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<SEC-DOCUMENT>0001144204-09-006041.txt : 20100504
<SEC-HEADER>0001144204-09-006041.hdr.sgml : 20100504
<ACCEPTANCE-DATETIME>20090209125810
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001144204-09-006041
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20090209

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GOLDSPRING INC
		CENTRAL INDEX KEY:			0001120970
		STANDARD INDUSTRIAL CLASSIFICATION:	GOLD & SILVER ORES [1040]
		IRS NUMBER:				650955118
		STATE OF INCORPORATION:			FL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		8585 E. HARTFORD DRIVE
		STREET 2:		SUITE 400
		CITY:			SCOTTSDALE
		STATE:			AZ
		ZIP:			85255
		BUSINESS PHONE:		480-505-4040

	MAIL ADDRESS:	
		STREET 1:		8585 E. HARTFORD DRIVE
		STREET 2:		SUITE 400
		CITY:			SCOTTSDALE
		STATE:			AZ
		ZIP:			85255

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GOLDSPRING
		DATE OF NAME CHANGE:	20030821

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	STARTCALL COM INC
		DATE OF NAME CHANGE:	20010305
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">February
9, 2009</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">VIA EDGAR
AND TELEFAX</font></div>
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772-9210</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Jill S.
Davis</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Branch
Chief</font></div>
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States Securities and Exchange Commission</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
D.C. 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mailstop
7010</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            <td align="right" style="WIDTH: 36pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Re:&#160;</font></div>
            </td>
            <td align="left">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Goldspring,
      Inc.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>Form 10-KSBfor Fiscal Year Ended
December 31, 2007, As Amended</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>Filed December 10, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>Form 10-Q Fiscal Quarter Ended
September 30, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>Filed November 14, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>Response Letter Dated November 21,
2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>File No. 000-32429</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dear Ms.
Davis:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>We are in receipt of your letter to us,
dated January 5, 2009 regarding the Form 10-KSB/A we filed on December 10, 2008
(the &#8220;10-KSB/A&#8221;), Form 10-Q for Fiscal Quarter Ended September 30 2008 we filed
on November 14, 2008 and our Response Letter dated November 21,
2008.&#160;&#160;We thank you for taking the time to review the filing and
providing your comments.&#160;&#160;Your input is invaluable to us in our
efforts to fully comply with SEC regulations and also to improve the quality of
our disclosure documents.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>In order to fully respond to your
letter, we have repeated your comments (bolded) below followed by our
responses.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Form 10-KSB/A-1 for the
Fiscal Year Ended December 31, 2007</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Executive Compensation, page
28</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Stock Options, page
29</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Comment
#1:</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
note from your response to prior comment number six that you granted stock
options in 2007.&#160;&#160;However, you indicate in your response to number
seven that the disclosures under paragraphs 64 and A240 and A241 of FAS 123R
were inapplicable to the Form 10-KSB for the fiscal year ended December 31,
2007.&#160;&#160;Please further support your conclusion that such disclosures
were unnecessary given your grant of stock options during 2007.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">GoldSpring,
Inc P.O. Box 1118 ~ Virginia City, NV 89440 ~ T: 775.847.5272 F:
775.847.4762</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; TEXT-DECORATION: underline">www.goldspring.us</font></font></div>
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
response to prior comment number seven was referring to Mr. Faber&#8217;s options
which were not granted until January 2008.&#160;&#160;As indicated in our
response to prior comment number six, Mr. Golden was granted options in
2007.&#160;&#160;To provide appropriate disclosure concerning Mr. Golden&#8217;s
options, we are proposing to add the following footnote to our financial
statements and insert a reference to that footnote in the &#8220;Stock Options&#8221;
section on page 37</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock
Options</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 13, 2007, the Company granted a stock option to Jim Golden, it&#8217;s COO,
as stipulated in his Executive Employment Agreement, which became effective on
that same date.&#160;&#160;&#160;The Agreement carries a three year
term.&#160;&#160;Pursuant to the Agreement, Mr. Golden was granted 10,000,000
stock options currently at a strike price of $0.00963, which was equal to the
current market price of its common shares on that date of the
grant.&#160;&#160;&#160;The options may be exercised up to 10 years provided Mr.
Golden remains our employee, otherwise the agreement requires the stock options
to be exercised or canceled upon separation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Agreement also provides for the issuance of additional grants of 10,000,000
stock options for each additional 100,000 ounces of gold resources, up to a
maximum of 90,000,000 total additional stock options.&#160;&#160;Due to the
uncertainty involved in locating additional gold resources, we have determined
that the additional 90,000,000 stock options are not earned and should not be
included in our financial reporting until such time as the uncertainty is
resolved or the determination of gold resources can be reasonably
estimated.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;We
determined the value of the 10,000,000 stock options granted by utilizing the
Black-Scholes formula.&#160;&#160;Our calculations were based on a three year
life (life of the employment agreement), a volatility of 225% and a risk free
interest rate of 3.07%.&#160;&#160;Our calculations indicate that the value of
the options granted were immaterial.&#160;&#160;&#160;At December 31, 2007, the
Company did not have any other options outstanding.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Evaluation of Disclosure
Controls and Procedures, page 34</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Comment
#2:</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
note from your disclosure under this heading, which states &#8220;Based on the
evaluation and the identification of the significant deficiencies in our
internal control over financial reporting described below, which we do not
believe to be material weakness, our Chief Executive Officer and our Chief
Financial Officer concluded that as of December 31, 2007, our disclosure
controls and procedures were effective.&#8221;&#160;&#160;Please explain in greater
detail how you were able to determine that your disclosure controls and
procedures were effective as of December 31, 2007 even though you specifically
reference significant deficiencies in your internal control over financial when
including on the effectiveness of your disclosure controls and
procedures.&#160;&#160;Please also contact us to discuss.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
reviewed the language in Item 8A (T) and have concluded that the items discussed
were indeed not significant deficiencies, so our internal controls are fully
effective.&#160;&#160;Therefore, we revised Item 8A (T) as follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ITEM
8A (T). CONTROLS AND PROCEDURES.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Evaluation
of Disclosure Controls and Procedures</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of the
end of the period covered by this Annual Report on Form 10-KSB, management
performed, with the participation of our Chief Executive Officer and Chief
Financial Officer, an evaluation of the effectiveness of our disclosure controls
and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.
Our disclosure controls and procedures are designed to ensure that information
required to be disclosed in the report we file or submit under the Exchange Act
is recorded, processed, summarized, and reported within the time periods
specified in the SEC&#8217;s forms, and that such information is accumulated and
communicated to our management including our Chief Executive Officer and our
Chief Financial Officer, to allow timely decisions regarding required
disclosures. Based on the evaluation, our Chief Executive Officer and our Chief
Financial Officer concluded that, as of December 31, 2007, our disclosure
controls and procedures were effective.</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2</font></div>
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management's
Annual Report on Internal Control Over Financial Reporting.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles. Our internal control over financial reporting includes
those policies and procedures that:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our assets;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements; and</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized transactions.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management's
assessment of the effectiveness of our internal control over financial reporting
is for the year ended December 31, 2007. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in <font style="DISPLAY: inline; FONT-STYLE: italic">Internal Control - Integrated
Framework </font>and <font style="DISPLAY: inline; FONT-STYLE: italic">Internal
Control over Financial Reporting-Guidance for Smaller Public
Companies.</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management's
assessment of the effectiveness of the small business issuer's internal control
over financial reporting is as of the year ended December 31, 2007. We believe
that internal control over financial reporting is effective. We have not
identified any, current material weaknesses considering the nature and extent of
our current operations and any risks or errors in financial reporting under
current operations.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the SEC that permit the
Company to provide only management's report in this annual report.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There was
no change in our internal control over financial reporting that occurred during
the fiscal quarter ended December 31, 2007, that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
identified conditions as of December 31, 2007 that we believe are not material
weaknesses in internal controls that include: 1) a lack of segregation of duties
in accounting and financial reporting activities; and 2) the lack of a
sufficient number of qualified accounting personnel. We have taken corrective
measures to remedy these deficiencies. These measures include our consolidation
of the corporate office with the office at the Plum Mine operation. This
consolidation has provided the corporate office with additional accounting
personnel. We believe that the presence of additional qualified accounting
personnel will allow us to effectively correct the lack of segregation of duties
in accounting and financial reporting activities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
former Chief Financial Officer became our Chief Executive Officer in September
2004. Our Company has not hired another individual to act as Chief Financial
Officer. We believe the absence of a full-time Chief Financial Officer or Chief
Accounting Officer has resulted in a significant deficiency with respect to the
lack of qualified accounting personnel. We have been able to mitigate this
deficiency by engaging outside consultants to assist the Company in its
accounting activities, but believe that the only effective long-term solution to
our accounting needs is to hire a qualified CFO. Due to our budgetary
constraints and the small size of our company we are uncertain as to when we
will be able to accomplish this. We estimate the annual cost of these remedial
actions which include compensation, fees, additional insurance, board meetings,
travel and record keeping costs to be approximately $60,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We do not
believe that these deficiencies constitute material weaknesses because of (i)
additional accounting support through the office consolidation with Plum Mine
and (ii) the use of outside consultants.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
have been no changes during the quarter ended December 31, 2007 in our Company's
internal control over financial reporting identified in connection with the
evaluation required by Exchange Act Rules 13a-15(d) and 15d-15(d) that have
material affected, or are reasonably likely to materially affect, our internal
controls over our financial reporting.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Consolidated Balance Sheet,
pages F-3 and F-4</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Comment
#3:</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
note your inclusion of footnote 14 in response to prior comment number
eight.&#160;&#160;However, based upon review of footnote 14, it remains unclear
what the line item &#8220;Other &#8211; embedded derivatives&#8221; represents.&#160;&#160;In this
regard, you disclose that this balance represents the net debt discount
resulting from the original determination of the fair value of the conversion
feature (embedded derivatives) included in the debt, net of periodic
amortizations of interest expense.&#8221;&#160;&#160;Please explain to us in greater
detail how you determine the balance of &#8220;Other &#8211; embedded derivatives,&#8221; and
specifically cite the accounting guidance you reference in determining the
appropriate accounting for this line item and the &#8220;Derivative liability&#8221; line
item.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In order
to improve the clarity of our balance sheet and footnotes, we will change the
line item description &#8220;Other-embedded derivatives&#8221; to &#8220;Discount on convertible
notes payable&#8221;.&#160;&#160;Correspondingly, we will modify footnote 14 to read
as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Discounts
on convertible notes payable&#8221; totaling $906,989 at December 31, 2007 represents
the discount on convertible note proceeds associated with the fair value of the
embedded derivative features consisting of warrants and conversion rights
bifurcated from the host instrument, determined in accordance with the guidance
provided in SFAS 133 and EITF 00-19.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Derivative
liability&#8221; totaling $776,385 at December 31, 2007 represents the fair value of
the embedded derivative features consisting of warrants and conversion rights
bifurcated from the host instrument, determined in accordance with the guidance
provided in SFAS 133 and EITF 00-19.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Consolidated Statements of
Operations, pages F-5</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Comment
#4:</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
have considered your response to prior comment number nine wherein you indicate
you did not report the change in fair value of your derivative assets and
liabilities, as prescribed by FAS 133, because you were in negotiations that you
believed would ultimately change the nature and character of the derivatives you
had recorded on your consolidated balance sheets.&#160;&#160;We further note
your conclusion that &#8220;to record any changes in fair value in 2007 would not be
meaningful when considering the upcoming changes and when compared to our $17.2
million stockholders&#8217; deficit at December 31, 2007 and our $4.1 million net loss
for the year ended.&#8221;&#160;&#160;Based on your response, it appears you believe
that to record the change in fair value of your derivative assets and
liabilities would have been immaterial to your financial statements taken as a
whole.&#160;&#160;If this is true, please provide a detailed materiality
analysis under SAB 99 your conclusion, or otherwise advise.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
assessing the materiality of changes in our derivative assets and liabilities,
in accordance with the guidance offered in SAB 99, we held to the overriding
premise as stated CON 2 that</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">&#8220;The
omission or misstatement of an item in a financial report is material if, in the
light of surrounding circumstances, the magnitude of the item is such that it is
probable that the judgment of a reasonable person relying on the report would
have been changed or influenced by the inclusion or correction of the
item.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
assessment of materiality encompasses the following surrounding
circumstances.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">First and
foremost we are a test mine that is engaged in gold exploration.&#160;&#160;All
investors in our company, both current and future, are fully aware that their
investment is at risk.&#160;&#160;In our view, their decision to invest in our
company is primarily driven by our potential to locate and commercialize a gold
mining operation.&#160;&#160;Cash burn and continued access to liquidity may
also be primary concerns, but the impact of a non-cash accounting entries on
reported operations is not.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Second,
but no less important, is the fact that we have a material uncertainty regarding
our ability to continue as a going concern.&#160;&#160;All investors in our
company, both current and future, are fully aware that we have sustained
operating losses and express no assurance that circumstances will change in the
foreseeable future.&#160;&#160;We have reported operating losses in 2007 in
excess of $4 million annually and we have an accumulated a deficit to date of
approximately $32 million as of December 31, 2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Thirdly,
the terms and conditions in the instruments that give rise to the embedded
conversion feature originally were modified in 2008.&#160;&#160;The
modification, among other things, establishes a fixed conversion price for the
shares thereby removing the derivative feature.&#160;&#160;We are currently in
our 2008 audit period and as such will record the appropriate adjustments once
our computations are complete.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
considering the guidance offered by SAB 99 we noted several qualitative
considerations that should also be considered in materiality
judgments.&#160;&#160;Regarding reporting the transactions associated with our
embedded derivatives and have done so as follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Is
      the item capable of precise
measurement?</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: right">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No,
valuing embedded derivatives in a company whose operating future is uncertain,
using a pricing model based on stock price volatility of a company that trades
less than .1% of shares is likely to yield imprecise results.</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Does
      the item mask a change in earnings
trends?</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No,
operating losses in 2007 and 2006 both were in excess of $4
million.</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Does
      the item hide a failure to meet analysts&#8217; consensus
      expectations?</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No,
analyst&#8217;s are currently following our shares or making a market in our shares,
as far as we know.</font></div>
    <div>
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          <tr valign="top">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Does
      the item change a loss to income or vice
versa?</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No,
operating losses in 2007 were in excess of $4 million.</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Does
      the item affect compliance with regulatory
  requirements?</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
regulatory requirements were affected.</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Does
      the item affect compliance with loan
covenants?</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
financing has been through private sources and are consummated without
performance covenants.</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Does
      the item increase management&#8217;s
compensation?</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No,
management&#8217;s compensation is not based on earnings performance.</font></div>
    <div>
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            <td align="right" style="WIDTH: 36pt">
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            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Does
      the item conceal and unlawful
transaction?</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
      unlawful transaction was involved.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
summary, after consideration of the surrounding facts and circumstances
enumerated above, we conclude that the adjustments were not
material.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Note 3 &#8211; Summary of
Significant Accounting Policies, page F-8</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Revenue recognition, page
F-9</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Comment
#5</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
note from your response to prior comment number ten that your &#8220;sales contract
with the refiner, Johnson-Matthey, does not include pricing
mechanisms;&#160;&#160;and that all &#8220;sales are based on the quantity of metals
delivered and the value of the metals at the time of sale.&#8221;&#160;&#160;Based
upon your response, please explain why your disclosure under this heading
continues to indicate that provisionally priced contracts may
exist.&#160;&#160;In this regard, your revenue recognition policy reads as
follows:</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sales
of gold and silver dore are recorded when title and risk of loss transfer to the
refiner at current spot metals prices. Sales are calculated based upon assay of
the dore&#8217;s precious metal content and its weight. Recorded values are adjusted
upon final settlement from the refiner which usually occurs within 24 days of
delivery. If we have reason to believe that the final settlement will materially
affect our recognition of revenue because of a difference between the refiner&#8217;s
assay of precious metals contained in the dore and ours, we establish a reserve
against the sale.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sales of
gold and silver dore are recorded when we issue a sales order to our refiner,
Johnson Matthey, to sell a specified quantity of metals.&#160;&#160;Sales orders
are typically executed upon receipt of sales order.&#160;&#160;Upon receipt of
the sale order, Johnson-Matthey confirms quantities available and executes the
sale at the current market price of the metals on the day and time of the sales
order.&#160;&#160;We record revenues on the day the Sales order is issued based
on the confirmed quantity of metal at the confirmed market
price.&#160;&#160;Proceeds from the sale of metals are typically wired to our
bank within twenty-four hours.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Reclamation Liabilities and
Asset Retirement Obligations, page F-11</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">RESPONSE to Comment
#6</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
your response to prior comment number 11, you represented that &#8220;the fair value
of the liability of our asset retirement obligations, determined in accordance
FAS 142, are reported on (y) our balance sheet as or December 31,
2007.&#8221;&#160;&#160;However, based upon your disclosure, it continues to remain
unclear to us why you expense your asset retirement obligation directly to
reclamation expense &#8220;Since (you) do not yet have proven or probable reserves as
defined by Industry Guide 7.&#8221;&#160;&#160;Furthermore, it is unclear to us why
your Long-term reclamation liability balance of $553,190 as of December 31, 2007
has not changed since the fiscal year ended 2004.&#160;&#160;In this regard, we
would expect the balance to increase due to (a) the passage of time and (b)
revisions to either the timing or the amount of the original estimate of
undisclosed cash flows, as indicated by paragraph 13 of FAS
143.&#160;&#160;Please further support your representation to us that you report
your asset retirement obligation in accordance with FAS 143.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At the
initial measurement date (2004) we estimated our long-term reclamation liability
by calculating the current reclamation costs as a test mine and accreting those
costs by an inflation factor of 2.5% over the then projected 7 year life of the
mine.&#160;&#160;As prescribed in SFAS 143, we then present valued that
estimated future cash flow utilizing the Company&#8217;s effective borrowing rate of
7.5%, which was 4.5% greater than the equivalent treasury rates at the
time.&#160;&#160;&#160;Our calculations resulted in a long-term reclamation
liability of $487,820 at December 31, 2004.&#160;&#160;Because we are a test
mine and had uncertainties about our ability to continue as a going concern, we
concluded that a conservative approach was justified and recorded our long-term
reclamation liability at $553,190, the value assigned by the Nevada Division of
Environmental Protection (NDEP) which exceeded our calculations.&#160;&#160;We
posted a cash bond with NDEP for this amount.&#160;&#160;Further, based on the
fact that we were a test mine, we concluded that it was more appropriate expense
such costs rather than to capitalize the estimated reclamation costs as an
addition to the mineral properties.&#160;&#160;Accordingly, we expensed $553,190
as a reclamation expense in 2004.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2007, our calculations of long-term reclamation liability (based on
the original 2004 calculations) indicated a liability of $606,018 assuming
accretion of discounted interest over the ensuing 3 years.&#160;&#160;Since we
retained the original $553,190 liability on the books, we considered the
shortfall, when compared to our calculation, immaterial.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Note 8 &#8211; Convertible
Debentures and Notes Payable, page F-16</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">General</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response to Comment
#7</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
have reviewed the Schedule of Convertible Debentures you provided in response to
prior comment number 13. It continues to remain unclear how you initially
applied the accounting guidance of FAS 133 and EITF 00-19, as applicable, in
recording each of your outstanding convertible debentures and notes payable with
embedded conversion features. Please contact us at your earliest convenience to
further discuss your response.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Please
see our response to comment #3.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Note 13 &#8211; Subsequent Events,
page F-26</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response to Comment
#8</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
note from your response to prior comment number 15 that you determined the
modification of the conversion terms of your convertible notes represented a
&#8220;substantial modification of terms&#8221; as contemplated by EITF
96-19.&#160;&#160;You further state that you &#8220;removed all vestiges of the
derivative valuations associated with the previous conversion features, from
[y]our accounts as reflected in [y]our quarterly reporting as of June 30, 2008&#8221;.
According to EITF 96-19, if it is determined that the original and new debt
instruments are <font style="DISPLAY: inline; FONT-STYLE: italic">substantially
different, </font>then the new debt instrument should be initially recorded at
fair value and that amount should be used to determine the debt extinguishment
gain or loss to be recognized and the effective rate of the new instrument.
Given this guidance and your response, it is unclear whether you reported a debt
extinguishment gain or loss during the fiscal quarter ended June 30, 2008.
Please explain in greater detail how you applied the guidance in EITF 96-19
associated with the extinguishment of your convertible notes.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
revisited our records regarding our accounting for certain transactions related
to the&#160;series of convertible notes originated in 2006 and 2007. These
notes&#160;best described as a simple note containing an embedded conversion
feature&#160;with detachable warrants.&#160;&#160;To clarify our accounting for
related to the notes, we offer the following comments revisiting the original
recording.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Warrants</font> - In
considering the original accounting treatment for the warrants, we determined
that although they met the definition of a derivative under SFAS 133, they also
met the scope exception under paragraph 11(a) as they were indexed to the
company&#8217;s shares.&#160;&#160;&#160;&#160;Because they are excluded from SFAS
133, they are then evaluated under EITF 00-19.&#160;&#160;We evaluated
paragraphs 7-32 of EITF 00-19 and determined that under paragraph 19, since the
maximum shares issued are not capped, the Company may not have enough authorized
shares to permit a settlement in shares and may need to seek board approval for
additional authorized shares.&#160;&#160;Accordingly, since the share settlement
may not be in the Company&#8217;s control and because of this potential lack of
control, we classified the fair value of the warrants as a liability rather than
equity.&#160;&#160;The primary reason for the concern over available authorized
shares, stems from the fact that the Company was and still is an exploration
test mine not yet in production; was in financial difficulties; share price was
a fraction of a penny with no proven viable commercial operations or orderly
share trading market for its shares; along with numerous other challenges both
legal and financial.&#160;&#160;We calculated a fair value for the derivatives
and recorded a derivative liability offset by an equivalent note discount
asset.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Embedded Conversion
Feature</font> &#8211; We assessed the embedded conversion feature within the host
instrument, under paragraph 12 of SFAS 133 and determined that all three tests
were met.&#160;&#160;This requires that the embedded conversion feature be
bifurcated from the host instrument and accounted for as a derivative at fair
value.&#160;&#160;Next we need to determine its classification on the balance
sheet and to do so we again visit EITF 00-19.&#160;&#160;As discussed in
paragraph 4 of EITF 00-19 and also in EITF 05-2 we determined that the host
contract is not a &#8220;conventional&#8221; convertible instrument, essentially because it
contains the &#8220;favored nations&#8221; clause.&#160;&#160;The &#8220;favored nations&#8221; clause
adjusts the conversion rate to match more favorable terms subsequently offered
in other issued debt instruments.&#160;&#160;Because the instrument does not
qualify as &#8220;conventional&#8221;, we look to paragraphs 7-32 of EITF 00-19 to determine
if the conversion feature should be classified as debt or
equity.&#160;&#160;This instrument fails the same test as the warrants did and
according we recorded the fair value of the conversion feature as liability
offset by an equivalent note discount asset.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Amortization of Note
Discount</font> &#8211;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
the first three quarters of 2007, we recorded entries to amortize the note
discount, which were reflected in our quarterly filings for 2007 in the line
item titled <font style="DISPLAY: inline; FONT-STYLE: italic">Note
discount</font> (previously reported as <font style="DISPLAY: inline; FONT-STYLE: italic">Other &#8211; Embedded Derivatives).
</font>We suspended the amortization of note discount and reversed the 2007
amortization of note discount, in an effort to reflect the reduced value of the
note, as a result of failing to make scheduled payments.&#160;&#160;&#160;Please
refer to our response to comment #12 for further discussion of this
matter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Modification of Terms
</font>-</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
February 20, 2008, as a result of the Company completing other financing
arrangements, a &#8220;favored nations&#8221; clause was triggered in the convertible notes,
which modified the notes conversion feature and effectively established a fixed
conversion rate of $0.01.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
understanding of the guidance offered in EITF 96-19 is that debt extinguishment
gain or loss is reported in situations where a substantial modification in terms
has occurred.&#160;&#160;EITF 96-19 offers a test to determine if a substantial
change has occurred, however in the original document, the test was based on a
change in cash flow, before and after the modification.&#160;&#160;EITF 05-7
modified EITF 96-19 to include the change in fair value of the embedded
conversion feature in the test.&#160;&#160;The test was further altered by EITF
06-6 to determine if the change in fair value of the embedded conversion feature
is more than 10% of the original note value, if so, the change is deemed
substantial.&#160;&#160;Our calculation indicates that the change in fair value
of the modified conversion feature was more than 10% of the original
note.&#160;&#160;The test indicates that a substantial modification has occurred
and therefore the guidance regarding extinguishment of debt should be applied to
account for the modification.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">That
guidance provides that the modified conversion feature be revalued to its fair
value and the change reported as debt extinguishment gain or loss.&#160;&#160;To
accomplish this, we intend to modify our quarterly disclosure in 2008 by showing
the related effects of extinguishment accounting treatment broad rather than
net.&#160;&#160;We will eliminate the expense item referred to as <font style="DISPLAY: inline; FONT-STYLE: italic">Derivative change in fair
value,</font> which contained the net elimination of the note discount and the
fair value of the derivative fair value prior to the modification and add an
income item reported as <font style="DISPLAY: inline; FONT-STYLE: italic">Debt
extinguishment gain</font> calculated based on the change in fair value of the
embedded conversion feature as a result of the modification.&#160;&#160;Further
we will reflect the change in note discount as interest expense.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management
believes that the warrant was unaffected by the modification and we will restore
its fair value to derivative liabilities.&#160;&#160;We also will increase
interest expense reflecting the acceleration of note discount and restore the
item reported as <font style="DISPLAY: inline; FONT-STYLE: italic">Note
discount</font> (previously reported as <font style="DISPLAY: inline; FONT-STYLE: italic">Other &#8211; Embedded Derivatives</font>
for the revised discount based on the new note terms.&#160;&#160;(See response
to comment #3).&#160;&#160;This modification will provide the reporting of Debt
extinguishment gain.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
discussed in our response to comment #9, the modification of terms occurred in
the first quarter of 2008 and accordingly the disclosure modifications referred
to above will be reflected in that quarterly reporting.&#160;&#160;The
disclosures will be carried through the second and third quarters of 2008 as
well.&#160;&#160;Further, it is management&#8217;s belief, as expressed in our
response to comment #4 regarding materiality, that the modifications are not
material to any reporting period being modified.&#160;&#160;However, we intend
to enhance our disclosures in the mentioned reporting periods in an effort to
improve the clarity of our reporting.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response to Comment
#9</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
please explain to us what you mean by your statements that &#8220;Although we recorded
the elimination of the derivative assets and liabilities associated with the
previous conversion features, we did note record the fair value adjustment
generated by the new conversion features. Therefore, we intend to amend our
filings for the first, second and third quarters of 2008 to reflect establishing
the new debt discount and the additional interest expense suggested by this
accounting treatment.&#8221;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
previous response should be modified to state that as a result of the
modification of conversion terms initiated by a &#8220;favored nations&#8221; clause which
became effective on February 20, 2008 the filed 10Q for the first quarter will
be modified to reflect this change in terms as discussed more fully in our
response to comment #8 above.&#160;&#160;The change will be carried through the
second and third quarters of 2008 as well.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response to Comment
#10</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.
Please explain to us in greater detail why the asset item titled &#8220;Reclamation
deposit&#8221; totaling $766, 768, equals the balance of the liability item titled
&#8220;Reclamation liabilities&#8221;.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
discussed in our response to comment number 6, it has been our practice to
record our long-term reclamation liability consistent with the cash bond we are
required to post with the NDEP.&#160;&#160;As long as we are a test mine, it has
been our experience that this results in a liability that exceeds our
calculations.&#160;&#160;This is the case in Q1 2008.&#160;&#160;During that
quarter, we requested a permit expansion which triggered the
increase.&#160;&#160;We will evaluate our long-term reclamation liability more
fully in connection with our audit at December 31, 2008.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Condensed Consolidated
Statements of Operations, page 4</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response to Comment
#11</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.
Please include the disclosures required for diluted earning/ loss per share, as
required by paragraph 40 of FAS 128.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
disclosure for our September 30, 2008 quarterly filing will be updated to
include a summary of all securities that could potentially dilute basic EPS in
the future that were not included in the computation of diluted EPS because to
do so would have been anti-dilutive for the periods presented.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response to Comment
#12</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Please
explain how you determined the Derivative Change in Fair Value for the nine
months ended September 30, 2007, given your response to prior comment number
nine that you did not recognize the fair value change in your derivative assets
and liabilities during the fiscal year ended December 31, 2007.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In late
2007, negations were under way to obtain additional
financing.&#160;&#160;Because the negotiation would impact the terms of existing
financing (see our response to comment #8 for further details) we suspended and
reversed certain previously recorded transactions associated with the conversion
features in 2007, specifically the amortization of note
discount.&#160;&#160;&#160;In support of suspending certain transactions, we
concluded that the impact of these entries, recorded or not, were not material
to the financial statements (see our response to comment #4 regarding
materiality).&#160;&#160;Further, given the lack of materiality and since it was
both impractical and costly to attempt to anticipate the ultimate outcome of the
negotiations, we concluded that suspension resulted in the fairest presentation
of our financial position.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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      <div id="FTR">
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response to Comment #
13</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Please
tell us and disclose the nature of the Other, net income item for the nine
months ended September 30, 2008 totaling $551,907.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
2008 the company settled several loan obligations.&#160;&#160;The payment of
these loan obligations resulted in the decrease of liquidated damages that had
been accrued.&#160;&#160;The liability adjustment of $551,907 to accrued
liquidated damages of $551,997 is reflected in Other, net income at September
30, 2008.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Condensed Consolidated
Statements of Cash Flows, page 5</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Response to Comment
#14</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Please
explain to us the nature of the adjustment to operating cash flows of $607,563
titled &#8220;Interest capitalized with amended and restructured notes.&#8221;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This was
a presentation error.&#160;&#160;This amount should have been offset against
Accrued Interest.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: right">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Again, thank you very much for
providing your comments.&#160;&#160;Pursuant to my conversation last Friday with
Jennifer O&#8217;Brien, any amendments, if any, will be filed after your
review.&#160;&#160;Once again, please feel free to contact either me or our
counsel, Jolie Kahn (at <font style="DISPLAY: inline; TEXT-DECORATION: underline">joliekahnlaw@sbcglobal.net</font>
or (212) 422-4910) with any further comments regarding the foregoing or if we
can be of any further assistance.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Very
truly yours,</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
Robert T. Faber</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert T.
Faber</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">cc:&#160;&#160;Jolie
Kahn, Esq.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      </div>
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