7. Debt

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

7. Debt

The following table sets forth the outstanding indebtedness of the Company at the date indicated. Inter-company transactions have been eliminated in the consolidated balance sheet:

Description	Total Due at March 31, 2013		Total Due at December 31, 2012
Related party notes
Suprafin, Ltd.	$	973,438	$	785,929
Global Investments I		34,000		–
Robert Dickey		540,000		540,000
Bass Energy		500,000		500,000
Total related party notes payable	$	2,047,438	$	1,825,929
Notes payable
Banco de Chile Loan	$	–	$	45,541
Walker River Investments		–		270,988
Land Purchase Balance		372,479		367,763
Total notes payable	$	372,479	$	684,292
Convertible notes
Magna Group LLC	$	233,605	$	205,589
Total beneficial conversion liability	$	233,605	$	205,589

From February 2012 through March 2013, Suprafin, Ltd. (“Suprafin”) provided the Company a total of $3,358,890 in non-interest bearing unsecured demand loans to enable Bluestone to pay the balance of the purchase price for the Sulfatos Acquisition and for working capital purposes. Zirk Engelbrecht, currently a member of the Board of Directors, and formerly the Chief Executive Officer, of Lustros, is the owner of Suprafin. In April 2012 Suprafin assigned $570,988 of the loans to Walker River Investments, Corp (“Walker”). In May 2012, Suprafin agreed to cancel $429,000 of these loans in exchange for 100,000 shares of Series A Preferred Stock. As of March 31, 2013, the Company had repaid an additional $1,385,464 of these loans, and the outstanding balance of these loans was $973,438, $187,509 represented the additional advances made by Suprafin, Ltd. during the three month period ended March 31, 2013.

In December 2012, Walker sold $300,000 of their loans to Magna Group LLC (“Magna”) in three increments of $100,000 each, and the Company issued to Magna a series of convertible notes (the “Magna Notes”) for the principal amount which bear interest at the rate of 8% per annum. These Magna Notes are convertible into stock of the Company at a discount of 37.5% from the lowest Trading Price the day prior to the execution of the Magna Notes and contain a one-time price reset which allows Magna to take a 37.5% discount from the lowest trading price on the day prior to the day the investor choses to exercise the reset. We have evaluated original issue discount feature derived from the conversion option of this note as of March 31, 2013 and deemed it to be $180,000. Magna chose to convert $100,000 as of December 31, 2012 which represented a $160,000 value with the debt discount of these Magna Notes into 177,714 shares of Common Stock. As of March 31, 2013, Magna chose to convert the remaining $200,000 which represented a $322,141 value with the debt discount and $2,141 interest of these Magna Notes into 604,357 shares of Common Stock. During the three month period ended March 31, 2013, we recognized $120,803 in amortized debt discount related to these Magna Notes. The amount was recorded as interest expense.

In January and February 2013, Walker sold an additional $270,988 of their loans to Magna in two increments of $125,000 and $145,988, and the Company issued to Magna a series of convertible Magna Notes for the principal amount which bear interest at the rate of 8% per annum. These Magna Notes are convertible into stock of the Company at a discount of 37.5% from the lowest Trading Price the day prior to the execution of the Magna Notes and contain a one-time price reset which allows Magna to take a 37.5% discount from the lowest trading price on the day prior to the day the investor choses to exercise the reset. As of March 31, 2013, Magna chose to convert $65,000 of the $125,000 loan which represented a $104,000 value with the debt discount into 179,311 shares of Common Stock. The total balance due to Magna, including accrued interest of $16,557, was $233,605, net of unamortized debt discount of $112,532 as of March 31, 2013. As of March 31, 2013, we recognized $183,169 in amortized debt discount related to these Magna Notes. The amount was recorded as interest expense.

From September through December 2012, the Company borrowed a total of $1,040,000 for working capital purposes from Robert Dickey, currently an alternate member of the Board of Directors and Bass Energy. Bill Hlavin, currently a member of the Board of Directors is the owner of Bass Energy. These loans are non-interest bearing, unsecured demand loans. These loans are personally guaranteed by Zirk Engelbrecht.

From January through March 2013, the Company borrowed a total of $34,000 for working capital purposes from Global Investments I LLC. William Farley, currently our Chief Executive Officer and a member of the Board of Directors is the owner of Global Investments I, LLC. These loans are non-interest bearing, unsecured demand loans.

In April 2012, Sulfatos borrowed $40,500,223 CLP, or approximately $79,454 US dollars, from Banco de Chile for working capital purposes. This loan bears interest at the rate of 13.43% per annum and is due on March 31, 2013. Monthly payments of principal and interest in the amount of $7,343,229 CLP, or approximately $15,608 US dollars, commenced on October 1, 2012. As of March 31, 2013, the outstanding balance of this loan had been paid in full. The company paid $3,559,151 CLP, or approximately $7,532 US dollars in interest expense related to these notes.

Sulfatos currently owes $176,011,132 CLP, or approximately $372,479 US dollars, for the last two payments of the land acquired in the first quarter of 2011.