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6. Debt

6 Months Ended

Jun. 30, 2012

From November 2011 through February 2012, Angelique de Maison, a director of the Company, provided a total of $1.1m in working capital advances in the form of an unsecured demand loan with no interest and no set terms of repayment to Santa Teresa Minerals. In February 2012 these advances were assigned to Bluestone, of which Ms. de Maison is a major shareholder, and were applied to the purchase of Santa Teresa Minerals’ 60% equity interest in Sulfatos Chile by Bluestone in February 2012. After the acquisition of Bluestone by Lustros in March 2012, Lustros became responsible for repayment of this debt to Ms. de Maison. In April 2012 Ms. de Maison assigned her right to repayment of $1,000,000 of this loan to two third parties who agreed to apply this debt to the purchase of 5,000,000 shares of Common Stock. In June 2012 Ms. de Maison agreed to apply the remaining $100,000 balance due under the loan to the purchase of 181,818 shares of Common Stock.

From February through June 2012, Suprafin, Ltd. (“Suprafin”) provided a total of $1,316,393 in unsecured demand loans with no interest and no set terms of repayment which was applied to the purchase of Sulfatos Chile. Zirk Engelbrect, Chief Executive Officer and a director of the Company, is an officer of Suprafin, Ltd. In May 2012 Suprafin elected to apply $429,000 of these loans toward the purchase of 100,000 shares of Preferred Stock in the Company. In June 2012 $680,000 of these loans were repaid. $207,393 remained outstanding under these loans at June 30, 2012.

$135,000 remains due to Santa Teresa Minerals for the purchase of Sulfatos Chile as a note payable. See Note 3- Sulfatos Chile.

In April 2012 Sulfatos Chile borrowed 40,500,223 CLP or approximately $79,454 from Banco de Chile for working capital purposes. This is a 12 month loan due on March 31, 2013 at 13.43% interest with payments beginning on October 1, 2012. The balance due under this loan at June 30, 2012 is 41,438,863 CLP or approximately $81,296.

Sulfatos Chile currently owes 186,011,000 CLP or approximately $364,921 for the last payment of the land acquired in the first quarter of 2011.

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

Description	Total Due at June 30, 2012
Suprafin, Ltd.	$	207,393
Santa Teresa Minerals		135,000
Banco de Chile Loan		81,296
Land Purchase Balance		364,921
	$	788,610

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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