Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

Note 4. Commitments and Contingencies

In 2005, a subsidiary of the Company signed an option agreement that gives it the exclusive right to explore and develop the San Miguel I and San Miguel II concessions for an annual payment of $50,000, and an option to purchase payment of $100,000 annually.  Total payments will not exceed $1,430,344, reduced by taxes paid.  During the three months ended March 31, 2012 and the year ended December 31, 2011, $0 and $186,956 respectively, was paid and capitalized as mineral rights in accordance with the Company’s accounting policies.

From time to time, the Company is assessed fines and penalties by the Mine Safety and Health Administration (“MSHA”). Using appropriate regulatory channels, management may contest these proposed assessments. The Company has accrued $19,640 in other accrued liabilities as of March 31, 2012, related to these settled claims.

During the three months ended march 31, 2012, the Company negotiated a new credit facility increasing our lines of credit by $202,000.  As part of this agreement, we have pledged an additional two $101,000 certificates of deposit as collateral.  The increased loan facility allows us access to cash for an interest rate of 3.15% for the portion of the credit line used.  At March 31,2012, we did not have any outstanding line of credit debt.