February of 2009 in the amount of $49,372. We allowed some of our claims to lapse and we renewed those claims which we felt held the greatest potential for future exploration and development. A more detailed explanation of our properties and which claims we renewed can be found in Part 1, Item 2, Properties.

9. Our commitment to make $2 million in production expenditures for the Buen Futuro prospect by November 23, 2005. Because we were not in production by that date, we have paid a penalty of $3,000 per month and must continue to do so until we are in production at Buen Futuro. We were also required to pay a consulting fee of $3,000 per month in cash and $2,000 per month in common stock to the seller of the property as a consulting fee until May 31, 2008. As of December 31, 2008, we owed $42,000 in production penalties, $19,000 in management fees payable in cash which are included in our accounts payable. Additionally, we owe $10,000 in management fees payable in stock to Dr. Michael Biste, one of the co-sellers of the property.

10. Our obligation incurred in connection with the acquisition of the Buen Futuro prospect to spend $1 million in exploration over the three-year period ending December 12, 2006. We believe our expenditures of $699,000 in the region qualify to be applied against this obligation, leaving a remaining obligation of $301,000.

11. Our obligation to pay Livstar Management Services (Livstar), 5% of the compensation (not including reimbursement of expenses incurred) we receive as a result of our agreement with Queenstake Resources USA, Inc. through a settlement agreement entered into on October 31, 2008, which amended a Consulting Agreement entered into on June 2, 2007 which replaced an earlier agreement dated April 18, 2007. As of December 31, 2008, we had paid Livstar $5,000 under this agreement. As this commission is contingent upon revenues received from our agreement to operate the Jerritt Canyon Mill we have not included a commitment amount in the forgoing chart.

12. Our obligation to pay Blane Wilson, our Chief Operating Officer, 3% of the compensation (not including reimbursement of expenses incurred) we receive as a result of our agreement with Queenstake Resources USA, Inc. and 3% of any revenues that may be generated from our Gold Bar mill, as part of his employment contract. As of December 31, 2008, we owed Mr. Wilson $2,942 under this agreement which is included in our accounts payable. As this payment is contingent upon revenues received from our agreement to operate the Jerritt Canyon Mill and the idle Gold Bar Mill we have not included a commitment amount in the forgoing chart.

(a)(4) Derivative liability

We have no derivative liabilities.

(a)(5) Equity

Stockholders' equity remained approximately constant during our 2008 fiscal year, increasing by less than ¾ of 1% at December 31, 2008 when shareholders' equity was $4,700,318 as compared to $4,665,738 as of December 31, 2007.

(a)(6) Off-balance sheet arrangements.

We have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under whom we have;

o an obligation under a guarantee contract,

o a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets,

o any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or

o any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.

We do not have any off-balance sheet arrangements or commitments that have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material, other than those which may be disclosed in this Management's Discussion and Analysis of Financial Condition and the audited Consolidated Financial Statements and related notes.

(a)(7) Results of operations.

The following sets forth certain information regarding our results of operations as of December 31, 2008 and 2007.

    Years ended December 31,                              2008          2007
    Revenues                                    $      596,443  $          -
    Production costs                                  (498,741             -
    Exploration & development costs                   (174,710)     (297,776)
    General and administrative                      (1,115,540)   (1,218,035)
    Depreciation and depletion                         (21,381)      (25,043)
    Operating (loss)                                (1,213,928)   (1,540,855)
    Interest expense                                  (156,193)      (92,349)
    Gain (Loss) on sale of fixed assets                 13,096        (1,509)
    Asset impairment                                  (246,845)     (107,425)
    Financing costs                                   (222,554)   (4,647,263)
    Other income (loss)                                130,043        11,764
    Net (loss)                                     $(1,696,382)  $(6,377,636)
    Net (loss) per share - basic and diluted              (.00)         (.01)
    Weighted average shares - basic and diluted  1,898,367,966   830,814,298

Our operations have resulted in significant losses and negative cash flow from operations during approximately the past five years as we have invested in exploration on our mining concessions, and in property acquisitions.

Revenue. Revenue increased to $596,443 in 2008 from $0 in 2007. Revenue was generated during from two sources.

(a) We generated $19,307 from the sale of gold during the quarter ending December 31, 2009. Gold was generated from our C Zone mine and mill in eastern Bolivia. This gold was mined and milled prior to the cessation of operations at the C Zone in November, 2008.

(b) We generated $577,136 in revenue during the period September through December of 2008 through our contract with Queenstake Resources USA, Inc. to operate the Jerritt Canyon mill located 50 miles north of Elko, Nevada. During this period of time the mill was not in operation, however, we provided maintenance services, regulatory environmental compliance and assistance in the application process needed to gain approval to restart milling operations at Jerritt Canyon. We had no interest in the Jerritt Canyon mill during 2007 and therefore recognized no revenues from its operation.

Production costs. Production costs incurred at

(a) the C Zone mine and mill located in eastern Bolivia during the quarter ending December 31, 2008 totaled $25,071; and

(b) Production costs incurred from our Jerritt Canyon operations during the period September through December 2008 totaled $473,670.

We incurred $0 production costs during 2007 as we generated $0 no revenue during that year. Any production costs associated with the operation of our C Zone pilot plant were classified as Exploration and Development costs.

Exploration & development.Exploration and mine development costs decreased by $123,066, or 41%, to $174,710 during 2008 from $297,776 during 2007. The decrease in 2008 was the result of the transition of our C Zone mine and plant from development and pilot operations to production during the quarter ending September 30, 2008. Further decreases in exploration and development costs resulted from the political climate in Bolivia and the cessation of all Bolivian operations during the quarter ending December 31, 2008.

General and administrative expenses. Our general and administrative expenses decreased by $102,495, or 8.4%, to $1,115,540 during 2008 from $1,218,035 during 2007. We attribute the decrease in our general and administrative expenses to the reduction of staff at our corporate offices and offices in Bolivia, a reduction in legal expenses resulting from the settlement of legal issues during 2008 and an increased emphasis on cost controls throughout the company.

Depreciation and depletion.Depreciation and depletion decreased by $3,662 to $21,381 in 2008 from $25,043 in 2007. The decrease in 2008 was the result the decrease in the amount of equipment being depreciated through the sale and disposal of equipment in previous periods.

Operating expenses. During 2008, our operating expenses increased by $269,518 or 17% to $1,810,372 from $1,540,855 during 2007. The increase was the result of production costs incurred at Jerritt Canyon.

Interest expense. Interest expense during 2008, increased by $63,844 to $156,193 from $92,349 during 2007. The increase during 2008 was primarily the result of the elimination of increased debt and the payment of penalty interest on past due notes.

Gain on sale of fixed assets. During 2008 we experienced a gain on sale of fixed assets in the amount of $13,096 compared to a loss of $1,509 during 2007. The gain was primarily the result of the sale of certain pieces of equipment at our Gold Bar mill and plant that are not required for a restart of plant operations. We also had sales of equipment in Bolivia during 2008, however, the gain on the sale of certain items was offset by the loss on the sale of other items which essentially netted out the gain and loss.

Asset impairment. During 2008, we incurred an impairment expense of $246,845 related to the partial impairment of the acquisition cost of our Precambrian properties. On February 28, 2009 we allowed our claims on 87,733 acres of our Precambrian Shield properties in eastern Bolivia to lapse. We renewed our claims on 18,031 acres which we believed to have the greatest potential for gold and copper mineralization. As 82.28% of our Precambrian claims were not renewed, we impaired 82.28% of our $300,000 acquisition cost from 2002. During 2007 we impaired $107,425 which was related to our Cangalli mine. We have fully impaired all assets related to our Cangalli operation with the exception of certain buildings located in Cangalli which we are attempting to sell.

Financing costs. During 2008 we incurred financing costs of $222,554 related to the sale of debentures during 2008. These debentures were convertible into our restricted common stock and carried a conversion price less than the market price on the date if sale. As a result of this discounted conversion price the rules of beneficial conversion applied. The difference between market price and the conversion price was accounted for as a discount against each individual debenture and the discount was amortized over the two year term of each debenture. Additionally if a debenture was converted during the year the remaining amount of the unamortized discount was expensed as a financing cost during the year. This amortized amount was expensed as a financing cost and totaled $222,554 during 2008. During 2007 we incurred financing costs related the issuance of our Series B Convertible Preferred stock in the amount of $4,647,263. This expense was the result of the issuance of Series B preferred stock to debt holders and for cash consideration with a conversion rate less than the market price on the date of issuance.

Net loss. Our net loss for 2008 decreased by $4,681,254 to ($1,696,382) compared to ($6,377,636) during 2007, resulting in a basic per-share loss of $(.00) in 2008 as compared to $(.01) in 2007 based on weighted average shares outstanding
- basic of 1,898,367,966 and 830,814,298 respectively. The decrease in net loss was primarily related to the decrease in financing costs of $4,424,709 with the remaining decrease resulting from the reduction of operating costs.

Since commencing operations, our general, administrative and other costs have exceeded the resources we have generated through operations. As described above in "Liquidity and Capital Resources," we have been dependent on loans from affiliated and unaffiliated parties, and debt/equity financing, to meet our working capital obligations and to finance our continuing operating losses. Our . . .