# Comstock Inc.: Form 10-K/A for the period ended Dec 31, 2008 - Company: [Comstock Inc.](/companies/lode.md) (CIK 1120970) - Form: 10-K/A - Filed: 2010-03-05 - Accepted by EDGAR: Mar 5, 2010, 14:35 ET - Period: 2008-12-31 - Accession: 0001144204-10-011748 - Inline XBRL: no - Main document: https://www.sec.gov/Archives/edgar/data/1120970/000114420410011748/v176431_10ka.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1120970/000114420410011748/ ## Business As filed, 6,362 characters. ### Overview GoldSpring Inc. (the Company) is a North American precious metals mining company, focused in Nevada, with land holdings in the Comstock Gold-Silver District of Nevada. The Company has located a deposit of mineralized material at the Hartford Complex and has secured several of the key mining permits required to develop the project. The Company is currently engaged in an aggressive exploration program to define the extent of the Hartford deposit, assess other key exploration targets on its large land package and push the project toward production. The high-grade nature of the bulk tonnage Hartford deposit and its favorable configuration has potentially positioned the Company to become a new gold-silver producer in the future. In early 2007, we temporarily closed our mining operation. This shutdown allowed the Company to focus on the geology to gain a comprehensive understanding of the mineralization at the Hartford complex at our Comstock project. The company commenced a drilling program in December 2007 to further delineate the mineralized material and to determine the most effective process for mining operations. The goal has been to define and map the geology and to prepare geologic cross sections to be utilized in mine planning and as a result, to be able to build a new mine model using geostatistics and extensive drill hole data. There is also ongoing metallurgic testing to attempt to maximize recovery of the high grade fraction of the mineralized material and to determine optimum size to continue heap leaching. The exploration and developmental drilling program commenced at the Comstock project in mid December 2007 and continued throughout 2008. The Company as of December 31, 2008 has drilled 130 holes at the Lucerne / Hartford Complex at its Comstock Project. The Company intends to continue the exploration drilling program throughout 2009; however, lack of adequate funding will impact the pace of the drilling program. We are actively seeking financing to meet our working capital needs and fuel our growth. If we are unable to secure such financing, we may be unable to continue as a going concern. The following table sets forth certain information regarding our current projects. | Name | Location | Type | | --- | --- | --- | | Comstock Lode Gold and Silver Properties | Storey and Lyon County, Nevada | Gold and silver lode claims | | Como | Lyon County, Nevada | Gold and silver lode claims | | Gold Canyon | Lyon County, Nevada | Placer gold claims | | Spring Valley | Lyon County, Nevada | Placer gold claims | Our Comstock Lode exploration project is located between Carson City and Virginia City, Nevada, about 30 miles southeast of Reno in an area known as American Flat. Our Gold Canyon and Spring Valley placer claims are located in Lyon County, Nevada, five miles south of our Plum property, in American Flat / Gold Hill, Nevada. Our Big Mike Copper property is located approximately two hours east of Reno near Winnemucca, Nevada. Our Comstock exploration activities include open pit gold and silver test mining. As defined by SEC Industry Guide 7, we have not yet established any proven or probable reserves at this project. Therefore, all of our activities are considered test mining and exploratory in nature. Test mining at Plum commenced in the third quarter of 2004. We have not as yet explored or developed our Como claims. We also have not completed any exploratory activities on our Gold Canyon, Spring Valley, or Big Mike properties. We have not established reserves on any of these properties. Therefore, there can be no assurance that we will be able to produce sufficient gold to cover our investment and operating costs. ### Employees We approximately have 17 employees, including our managers, administrative staff, engineers, geologists, lab technicians, and process operators. We use consultants with specific skills to assist with various aspects of our operation, including project evaluation, due diligence, and acquisition initiatives. ### Principal Markets We plan to sell our production on world markets at prices established by market forces. These prices are not within our control. ### Government Regulation Mining operations and exploration activities are subject to various national, state, and local laws and regulations in the United States, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances, and other matters. We have obtained or have pending applications for those licenses, permits, and other authorizations currently required to conduct our exploration and other programs. We believe that we are in compliance in all material respects with applicable mining, health, safety, and environmental statutes and regulations. ### Reclamation We are generally required to mitigate long-term environmental impacts by stabilizing, contouring, resloping, and revegetating various portions of a site after mining and mineral processing operations are completed. These reclamation efforts are conducted in accordance with detailed plans, which must be reviewed and approved by the appropriate regulatory agencies. The Nevada Revised Statutes and regulations promulgated there under by the Nevada State Environmental Commission and the Nevada Division of Environmental Protection, Bureau of Mining and Reclamation require a surety bond to be posted for mining projects to assure we will leave the site safe, stable and capable of providing for a productive post-mining land use. Pursuant to the approved Reclamation Plan for our Comstock project, we posted a surety bond in the amount of $1,106,882, of which $776,768 was in the form of a cash deposit and the balance was secured from a surety agent. ### Competition We compete with other mineral exploration and mining companies in connection with the acquisition of gold and other mineral properties. There may be competition for gold acquisition opportunities, some of which may involve other companies having substantially greater financial resources than we do. ### Financing Events - In 2008, we financed operations through issuance of promissory notes and sales of our common stock, all in private placement transactions, which provided us with $5,520,000 in funding. ## Risk factors As filed, 23,823 characters. An investment in our common stock involves risk. You should carefully consider the following risk factors, in addition to those discussed elsewhere in this report, in evaluating our company, its business, and prospects. The following risks could cause our business, financial condition, and operating results to be materially and adversely affected. ***We have limited resources and our inability to obtain additional financing could negatively affect our growth and success.*** We have incurred substantial losses since our inception, and we are currently experiencing a cash flow deficiency from operations. Our current cash flow and capital resources are limited, and we may require additional funds to pursue our business. We may not be able to secure further financing in the future. If we are not able to obtain additional financing on reasonable terms, we may not be able to execute our business strategy, conduct our operations at the level desired, or even to continue business. ### We have received a qualified report from our independent auditors Our independent auditors report on our financial statements indicates that our recurring losses from operations and working capital deficit raise substantial doubt about our ability to continue as a going concern ### Inability to raise sufficient funds to increase growth Our recent financings have only provided capital to continue existing operations but not to continue significant exploration and growth. Without the ability to attract sufficient amounts of capital at any one time, it is unlikely that we can achieve profitability in the foreseeable future. ***We have invested capital in high-risk mineral projects where we have not conducted sufficient exploration and engineering studies.*** We have invested capital in various mineral properties and projects in Nevada where we may not have conducted sufficient exploration and engineering studies to minimize the risk of project failure to the extent that is typical in the mining industry. Our mineral projects involve high risks because we have not invested substantial sums in the characterization of mineralized material, geologic analysis, metallurgical testing, mine planning, and economic analysis to the same extent that other mining companies might deem reasonable. Standard industry practice calls for a mining company to prepare a formal mine plan and mining schedule and have these documents reviewed by a third party specialist. We do not have a formal mine plan that has been reviewed by a third party specialist. Because we have not established proven or probable reserves, there can be no assurance that we will be able to produce sufficient gold to recover our investment and operating costs. ***We will not be successful unless we recover precious metals and sell them for a profit.*** Our success depends on our ability to recover precious metals, process them, and successfully sell them for more than the cost of production. The success of this process depends on the market prices of metals in relation to our costs of production. We may not always be able to generate a profit on the sale of gold or other minerals because we can only maintain a level of control over our costs and have no ability to control the market prices. The total cash costs of production at any location are frequently subject to great variation from year to year as a result of a number of factors, such as the changing composition of the mineralized material , metallurgy, and exploration activities in response to the physical shape and location of the deposit. In addition costs are affected by the price of commodities, such as fuel and electricity. Such commodities are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. A material increase in production costs or a decrease in the price of gold or other minerals could adversely affect our ability to earn a profit on the sale of gold or other minerals. ***We do not have proven or probable reserves, and there is no assurance that the quantities of precious metals we produce will be sufficient to recover our investment and operating costs.*** Our success depends on our ability to produce sufficient quantities of precious metals to recover our investment and operating costs. We do not have proven or probable reserves. There can be no assurance that our exploration activities will result in the discovery of sufficient quantities of mineralized material to lead to a commercially successful operation. ***The cost of our exploration and acquisition activities is substantial, and there is no assurance that the quantities of minerals we discover or acquire will justify commercial operations or replace reserves established in the future.*** Mineral exploration, particularly for gold and other precious metals, is highly speculative in nature, involves many risks, and frequently is nonproductive. There can be no assurance that our exploration and acquisition activities will be commercially successful. Once gold mineralization is discovered, it may take a number of years from the initial phases of drilling until production is possible, during which time the economic feasibility of production may change. Substantial expenditures are required to acquire existing gold properties, to establish ore reserves through drilling and analysis, to develop metallurgical processes to extract metal from the mineralized material, and in the case of new properties, to develop the processing facilities and infrastructure at any site chosen for mineral exploration. There can be no assurance that any mineralized material that may be discovered or acquired in the future will be in sufficient quantities or of adequate grade to justify commercial operations or that the funds required for mineral production operation can be obtained on a timely or reasonable basis. Mineral exploration companies must continually replace mineralized material depleted by production. As a result, there can be no assurance that we will be successful in replacing any mineralized material acquired or established in the future. ***The price of gold fluctuates on a regular basis and a downturn in price could negatively impact our operations and cash flow.*** Our operations are significantly affected by changes in the market price of gold. Gold prices can fluctuate widely and may be affected by numerous factors, such as expectations for inflation, levels of interest rates, currency exchange rates, central bank sales, forward selling or other hedging activities, demand for precious metals, global or regional political and economic crises, and production costs in major gold-producing regions, such as South Africa and the former Soviet Union. The aggregate effect of these factors, all of which are beyond our control, is impossible for us to predict. The demand for and supply of gold affect gold prices, but not necessarily in the same manner as supply and demand affect the prices of other commodities. The supply of gold consists of a combination of new mineral production and existing stocks of bullion and fabricated gold held by governments, public and private financial institutions, industrial organizations, and private individuals. As the amount produced in any single year constitutes a small portion of the total potential supply of gold, normal variations in current production do not have a significant impact on the supply of gold or on its price. If gold prices decline substantially, it could adversely affect the realizable value of our assets and potential future results of operations and cash flow. ***The use of hedging instruments may not prevent losses being realized on subsequent price decreases or may prevent gains being realized from subsequent price increases.*** We may from time to time sell some future production of gold pursuant to hedge positions. If the gold price rises above the price at which future production has been committed under these hedge instruments, we will have an opportunity loss. However, if the gold price falls below that committed price, our revenues will be protected to the extent of such committed production. In addition, we may experience losses if a hedge counterparty defaults under a contract when the contract price exceeds the gold price. As of the date of filing of this report, we have no open hedge positions. ***Since our business consists of exploring for or acquiring gold prospects, the drop in the price of gold will negatively affect our asset values, cash flows, potential revenues and profits.*** We plan to pursue opportunities to acquire properties with gold mineralized material and exploration potential. The price that we pay to acquire these properties will be influenced, in large part, by the price of gold at the time of the acquisition. Our potential future revenues are expected to be derived from the production and sale of gold from these properties or from the sale of some of these properties. The value of any mineralized material, and the value of any potential mineral production therefrom, will vary in direct proportion to variations in those mineral prices. The price of gold has fluctuated widely as a result of numerous factors beyond our control. The effect of these factors on the price of gold, and therefore the economic viability of any of our projects, cannot accurately be predicted. Any drop in the price of gold would negatively affect our asset values, cash flows, potential revenues, and profits. ### We compete with other mineral exploration and mining companies We compete with other mineral exploration and mining companies or individuals, including large, established mining companies with substantial capabilities and financial resources, to acquire rights to mineral properties containing gold and other minerals. There is a limited supply of desirable mineral lands available for claim staking, lease, or other acquisition. There can be no assurance that we will be able to acquire mineral properties against competitors with substantially greater financial resources than we have. ***Our activities are inherently hazardous and any exposure may exceed our insurance limits or may not be insurable.*** Mineral exploration and operating activities are inherently hazardous. Operations in which we have direct or indirect interests will be subject to all the hazards and risks normally incidental to exploration and production of gold and other metals, any of which could result in work stoppages, damage to property, and possible environmental damage. The nature of these risks is such that liabilities might exceed any liability insurance policy limits. It is also possible that the liabilities and hazards might not be insurable, or we could elect not to insure ourselves against such liabilities because of the high premium costs, in which event, we could incur significant costs that could have a material adverse effect on our financial condition. ***We do not have proven or probable reserves, and our mineral calculations are only estimates; any material change may negatively affect the economic viability of our properties.*** Substantial expenditures are required to acquire existing gold properties with established reserves or to establish proven or probable reserves through drilling and analysis. We do not anticipate expending sums for additional drilling and analysis to establish proven or probable reserves on our properties. We drill in connection with our mineral exploration activities and not with the purpose of establishing proven and probable reserves. Therefore, our activity must be called exploration or test mining. While we estimate the amount of mineralized material we believe exists on our properties, our calculations are estimates only, subject to uncertainty due to factors, including the quantity and grade of the material, metal prices, and recoverability of minerals in the mineral recovery process. There is a great degree of uncertainty attributable to the calculation of any mineralized material, particularly where there has not been significant drilling, mining, and processing. Until the mineralized material located on our properties is actually mined and processed, the quantity and quality of the mineralized material must be considered as an estimate only. In addition, the quantity of mineralized material may vary depending on metal prices. Any material change in the quantity of mineralized material may negatively affect the economic viability of our properties. In addition, there can be no assurance that we will achieve the same recoveries of metals contained in the mineralized material as in small-scale laboratory tests or that we will be able to duplicate such results in larger scale tests under on-site conditions or during production. ***Our operations are subject to strict environmental regulations, which result in added costs of operations and operational delays.*** Our operations are subject to environmental regulations, which could result in additional costs and operational delays. All phases of our operations are subject to environmental regulation. Environmental legislation is evolving in some countries and jurisdictions in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors, and employees. There is no assurance that any future changes in environmental regulation will not negatively affect our projects. ### We have no insurance for environmental problems. Insurance against environmental risks, including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production, has not been available generally in the mining industry. We have no insurance coverage for most environmental risks. In the event of a problem, the payment of environmental liabilities and costs would reduce the funds available to us for future operations. If we are unable to fund fully the cost of remedying an environmental problem, we might be required to enter into an interim compliance measure pending completion of the required remedy. ***We are subject to federal laws that require environmental assessments and the posting of bonds, which add significant costs to our operations and delays in our projects.*** The Bureau of Land Management requires that mining operations on lands subject to its regulation obtain an approved plan of operations subject to environmental impact evaluation under the National Environmental Policy Act. Any significant modifications to the plan of operations may require the completion of an environmental assessment or Environmental Impact Statement prior to approval. Mining companies must post a bond or other surety to guarantee the cost of post-mining reclamation. These requirements could add significant additional cost and delays to any mining project undertaken by us. Our mineral exploration operations are required to be covered by reclamation bonds deemed adequate by regulators to cover these risks. We believe we currently maintain adequate reclamation bonds for our operations. ***Changes in state laws, which are already strict and costly, can negatively affect our operations by becoming stricter and costlier.*** At the state level, mining operations in Nevada are regulated by the Nevada Division of Environmental Protection, or NDEP. Nevada state law requires our Nevada projects to hold Nevada Water Pollution Control Permits, which dictate operating controls and closure and post-closure requirements directed at protecting surface and ground water. In addition, we are required to hold Nevada Reclamation Permits required under Nevada law. These permits mandate concurrent and post-mining reclamation of mines and require the posting of reclamation bonds sufficient to guarantee the cost of mine reclamation. Other Nevada regulations govern operating and design standards for the construction and operation of any source of air contamination and landfill operations. Any changes to these laws and regulations could have a negative impact on our financial performance and results of operations by, for example, requiring changes to operating constraints, technical criteria, fees or surety requirements. ***Title claims against our properties could require us to compensate parties, if successful, and divert management’s time from operations.*** There may be challenges to our title in the properties in which we hold material interests. If there are title defects with respect to any of our properties, we might be required to compensate other persons or perhaps reduce our interest in the effected property. The validity of unpatented mineral claims, which constitute most of our holdings in the United States, is often uncertain and may be contested by the federal government and other parties. The validity of an unpatented mineral claim, in terms of both its location and its maintenance, depends on strict compliance with a complex body of federal and state statutory and decisional law. Although we have attempted to acquire satisfactory title to our properties, we have not obtained title opinions or title insurance with respect to the acquisition of the unpatented mineral claims. While we have no pending claims or litigation pending contesting title to any of our properties, there is nothing to prevent parties from challenging our title to any of our properties. While we believe we have satisfactory title to our properties, some risk exists that some titles may be defective or subject to challenge. Also, in any such case, the investigation and resolution of title issues would divert management’s time from ongoing exploration programs. ***We have never paid a cash dividend on our common stock and do not expect to pay cash dividends in the foreseeable future.*** We have never paid cash dividends, and we do not plan to pay cash dividends in the foreseeable future. Consequently, your only opportunity to achieve a return on your investment in us will be if the market price of our common stock appreciates and you sell your shares at a profit. There is no assurance that the price of our common stock that will prevail in the market after this offering will ever exceed the price that you pay. ***Our business depends on a limited number of key personnel, the loss of whom could negatively affect us.*** Robert Faber, Chief Executive Officer, President and acting-Chief Financial Officer and Jim Golden, our COO, are important to our success. If either becomes unable or unwilling to continue in his present position, our business and financial results could be materially negatively affected. ***If we fail to adequately manage our growth, we may not be successful in growing our business and becoming profitable.*** We plan to expand our business and the number of employees over the next 12 months. In particular, we intend to hire additional operational personnel. Our inability to hire and retain additional qualified employees could have a negative impact on our chances of success. ***The issuance of securities by us may not have complied with or violated federal and state securities laws and, as a result, the holders of these shares and warrants may have rescission rights.*** Securities issued by us may not have complied with applicable federal and state securities laws, the result of which is that the holders of these securities may have rescission rights that could require us to reacquire the securities. ***Outstanding convertible securities and warrants may result in substantial dilution.*** At December 31, 2008 we had outstanding 3, 380,948,371 shares of common stock. In addition, we had outstanding convertible notes and related interest plus various common stock purchase warrants. At December 31, 2008, these notes, related interest and warrants were convertible into or exercisable for a total of approximately 1.5 billion additional shares of our common stock, subject to further anti-dilution provisions. ***Our stock is a penny stock and trading of our stock may be restricted by the SEC’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our stock.*** Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9, which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers that sell to persons other than established customers and “accredited investors.” The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock. NASD sales practice requirements may also limit a stockbroker’s ability to buy or sell our stock. In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretation of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy or sell our stock and have an adverse effect on the market for our shares. ## Properties As filed, 43,218 characters. ### Comstock Lode Project #### Location, Access, and Title to the Property We own the following mineral exploration projects: The Comstock gold and silver exploration and test mining project and the Como mineral Claims. The Comstock project is located in Storey and Lyon Counties, Nevada. The Plum property is physically situated roughly three miles south of Virginia City, Nevada. Paved state highways from Reno, Carson City, and Virginia City provide access to the property. The Como mineral Claims are located in Lyon County, Nevada, approximately 15 miles east of Carson City, and have not been explored or developed by us. ### OCCIDENTAL LEASE: Our property rights to the mineral properties consist of several mineral leases, unpatented mineral claims, and fee ownership of real property. We have a mineral exploration and mining lease agreement with Claire Obester, Jim Obester, Alan Obester, and Julian Smith dated May 1, 2008 covering mineral rights to six patented claims located in Storey County. The lease remains in effect for 15 years as long as exploration, development, mining, or processing operations are conducted on a continuous basis, without a lapse of activity for more than 180 days. We agree to spend $100,000.00 on drilling and associated costs within the first 36 months of the term. We agree to pay $10,000.00 upon execution of the lease. We pay a monthly rent to the lessor of $500 per month beginning April 2009 during the Exploration Term. During the Development Term we pay a royalty of $1000 a month or a royalty percentage on the amount received by us on the sale of the mineral products less the costs incurred for marketing, distribution, processing and sales, commonly referred to as a Net Smelter Return. The royalty percentage varies based on the price of gold: 2% if gold is less than $501 per ounce, 3% if gold is at least $501 per ounce but less than $801 per ounce, 4% if gold is at least $801 per ounce but less than $901 per ounce, 5% if gold is at least $901 per ounce but less than $1001, 6% if gold is at least $1001 per ounce but less than $1101 per ounce, 7% if gold is at least $1101 per ounce but less than $1201 per ounce, 8% if gold is at least $1201 per ounce but less than $1301 per ounce, 9 % if gold is at least $1301 per ounce but less than $1401 per ounce and 10% if gold is $1401 per ounce or greater. We are also responsible for payment and filing of annual maintenance fees, if any, and taxes for these claims. Obester Patented Claims: | Claim Number | Claim Name | Position | Land Source | Acres | | --- | --- | --- | --- | ---: | | 800-001-010 | North Occidental | Purchase | Private | 7.2 | | 800-001-025 | East North Occidental | Purchase | Private | 12.2 | | 800-001-021 | Dean Parcel | Purchase | Private | 11 | | 800-001-024 | South Occidental | Purchase | Private | 20.6 | | 800-001-068 | Occidental | Purchase | Private | 7.8 | | 800-001-026 | Edwards | Purchase | Private | 17.8 | ### BILLIE THE KID LEASE: Our property rights to the mineral properties consist of several mineral leases, unpatented mineral claims, and fee ownership of real property. We have a mineral exploration and mining lease agreement with Claire Obester and the Estate of Dorothy Obester dated January 1, 1997 covering mineral rights to five patented claims located in both Storey and Lyon Counties, including the Billie the Kid and Lucerne patented lode claims. The lease remains in effect for as long as exploration, development, mining, or processing operations are conducted on a continuous basis, without a lapse of activity for more than 180 days. We pay a royalty to the lessor equal to the greater of $500 per month or a royalty percentage on the amount received by us on the sale of the mineral products less the costs incurred for marketing, distribution, processing and sales, commonly referred to as a Net Smelter Return. The royalty percentage varies based on the price of gold: 3% if gold is less than $400 per ounce, 4% if gold is at least $400 per ounce but less than $500 per ounce, and 5% if gold is $500 or greater per ounce. We are also responsible for payment and filing of annual maintenance fees, if any, and taxes for these claims. Obester Patented Claims: | Claim Number | Claim Name | Position | Land Source | Acres | | --- | --- | --- | --- | ---: | | 800-001-009 | Green | Purchase | Private | 11 | | 800-001-11 | Echo Parcel | Purchase | Private | 7 | | 800-001-12 | Lucerne | Purchase | Private | 8 | | 800-001-08 | St. Louis Parcels | Purchase | Private | 7 | | 800-002-71 | Billie the Kid | Purchase | Private | 18 | 12 ### DONOVAN LEASE: We have a second mineral exploration and mining lease agreement with the Donovan Silver Hills, LLC dated September 1, 1999 covering seven patented claims and 13 unpatented claims located in Storey and Lyon Counties. The lease remains in effect for as long as exploration, development, mining, or processing operations are conducted on a continuous basis, without a lapse of activity for more than 180 days. We pay a royalty to the lessor amounting to the greater of $500 per month or a royalty percentage of the Net Smelter Returns. The royalty percentage varies based on the price of gold: 3% if gold is less than $400 per ounce, 4% if gold is at least $400 per ounce but less than $500 per ounce, and 5% if gold is $500 or greater per ounce. We are also responsible for payment and filing of annual maintenance fees, if any, and taxes for these claims. Donovan Patented Claims: | Claim Number | Claim Name | Position | Land Source | Acres | | ---: | --- | --- | --- | ---: | | 84 | Tarto Lode | Lease | Private Land | 1 | | 86 | Hartford | Lease | Private Land | 14 | | 1723 | Succor Lode | Lease | Private Land | 6 | | 3760 | Olympia | Lease | Private Land | 6 | | 4728 | Hardluck | Lease | Private Land | 6 | | 4728 | Friendship | Lease | Private Land | 7 | | 4728 | Brown Lode | Lease | Private Land | 8 | | 125 | Niagra Mining Claim | Lease | Private Land | 3 | | 1066 | S. Comstock Mining Claim | Lease | Private Land | 12 | Donovan Unpatented Claims: | Serial # | Claim Name | Location Date | Owner / Lease Holder | Type | Position | Land Source | Acres | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC416049 | Big Mike | 4/7/1987 | Donovan | Lode | Lease | BLM | 20 | | NMC416048 | Cliff House Fraction | 4/7/1987 | Donovan | Lode | Lease | BLM | 4 | | NMC416043 | Echo St. Louis Fraction | 4/7/1987 | Donovan | Lode | Lease | BLM | .30 | | NMC416041 | Green St. Louis Fraction | 3/41987 | Donovan | Lode | Lease | BLM | 7 | | NMC676492 | Hartford Lucerne Fraction | 4/7/1987 | Donovan | Lode | Lease | BLM | 0.9 | | NMC416040 | Hartford South Extension | 4/7/1987 | Donovan | Lode | Lease | BLM | 3 | | NMC416042 | Hartford St. Louis Fraction | 4/7/1987 | Donovan | Lode | Lease | BLM | 6.5 | | NMC416044 | Justice Lucerne Fraction | 4/7/1987 | Donovan | Lode | Lease | BLM | 1.7 | | NMC416046 | Justice Woodville Fraction | 4/7/1987 | Donovan | Lode | Lease | BLM | 3.1 | | NMC416047 | New Deal Fraction | 4/7/1987 | Donovan | Lode | Lease | BLM | 12 | | NMC416045 | South Comstock St. Louis | 4/7/1987 | Donovan | Lode | Lease | BLM | 1 | | NMC416033 | Vindicator #8 | 4/61987 | Donovan | Lode | Lease | BLM | 20.7 | 13 ### FRED GARRET LEASE: We entered into a mineral exploration and mining lease agreement with the Fred Garret et al on April 1, 2008 covering one patented claim located in Storey, Nevada. The lease remains in effect for as long as exploration, development, mining, or processing operations are conducted on a continuous basis, without a lapse of activity for more than 180 days. We pay a royalty to the lessor of $250 per month or a 3% Net Smelter Return, which ever is greater. We are also responsible for payment and filing of annual maintenance fees, if any, and taxes for these claims. Garrett Patented Claims: | Claim Number | Claim Name | Position | Land Source | Acres | | ---: | --- | --- | --- | ---: | | 114 | Pride of Washoe | Lease | Private Land | 25.25 | ### LEDA RESOURCES LLC LEASE: We have a mineral lease agreement with Leda Resources LLC dated March 15, 2008 covering 3 unpatented mining claims located in Storey and Washoe Counties. The lease remains in effect for 20 years with automatic extensions so long as conditions of the lease are met. We are responsible for payment and filing of Federal and State maintenance fees for any year in which this agreement is in maintained in good standing after June 1, 2008. We are responsible for performing reclamation work on the Property as required by Federal, State, and Local law for disturbances resulting from Goldspring’s activities on the Property. The lease agreement includes a production royalty of a 3.0% Net Smelter Return (NRS). Also, we are required to make the following advance royalty payments: upon execution $5,000, 1st Anniversary $10,000, 2nd Anniversary $10,000, 3rd Anniversary $10,000, 4th Anniversary $25,000, 5th Anniversary $25,000, 6th Anniversary & thereafter $25,000 annually. Royalty advances are to be adjusted to annual changes in the consumer price index (CPI) with 2008 as the base year. CPI adjustment commence on the 7th Anniversary. The agreement also provides for an option for a partial Royalty Buy down, whereby we could purchase a 2% NSR for $5 million. . The mineral lease agreement also requires the issuance of 5 million of our common shares; 1,000,000 common shares upon execution and 1,000,000 common shares on each anniversary starting with the first and ending with the fourth. Leda Resources unpatented claims: | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Serial # | Claim Name | Location Date | Owner/ Lease Holder | Type | Position | Land Sources | Acre | | NMC832220 | Checkup 1 | | Leda Resources | Lease | | BLM | | | NMC832220 | Checkup 21 amended | | Leda Resources | Lease | | BLM | | | NMC832220 | Checkup 22 | | Leda Resources | Lease | | BLM | | 14 ### KIM DROSSULIS LEASE: We have a mineral lease agreement with Kim Drossulis dated January 15, 2008 covering 8 unpatented mining claims located in Storey County, Nevada. The lease remains in effect for 20 years with automatic extensions so long as conditions of the lease are met. We are responsible for payment and filing of Federal and State maintenance fees for any year in which this agreement is in maintained in good standing after June 1, 2008. We are responsible for performing reclamation work on the Property as required by Federal, State, and Local law for disturbances resulting from Goldspring’s activities on the Property. The lease agreement includes a production royalty of a 3.0% Net Smelter Return (NRS). Also, we are required to make the following advance royalty payments: upon execution $5,000, 1st Anniversary $10,000, 2nd Anniversary $10,000, 3rd Anniversary $10,000, 4th Anniversary $25,000, 5th Anniversary $25,000, 6th Anniversary & thereafter $25,000 annually. Royalty advances are to be adjusted to annual changes in the consumer price index (CPI) with 2008 as the base year. CPI adjustment commence on the 7th Anniversary. The agreement also provides for an option for a partial Royalty Buy down, whereby we could purchase a 2% NSR for $5 million. . The mineral lease agreement also requires the issuance of 5 million of our common shares; 1,000,000 common shares upon execution and 1,000,000 common shares on each anniversary starting with the first and ending with the fourth Kim Drossulis unpatented claims: | Serial # | Claim Name Location Date | Owner / Lease Holder | Type | Position | Land Source | Acres | | --- | --- | --- | --- | --- | --- | ---: | | NMC823682 | SP #1 | Drossulis | Lode | Lease | BL M | 20.7 | | NMC823683 | SP #2 | Drossulis | Lode | Lease | BL M | 20.7 | | NMC911164 | SP #3 | Drossulis | Lode | Lease | BL M | 20.7 | | NMC911165 | SP #4 | Drossulis | Lode | Lease | BL M | 20.7 | | NMC911166 | SP #5 | Drossulis | Lode | Lease | BL M | 20.7 | | NMC911167 | SP #6 | Drossulis | Lode | Lease | BL M | 20.7 | | NMC911168 | SP #7 | Drossulis | Lode | Lease | BL M | 20.7 | | NMC911169 | SP #8 | Drossulis | Lode | Lease | BL M | 20.7 | ### MICHAEL & KATHRYN S. DONDERO LEASE: On November 1, 2008 we entered into a mineral exploration and mining lease agreement with the Michael & Kathryn S. Dondero covering seven patented claims located in Lyon County. The lease remains in effect for as long as exploration, development, mining, or processing operations are conducted on a continuous basis, without a lapse of activity for more than 180 days. We pay a royalty to the lessor amounting to the greater of $1,000 per month or a 3% Net Smelter royalty. We are also responsible for payment and filing of annual maintenance fees, if any, and taxes for these claims. We also have an option to purchase land and related patents for $900,000. Dondero Patented & Town Lots w/mineral rights Claims: | Claim Number Claim Name | Position | Land Source | Acres | | --- | --- | --- | ---: | | 16-121-10 | Lease | Private Land | 2.9 | | 16-121-11 | Lease | Private Land | 1.04 | | 16-121-12 | Lease | Private Land | .08 | | 16-121-22 | Lease | Private Land | 20.03 | | 16-121-23 | Lease | Private Land | 20 | | 16-121-24 | Lease | Private Land | 20 | | 16-121-25 | Lease | Private Land | 20 | ### JAMES OBESTER LEASE: We have a second mineral exploration and mining lease agreement with the James Obester dated August 1, 2008 covering one patented claim located in Storey County. The lease remains in effect for as long as exploration, development, mining, or processing operations are conducted on a continuous basis, without a lapse of activity for more than 180 days. We pay a royalty to the lessor amounting to the greater of $200 per month for two years and increase to $300 a month for three years then increase to $500 with a royalty percentage of the Net Smelter Returns. The royalty percentage is a 2% NSR when gold is $900 or less per ounce and 3% NSR when gold is greater than $900 per ounce. We are also responsible for payment and filing of annual maintenance fees, if any, and taxes for these claims. James Obesters Unpatented Claims: | Serial # | Claim Name | Location Date | Owner / Lease Holder | Type | Position | Land Source | Acres | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC275502 | Alta #5 | 7/22/1983 | Obester | Lode | Lease | BLM | 20.66 | | NMC275503 | Alta #6 | 7/22/1983 | Obester | Lode | Lease | BLM | 20.66 | | NMC275504 | Alta #7 | 7/22/1983 | Obester | Lode | Lease | BLM | 20.66 | | NMC275505 | Alta #8 | 7/22/1983 | Obester | Lode | Lease | BLM | 12.71 | | NMC275506 | Alta #9 | 7/22/1983 | Obester | Lode | Lease | BLM | 20.66 | | NMC275507 | Alta #10 | 7/22/1983 | Obester | Lode | Lease | BLM | 20.66 | | NMC276609 | Alta #12 | 7/22/1983 | Obester | Lode | Lease | BLM | 12.05 | | NMC300858 | Brunswick #1 | 12/24/1983 | Obester | Lode | Lease | BLM | 20.66 | | NMC300859 | Brunswick #2 | 12/24/1983 | Obester | Lode | Lease | BLM | 20.66 | | NMC300860 | Brunswick #4 | 12/24/1983 | Obester | Lode | Lease | BLM | 20.66 | In addition to the mineral leases, we hold 100 unpatented mineral claims in Storey County, hold eight unpatented mineral claims in Lyon County, and own title to 40 acres of land in Storey County. The W. Hughes Brockbank Living Trust has a lien against and a security interest in these unpatented mineral claims and the 40 acres of land pursuant to a Deed of Trust dated October 31, 2003, entered into with W. Hughes Brockbank Living Trust. The Deed of Trust was granted to secure a promissory note, dated October 31, 2003, in the amount of $1 million for the balance of the purchase price for the property. The non-interest bearing promissory note requires ten quarterly payments of $100,000 each. As of December 31, 2007, the outstanding balance of the note was $250,000. In 2007, Winfield’s affiliates, Intergroup Corporation, Santa Fe Financial and Portsmouth Square, purchased the note from the W. Hughes Brockbank Living Trust. Unpatented Mineral Claims: | Serial # | Claim Name | Location Date | Owner / Lease Holder | Type | Position | Land Source | Acres | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC821729 | Comstock #1 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821739 | Comstock #11 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821740 | Comstock #12 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.6 | | NMC821741 | Comstock #13 | 12/1/2000 | GSPG | Lode | Fee | BLM | 20.6 | | NMC821742 | Comstock #14 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821743 | Comstock #15 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821744 | Comstock #16 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821745 | Comstock #17 | 12/1/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821746 | Comstock #18 | 12/1/2000 | GSPG | Lode | Fee | BLM | 13.8 | 16 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC821730 | Comstock #2 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821731 | Comstock #3 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821735 | Comstock #7 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821736 | Comstock #8 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821737 | Comstock #9 | 10/16/2000 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821492 | Comstock #115 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821493 | Comstock #116 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821494 | Comstock #117 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821495 | Comstock #118 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821496 | Comstock #119 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821497 | Comstock #120 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821498 | Comstock #121 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821499 | Comstock #122 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821500 | Comstock #123 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821501 | Comstock #124 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821502 | Comstock #125 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821503 | Comstock #126 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821504 | Comstock #127 | 4/8/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821505 | Comstock #128 | 4/8/2004 | GSPG | Lode | Fee | BLM | 13.8 | | NMC821506 | Comstock #129 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821507 | Comstock #130 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821508 | Comstock #131 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821509 | Comstock #132 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821510 | Comstock #133 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821511 | Comstock #134 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821512 | Comstock #135 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821513 | Comstock #136 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821514 | Comstock #137 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | 17 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC821515 | Comstock #138 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821516 | Comstock #139 | 7/1/2004 | GSPG | Lode | Fee | BLM | 14.4 | | NMC821517 | Comstock #140 | 7/1/2004 | GSPG | Lode | Fee | BLM | 18.3 | | NMC821518 | Comstock #141 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC821519 | Comstock #142 | 7/1/2004 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965375 | Ghost #1 | 9/30/2007 | GSPG | Load | Fee | BLM | 20.7 | | NMC965384 | Ghost #10 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965385 | Ghost #11 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965376 | Ghost #2 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965377 | Ghost #3 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965378 | Ghost #4 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965379 | Ghost #5 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965380 | Ghost #6 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965381 | Ghost #7 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965382 | Ghost #8 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC965383 | Ghost #9 | 9/30/2007 | GSPG | Lode | Fee | BLM | 20.7 | | NMC810323 | Lee #2 | 11/31/1999 | GSPG | Lode | Fee | BLM | 19.8 | | NMC810324 | Lee #3 | 11/31/1999 | GSPG | Lode | Fee | BLM | 20.7 | | NMC810321 | Lee #5 | 11/31/1999 | GSPG | Lode | Fee | BLM | 19.4 | | NMC814553 | Lee #8 | 1/29/2000 | GSPG | Lode | Fee | BLM | 19.5 | | NMC814554 | Lee #9 | 1/29/2000 | GSPG | Lode | Fee | BLM | 19.2 | | NMC704516 | Overman #1 | 8/27/1994 | GSPG | Lode | Fee | BLM | 1 | | NMC884216 | Plum | 11/19/2004 | GSPG | Lode | Fee | BLM | 20.4 | | NMC1000122 | OMAHA FRACTION #1 | 10/30/2008 | GSPG | Lode | Fee | BLM | 7.2 | | NMC1000123 | OMAHA FRACTION #2 | 11/8/2008 | GSPG | Lode | Fee | BLM | 0.9 | | NMC1000124 | OMAHA FRACTION #3 | 10/30/2008 | GSPG | Lode | Fee | BLM | 1.6 | | NMC1000125 | OMAHA FRACTION #4 | 10/30/2008 | GSPG | Lode | Fee | BLM | 0.2 | | NMC1000126 | OMAHA FRACTION #5 | 10/30/2008 | GSPG | Lode | Fee | BLM | 0.2 | | NMC1000127 | OMAHA FRACTION #6 | 10/30/2008 | GSPG | Lode | Fee | BLM | 1.8 | | NMC1000128 | OMAHA FRACTION #7 | 10/30/2008 | GSPG | Lode | Fee | BLM | 2.3 | | NMC1000129 | OMAHA FRACTION #8 | 10/30/2008 | GSPG | Lode | Fee | BLM | 0.3 | | NMC1000130 | OMAHA FRACTION #9 | 10/30/2008 | GSPG | Lode | Fee | BLM | 6.5 | | NMC1000131 | OMAHA FRACTION #10 | 10/30/2008 | GSPG | Lode | Fee | BLM | 0.8 | 18 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC1000132 | OMAHA FRACTION #11 | 10/30/2008 | GSPG | Lode | Fee | BLM | 1.1 | | NMC1000133 | OMAHA FRACTION #12 | 10/30/2008 | GSPG | Lode | Fee | BLM | 0.4 | | NMC1000134 | OMAHA FRACTION #13 | 10/30/2008 | GSPG | Lode | Fee | BLM | 1.1 | | NMC1000135 | OMAHA FRACTION #14 | 10/30/2008 | GSPG | Lode | Fee | BLM | 1.4 | | NMC1000136 | OMAHA FRACTION #17 | 10/30/2008 | GSPG | Lode | Fee | BLM | 1.6 | | NMC1000137 | OMAHA FRACTION #18 | 10/30/2008 | GSPG | Lode | Fee | BLM | 1.3 | | NMC1000138 | OMAHA FRACTION #19 | 10/30/2008 | GSPG | Lode | Fee | BLM | 2.2 | | NMC1000139 | OMAHA FRACTION #20 | 10/30/2008 | GSPG | Lode | Fee | BLM | 1.0 | | NMC1000140 | OMAHA FRACTION #21 | 10/30/2008 | GSPG | Lode | Fee | BLM | 1.1 | | NMC1000141 | OMAHA FRACTION #22 | 10/30/2008 | GSPG | Lode | Fee | BLM | 3.0 | | NMC1000142 | OMAHA FRACTION #23 | 10/30/2008 | GSPG | Lode | Fee | BLM | 2.3 | | NMC1000143 | OMAHA FRACTION #24 | 10/30/2008 | GSPG | Lode | Fee | BLM | 2.3 | | NMC983353 | COMSTOCK LODE 100 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 16.0 | | NMC983354 | COMSTOCK LODE 101 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 6.1 | | NMC983355 | COMSTOCK LODE 102 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 5.4 | | NMC983356 | COMSTOCK LODE 103 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 2.0 | 19 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC983357 | COMSTOCK LODE 104 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 2.2 | | NMC983358 | COMSTOCK LODE 105 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 1.1 | | NMC983359 | COMSTOCK LODE 106 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 8.6 | | NMC983360 | COMSTOCK LODE 107 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 12.7 | | NMC983361 | COMSTOCK LODE 108 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 1.0 | | NMC983362 | COMSTOCK LODE 109 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 2.3 | | NMC983363 | COMSTOCK LODE 110 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 19.2 | | NMC983364 | COMSTOCK LODE 111 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983365 | COMSTOCK LODE 112 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 16.6 | | NMC983366 | COMSTOCK LODE 113 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 17.1 | | NMC983367 | COMSTOCK LODE 114 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 1.7 | 20 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC983368 | COMSTOCK LODE 115 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 12.2 | | NMC983369 | COMSTOCK LODE 116 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.4 | | NMC983370 | COMSTOCK LODE 117 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.4 | | NMC983371 | COMSTOCK LODE 118 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983372 | COMSTOCK LODE 119 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983373 | COMSTOCK LODE 120 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 1.1 | | NMC983374 | COMSTOCK LODE 121 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 4.1 | | NMC983375 | COMSTOCK LODE 122 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983376 | COMSTOCK LODE 123 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 4.6 | | NMC983377 | COMSTOCK LODE 124 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983378 | COMSTOCK LODE 125 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 13.5 | 21 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC983379 | COMSTOCK LODE 126 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983380 | COMSTOCK LODE 127 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983381 | COMSTOCK LODE 128 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983382 | COMSTOCK LODE 129 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983383 | COMSTOCK LODE 130 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983384 | COMSTOCK LODE 131 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983385 | COMSTOCK LODE 132 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983386 | COMSTOCK LODE 133 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983387 | COMSTOCK LODE 134 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983388 | COMSTOCK LODE 135 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983389 | COMSTOCK LODE 136 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983390 | COMSTOCK LODE 137 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | 22 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC983391 | COMSTOCK LODE 138 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983392 | COMSTOCK LODE 139 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983393 | COMSTOCK LODE 140 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983394 | COMSTOCK LODE 141 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983395 | COMSTOCK LODE 142 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983396 | COMSTOCK LODE 143 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983397 | COMSTOCK LODE 144 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983398 | COMSTOCK LODE 145 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983399 | COMSTOCK LODE 146 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983400 | COMSTOCK LODE 147 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983401 | COMSTOCK LODE 148 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | 23 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC983402 | COMSTOCK LODE 149 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.5 | | NMC983403 | COMSTOCK LODE 150 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 8.4 | | NMC983404 | COMSTOCK LODE 151 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 14.5 | | NMC983405 | COMSTOCK LODE 152 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.1 | | NMC983406 | COMSTOCK LODE 153 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983407 | COMSTOCK LODE 154 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983408 | COMSTOCK LODE 155 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983409 | COMSTOCK LODE 156 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983410 | COMSTOCK LODE 157 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983411 | COMSTOCK LODE 158 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983412 | COMSTOCK LODE 159 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | 24 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC983413 | COMSTOCK LODE 160 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983414 | COMSTOCK LODE 161 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 15.6 | | NMC983415 | COMSTOCK LODE 162 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 19.5 | | NMC983416 | COMSTOCK LODE 163 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 7.7 | | NMC983417 | COMSTOCK LODE 164 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 12.8 | | NMC983418 | COMSTOCK LODE 165 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.5 | | NMC983419 | COMSTOCK LODE 166 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 6.3 | | NMC983420 | COMSTOCK LODE 167 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 20.7 | | NMC983421 | COMSTOCK LODE 168 | 12/21/2007 | THE PLUM MINING CO LLC | Lode | Fee | BLM | 16.2 | | NMC992973 | COMSTOCK LODE 169 | 7/10/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 1.4 | | NMC992974 | COMSTOCK LODE 172 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 20.7 | 25 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC992975 | COMSTOCK LODE 173 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 20.7 | | NMC992976 | COMSTOCK LODE 174 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 20.2 | | NMC992977 | COMSTOCK LODE 175 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 20.7 | | NMC992978 | COMSTOCK LODE 176 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 15.5 | | NMC992979 | COMSTOCK LODE 177 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 19.0 | | NMC992980 | COMSTOCK LODE 179 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 20.7 | | NMC992981 | COMSTOCK LODE 180 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 20.7 | | NMC992982 | COMSTOCK LODE 181 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 20.1 | | NMC992983 | COMSTOCK LODE 182 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 10.3 | 26 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC992984 | COMSTOCK LODE 183 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 19.8 | | NMC992985 | COMSTOCK LODE 184 | 4/25/2008 | THE PLUM MINING COMPANY | Lode | Fee | BLM | 0.0 | | NMC17092 | Como Comet 1 | 8/28/1976 | GSPG | Lode | Fee | BLM | 21.0 | | NMC17093 | Como Comet 2 | 8/28/1976 | GSPG | Lode | Fee | BLM | 21.0 | | NMC4439 | Como Comet 3 | 4/26/1977 | GSPG | Lode | Fee | BLM | 21.0 | | NMC4440 | Como Comet 4 | 4/26/1977 | GSPG | Lode | Fee | BLM | 21.0 | | NMC6121 | Como Comet 6 | 4/30/1977 | GSPG | Lode | Fee | BLM | 21.0 | | NMC6122 | Como Comet 7 | 5/15/1977 | GSPG | Lode | Fee | BLM | 21.0 | | NMC6123 | Como Comet 8 | 5/15/1977 | GSPG | Lode | Fee | BLM | 21.0 | | NMC6124 | Como Comet 9 | 5/15/1977 | GSPG | Lode | Fee | BLM | 21.0 | 27 #### Present Condition of Property and Work Performed We have not completed extensive characterization of mineralized material, geologic analysis, metallurgical testing, mine planning, or economic analysis on the Plum mineral assets. We have not established reserves on this property. Therefore, any activity we perform on the property is considered exploratory in nature. Part of our exploration includes operating a test mine. The purpose of the test mine is to determine our capital and operating costs, metallurgical recoveries, and other mining factors, and demonstrate that we can make a profit over and above our capital and operating costs. #### Description of Equipment and other Infrastructure Facilities Up until the shutdown in mining in February 2007, GoldSpring used a mining contractor to dig material from the Billie the Kid pit. The contractor used 50 ton Euclid haul trucks to haul the mineralized materials from the Billie the Kid/Lucerne open pit to the crushing and process facility located in the northeast corner of the property. The mineralized material is crushed, and agglomerated in a self-contained portable crushing plant. The mineralized material is fed to a vibrating plate feeder by a front-end loader. The feeder provides a steady feed to a Pioneer jaw crusher where material is crushed to -3” minus. Prior to agglomeration, 10 pounds of Type II Portland Cement is added for every ton of mineralized material and metered on to the pug mill feed conveyor which is then transported to the leach pads. A dilute cyanide solution is then applied to the mineralized material on the leach pads. Pregnant solution is accumulated from the leach pad and is then pumped to the 300 gpm Merrill-Crowe recovery plant. The resulting zinc precipitate collected in the presses is dried and smelted on the property using an electric furnace to produce gold and silver dore. Our third-party contract mining company owns and provided the haul trucks, front end shovel, loaders and blade. We own the Merrill-Crowe gold precipitation plant, the agglomerator, crushers, screen, water truck, generators, dozers, cement silo with a screw feeder, and conveyors. The Merrill-Crowe gold precipitation plant and the mineral processing equipment are less than four years old. The total book value of our equipment associated with the Billie the Kid and the Lucerne facilities is approximately $330,000. #### Power Utilization at the Plum Property: We completed the installation of the grid power line replacing a Caterpillar 3516 (1000 kilowatt) diesel generator. The change has reduced our crushing costs and directly attributed to expanding our permit for tons crushed. #### Geology, Structure and Mineralization Several large low angle brecciate structural zones (faults) dominate the geology of the Billie the Kid/Lucerne deposit. The thickness of these structural zones ranges from 20 to 30 feet. Gold mineralization within the Billie the Kid/Lucerne deposit is closely associated with dikes and sills that are composed of Alta Andesite, a dark-colored, fine-grained volcanic rock, but these rocks are rarely or weakly mineralized. Hartford Rhyolite, a fine-grained volcanic rock, hosts approximately 70% to 80% of the gold mineralization and the remaining 20% to 30% is associated with Alta Andesite. #### Mineralized Material We have not established any proven or probable reserves that meet the requirements of SEC Industry Guide 7. Therefore, all of our activities are considered exploratory in nature. Part of our exploration includes operating a test mine. The purpose of the test mine is to determine our capital and operating costs, metallurgical recoveries, and other mining factors, and demonstrate that we can make a profit over and above our capital and operating cost. These test mining activities will assist us with sufficient data to prepare a formal mine plan and establish reserves in the future. On June 10, 2008, our third-party engineer, Telesto Nevada, Inc. of Reno, Nevada, released the Preliminary Resource Report for our Comstock Project based 450 drill holes from prior drill campaigns and 38 drill holes that we completed as of the date of the report. The third-party Report indicated a mineralized material volume of 4,926,000 tons grading 0.080 ounces per ton gold and containing 392,000 ounces at a limiting grade of 0.030 ounces per ton. In September 2008, Telesto updated the estimate of the mineralized material . The updated Report, which included 19 additional holes not in the June 2008 Report, showed a mineralized material volume of 7,179,984 tons grading 0.072 ounces per ton gold and containing 510,000 ounces of gold at a limiting grade of 0.030 ounces per ton. As of March 24, 2009, we have drilled a total of 179 holes. We expect an updated estimate and scoping / feasibility report to be released in the short term. #### Future Exploration Potential We are conducting an exploration program to test surface mineral targets as well as deep underground bonanza targets by using geological mapping, geochemical/geophysical investigations and drilling. ### Gold Canyon and Spring Valley (Placer Claims) We own a 100% interest in the 25 federal unpatented placer claims located in Lyon County, Nevada known as the Gold Canyon and Spring Valley claims. The 25 unpatented placer claims cover approximately 850 acres and are located about 30 miles southeast of Reno and six miles south of Virginia City, Nevada. We have not completed any exploration activity on the Gold Canyon or Spring Valley properties. The properties are undeveloped and do not contain any open-pit or underground mines. We have not established any proven or probable reserves on the mineral claims. All of our activities associated with these properties are exploratory in nature. The processing plant is stored at our Plum Mining property in American Flat, Nevada. We have no plans to begin test mining operations on these properties in the near-term. Lyon County Unpatented Placer Claims: | Serial # | Claim Name | Location Date | Type | Lease Holder | Position | Land Source | Acres | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC677117 | Harlesk #1 | 3/8/1993 | Placer | GSPG | Fee | BLM | 4.4 | | NMC677118 | Harlesk #2 | 3/8/1993 | Placer | GSPG | Fee | BLM | 19.7 | | NMC677119 | Harlesk #3 | 3/8/1993 | Placer | GSPG | Fee | BLM | 17.8 | | NMC677120 | Harlesk #4 | 3/8/1993 | Placer | GSPG | Fee | BLM | 4.5 | | NMC677121 | Harlesk #5 | 3/8/1993 | Placer | GSPG | Fee | BLM | 20.1 | | NMC677122 | Harlesk #6 | 3/8/1993 | Placer | GSPG | Fee | BLM | 17.7 | | NMC677123 | Harlesk #7 | 3/8/1993 | Placer | GSPG | Fee | BLM | 20.3 | | NMC677124 | Harlesk #8 | 3/8/1993 | Placer | GSPG | Fee | BLM | 17.4 | | NMC677125 | Harlesk #9 | 3/8/1993 | Placer | GSPG | Fee | BLM | 18.9 | | NMC677126 | Harlesk #10 | 3/8/1993 | Placer | GSPG | Fee | BLM | 19.9 | | NMC872176 | Harlesk #100 | 4-19-2004 | Placer | GSPG | Fee | BLM | 21.0 | | NMC872177 | Harlesk #101 | 4-19-2004 | Placer | GSPG | Fee | BLM | 21.2 | | NMC872178 | Harlesk #102 | 4-19-2004 | Placer | GSPG | Fee | BLM | 21.0 | | NMC872179 | Harlesk #103 | 4-19-2004 | Placer | GSPG | Fee | BLM | 20.8 | | NMC99064 | SD Placer | 9/30/1967 | Placer | GSPG | Fee | BLM | 42.3 | | NMC99065 | DS Placer | 9/30/1967 | Placer | GSPG | Fee | BLM | 82.1 | | NMC99066 | Trio Claims | 9/30/1967 | Placer | GSPG | Fee | BLM | 41.5 | | NMC99067 | Gold Star Placers | 7/18/1972 | Placer | GSPG | Fee | BLM | 81 | | NMC99068 | Badger Placer | 8/13/1966 | Placer | GSPG | Fee | BLM | 21.0 | | NMC99072 | EZ Placer | 2/6/1970 | Placer | GSPG | Fee | BLM | 40.2 | | NMC99075 | Nugget Placer | 9/1/1959 | Placer | GSPG | Fee | BLM | 80.0 | | NMC99076 | Star Placer | 11/12/1966 | Placer | GSPG | Fee | BLM | 41.1 | | NMC99078 | Stans Placer | 9/2/1969 | Placer | GSPG | Fee | BLM | 80.3 | | NMC99079 | Stangs Placer | 10/15/169 | Placer | GSPG | Fee | BLM | 41 | | NMC99074 | Mustang | 9/6/1969 | Placer | GSPG | Fee | BLM | 38 | 32 ### The “Big Mike” Copper Project We own a 100% interest in the 17 unpatented lode claims and one placer claim covering a total of approximately 310 acres in Pershing County, Nevada that comprise the Big Mike Copper property. The Big Mike Copper property is located approximately 32 miles south of Winnemucca in Pershing County, Nevada. Access to this site is available by way of Grass Valley Road, a county maintained paved and gravel road, for 30 miles and then two miles on a BLM gravel road. The property is situated at an elevation of 5,000 to 5,500 feet. We have not completed any exploration activity or undertaken any geologic, engineering or economic studies on the Big Mike Copper property. The property includes an open pit, mineralized material in a stockpile, and waste dumps. As the site was previously mined, there are also roads and graded areas on the property. Two cased water wells with rights to two cubic feet per second are also present on the property. At the end of September 2006, the Company entered into a ten year lease with a local company, controlled by a former GoldSpring director, for a 10 year lease of all of its mining claims for its Big Mike copper mine. The Lease calls for a $50,000 initial payment, to cover royalty payments due for the first two years of the lease term. Additionally, the lessee must pay Goldspring $75,000 when a production permit is awarded and $125,000 when commercial mining commences. Additionally, the lessee agrees to a work expenditure of $300,000 for environmental and engineering matters in the first thirty-six months of the lease. During the term of the lease, Goldspring will also receive a production royalty of between 3% and 5% of net returns from copper mining, dependent on the price of copper. Unpatented Big Mike Claims: | Serial # | Claim Name | Location Date | Type | Lease Holder | Position | Land Source | Acres | | --- | --- | --- | --- | --- | --- | --- | ---: | | NMC-87482 | Big Mike Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87483 | Big Mike 4 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87484 | Big Mike 6 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87485 | Big Mike 7 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87486 | Big Mike 9 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87487 | Big Mike 10 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87488 | Big Mike 11 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87489 | Big Mike 12 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87490 | Big Mike 16 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87491 | Big Mike 20 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87492 | Big Mike 24 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87493 | Big Mike 30 Lode | 6/18/1979 | Lode | GSPG | Fee | BLM | 20.7 | | NMC-87494 | Big Mike Extension | 7/27/1979 | Lode | GSPG | Fee | BLM | 17.7 | | NMC-87495 | Big Mike Extension #1 | 7/27/1979 | Lode | GSPG | Fee | BLM | 17.7 | | NMC-87496 | Big Mike Extension #2 | 7/26/1979 | Lode | GSPG | Fee | BLM | 17.7 | | NMC-87497 | Brandi Placer | 6/18/1979 | Placer | GSPG | Fee | BLM | 20.0 | | NMC-510111 | Big Ron | 7/26/1979 | Lode | GSPG | Fee | BLM | 20.0 | | NMC510112 | Big Bruce | 7/26/1979 | Lode | GSPG | Fee | BLM | 20.0 | 34 ## Legal proceedings As filed, 286 characters. From time to time, we are involved in lawsuits, claims, investigations and proceedings that arise in the ordinary course of business. There are no matters pending that we expect to have a material adverse impact on our business, results of operations, financial condition or cash flows. ## Management's discussion and analysis As filed, 41,291 characters. The following discussion provides information that we believe is relevant to an assessment and understanding of the consolidated results of operations and financial condition of our company. It should be read in conjunction with the Consolidated Financial Statements and accompanying Notes also included in this 10-K. The following discussion addresses matters we consider important for an understanding of our financial condition and results of operations as of and for the year ended December 31, 2008, as well as our future results. #### Overview GoldSpring, Inc. is a North American precious metals mining company, focused in Nevada, with extensive, contiguous property in the Comstock Lode District. Our Company was formed in mid-2003, and we acquired two properties in the Comstock Lode before the end of that year. We secured permits, built an infrastructure and brought the exploration project into test mining production within a year of its acquisition. The Company, in 2005, began consolidating the Comstock Lode by acquiring additional properties in the district, expanding our footprint and creating opportunities for exploration and mining. We are an emerging company, looking to build on our success through the acquisition of other mineral properties in the Comstock Lode District with significant precious metals exploration potential. The Company's objectives are to increase its mineralized material inventory through exploration, expand its footprint in the Comstock, resume mining, optimize its production, and maximize shareholder value Our Company spent the majority of 2007 collecting and analyzing geological information from our Comstock project in Nevada, with the objective of developing an exploration and developmental drilling program. Based upon our review of geological information, including the assay results of several prior drilling campaigns, we believed the Hartford / Lucerne Complex provided the opportunity to identify significant precious metals mineralization that would lead us to mine production. We have also committed to assembling a tier-one team of mining industry professionals. In late 2007, we completed a drill plan based on the geological model for mineralization in the Comstock Mining District. In December 2007, we launched our exploration and developmental drilling program, which was focused on surface drilling at the Hartford / Lucerne Complex to delineate the zones of mineralization. The drill hole depth of this reverse circulation drilling program typically varied between 600 to 1000 feet. To date, we have drilled 170 Reverse Circulation holes as part of the 2007-2009 drill program. We have received data from 128 of the 170 holes; the data includes surveyed location, logged geology, and assays received from American Assay Labs in Reno, Nevada. We are currently awaiting data on the remaining 42 holes. Larry Martin leads GoldSpring’s team of geologists in this exploration program. In 2008, the Company began to execute a mineral exploration and mine development business model with all activities focused on resumption of mine production in late 2009 or 2010. The most relevant steps taken are as follows: ¨ Expanding our footprint in the Comstock Region and other acquisition opportunities through the entry into of two letters of intent to purchase rights, which upon consummation, may allow the Company to amass one of the largest land positions in the Comstock District. ¨ Further exploration in the Comstock Region to accomplish the above, including a decision to review the geology of the Hartford complex in a more detailed manner ¨ Completion of the Plum Mine preliminary feasibility report through a focus on infill drilling to allow completion of the Report ¨ Expanding the permitted drilling area and updating of the mine reclamation bond ¨ Consummation of loan agreement with major shareholder to borrow up to $2.5 million for completion of the drilling program, of which 100% has been funded as of December 31, 2008 and efforts to secure further funding to enable recommencement of mine production In addition to our exploration and drilling program, GoldSpring has added additional surface and mineral rights to its portfolio in the Comstock Lode Mining District through acquisitions and the staking of new claims. Our Company now controls over 3,500 acres of patented and unpatented mining claims. Approximately 2,000 acres of these holdings have been added through staking new claims, at a cost of less than $25,000. Scott Jolcover, GoldSpring Director, and Joel Casburn, a consulting land-man with 30 years of experience in managing and consolidating mineral districts, are working to expand the Company’s portfolio of land and mineral holdings. Our exploration program is currently conducting surface geochemistry, geology mapping, rock chip and shallow auger sampling that have identified a number of favorable target areas. We have consolidated historic exploration and production records using Techbase software to generate a computer model of the Comstock Mining District with the objective of delineating additional geologic targets that were previously untested. ### Early 2009 Developments In the first quarter of 2009, a modification application to the Water Pollution Control Permit was submitted to the Nevada Division of Environmental Protection. The permit modifications highlight the Company’s newly designed processing facilities that will optimize recovery of the recently discovered mill-grade gold and silver mineralized material at the Hartford Complex. The major improvements to the processing facilities include the: - Construction and operation of two new crushed material storage areas; - Implementation of a high-grade milling circuit in a contained area; - Expansion of the leach solution pumping systems; - Formation of a new pregnant solution pond; and - Expansion of the Merrill Crowe processing plant. The Nevada Division of Environmental Protection, Bureau of Mining Regulations and Reclamation, has begun its review of the application. Major modification applications typically take nearly 180 days to complete. Under the modified permit, the Company initially plans to mine and process at a rate of 720,000 tons of mineralized material per year. The portion of the mineralized material that will be processed in the milling circuit will have a high percentage of the contained precious metals recovered because of efficiencies afforded by the milling process. Several other operating permits are also being updated to allow operations to begin in 2010. Dennis Anderson, Professional Mine Engineer, leads the mine permitting efforts and is supported by the engineering consultants at Telesto Nevada, LLC of Reno, Nevada. In anticipation of mining resumption, the Company has procured a 300 ton per day ball mill and related equipment. The ball mill is being added to process the higher grade gold and silver mineralization, optimizing gold and silver recovery. Precious metal recovery using the ball mill and grinding to 100 Mesh should be around 95% versus 75% for heap leaching. Assuming sufficient funds are raised in a timely manner, the Company’s goal would be to reopen the Mine during in 2010. In order to resume production, the Company must complete a preliminary feasibility report certified by a qualified third party; complete a comprehensive mine plan; and complete a mining schedule, all of which are dependent upon ability to secure sufficient funds to procure the mining fleet and related assets. In addition, we will need to construct the milling facility, process ponds and expand the existing processing facilities. A haul truck and shovel fleet, and ancillary mine production equipment will need to be acquired and placed in service by the mine production team. There are also risks involved in the fact that one individual and his affiliates, as of December 31, 2008, beneficially own in excess of 24% of our voting stock. Pursuant to financing agreements, this convertible debt holder and his affiliates with a 61 day notice can waive the 4.9% ownership restriction, allowing him to convert 100% of his convertible debt and related interest, which totals $10,404,773 at December, 2008, into our common shares. This group, if they waive the ownership restriction and convert all convertible debt and related interest into our voting common stock, may take actions that could conflict with your interests. This includes the election of Company directors, approval of actions generally requiring the approval of the holders of our voting stock, including adopting amendments to our articles of incorporation and bylaws and approving mergers, certain acquisitions or sales of all or substantially all of our assets, which could delay or prevent someone from acquiring or merging with us or limit the ability of our other stockholders to approve transactions that they may deem to be in their best interests. ### Results of Operations and Operational Plan Our Comstock Lode Mine, which is located in Storey County, Nevada, went into test mining production in late third quarter 2004. We have not established reserves on this exploration project. Therefore, all of our activities on this property are considered test mining or exploratory in nature. In November 2005, we retained mining engineer Jim Golden, who became our COO in 2006, to conduct a comprehensive review of all aspects of the Comstock Lode Mine operation, including the overall mine plan, with the objective of further improving efficiency, increasing production, and reducing costs. Furthermore, Techbase International of Colorado, with the help of our consultants, has been retained to complete a detailed mine plan and a mineralized material inventory for our Comstock project. We released our first Mineralized Material Report in September 2008. We believe that these steps coupled with our exploratory drilling of the Hartford / Lucerne Complex will improve our overall performance at the Comstock Lode Mine. Among the exploration and business development activities that are in process: - Mineralized Material delineation - Completion of drilling results report - Development of comprehensive mine plan from exploration results - Increase of mineralized material inventory - Augment ability to mine and operate at more efficient levels - Intent to resume mine operations after completion of the scoping report and the comprehensive mine plan. - Expansion of existing footprint in the Comstock region (which was largely accomplished through the in process DWC and Sutro Tunnel transactions) Expansion of team of experts to study geology and metallurgy, as well as develop a mine plan, define recoveries, and complete a preliminary feasibility report Secure funds to complete drilling The Company hired Orbit Garant Drilling and George Delong Construction and Drilling to perform exploration and developmental drilling at the Comstock project. The Company also added several mining professionals and consultants in 2008 to its team to further augment its expertise in all facets of mining, including metallurgy. In order to fund its exploration efforts, the Company, in 2008, raised $5,120,000 in capital to finance the developmental and exploratory drilling. ### 2008 Developments The Company has drilled a total of 130 holes in its Phase 1 exploratory program through December 2008 at the Hartford / Lucerne Complex. The purpose of this program is to define the boundaries of the mineralized material and to produce a comprehensive feasibility report and mine plan. The total estimated cost of this plan is $3,500,000 of which $3,443,000 has been expended to date. The assay results from this drill campaign have been encouraging. The initial resource report released in September after obtaining 3rd party assays on 38 of these drill holes plus assay results from 450 holes from prior drill campaigns indicated a mineralized material volume of 4,926,000 tons grading 0.080 ounces per ton gold containing 392,000 ounces at a limiting grade of 0.030 ounces per ton. The material is highlighted by 930,000 tons grading 0.209 ounces per ton gold containing 194,000 ounces of gold using a 0.10 ounces per ton gold limiting grade. A report is expected to be completed during the second quarter 2009. The Company intends to expand the exploration program beyond the Hartford Complex in 2009. ### Summary Exploratory Drilling Results Table The chart below details the results of the assay testing, which was conducted by an independent third-party laboratory. The encouraging assay results received from the drilling program have expanded the surface area and the depth of the identified body of mineralized material in the Hartford Complex. To date, the Company’s drilling program results at the Hartford Complex since December 2007 are summarized in the table below. | Drill Hole Number | Intercept in Feet From | To | Gold Grade (ounces per ton Au) | Silver Grade (ounces per ton Ag) | | ---: | ---: | ---: | ---: | ---: | | **111** | **0** | **40** | **0.049** | **1.52** | | | **105** | **190** | **0.029** | **0.5** | | | **205** | **220** | **0.039** | **0.23** | | **110** | **90** | **105** | **0.039** | **0.47** | | | **120** | **130** | **0.024** | **0.14** | | | **140** | **160** | **0.028** | **0.12** | | | **320** | **340** | **0.043** | **0.7** | | **109** | **0** | **100** | **0.04** | **0.71** | | | **65** | **95** | **0.102** | **0.8** | | **108** | **125** | **145** | **0.019** | **1.34** | | | **200** | **215** | **0.047** | **1.62** | | | **250** | **265** | **0.027** | **0.87** | | | **310** | **400** | **0.022** | **1.05** | | **107** | **115** | **225** | **0.028** | **0.27** | | | **125** | **165** | **0.058** | **0.33** | | **106** | **15** | **50** | **0.017** | **0.49** | | | **130** | **140** | **0.019** | **0.33** | | **105** | **235** | **245** | **0.052** | **0.47** | | **104** | **0** | **190** | **0.057** | **1.17** | | | **75** | **190** | **0.091** | **1.98** | | **103** | **0** | **180** | **0.034** | **0.83** | | | **60** | **85** | **0.123** | **2.1** | | **102** | **0** | **35** | **0.081** | **2.28** | | | **170** | **290** | **0.047** | **0.55** | | | **185** | **220** | **0.12** | **0.78** | | | **325** | **390** | **0.123** | **2.23** | | **101** | **20** | **365** | **0.118** | **0.89** | | | **125** | **265** | **0.243** | | | | **555** | **570** | **0.394** | **0.48** | | | **585** | **595** | **0.163** | **2.26** | | **100** | **0** | **160** | **0.05** | **0.39** | | **99** | **5** | **30** | **0.016** | **0.41** | | | **60** | **90** | **0.022** | **0.37** | | | **130** | **285** | **0.051** | **0.49** | | **98** | **35** | **145** | **0.044** | **0.12** | | | **240** | **250** | **0.025** | **0.17** | | | **270** | **305** | **0.026** | **1.2** | | **97** | **105** | **240** | **0.041** | **0.34** | 41 | | | | | | | ---: | ---: | ---: | ---: | ---: | | **96** | **80** | **160** | **0.032** | **1.08** | | **95** | **0** | **60** | **0.014** | **0.33** | | | **110** | **145** | **0.039** | **0.16** | | **Hole 94** | **10** | **40** | **0.023** | **0.61** | | | **50** | **65** | **0.031** | **0.28** | | **93** | **20** | **100** | **0.017** | **0.11** | | | **130** | **270** | **0.029** | **1.05** | | **92** | **0** | **55** | **0.028** | **0.34** | | | **150** | **165** | **0.025** | **0.15** | | | **175** | **195** | **0.024** | **0.32** | | | **225** | **280** | **0.019** | **0.79** | | **91** | **40** | **70** | **0.026** | **0.75** | | **90** | **35** | **90** | **0.021** | **0.19** | | **89** | **0** | **20** | **0.013** | **0.31** | | | **60** | **80** | **0.017** | **0.08** | | | **90** | **105** | **0.019** | **0.18** | | **88** | **5** | **20** | **0.016** | **0.33** | | | **150** | **165** | **0.032** | **0.14** | | | **175** | **215** | **0.017** | **0.25** | | **87** | | | | | | **86** | | | **No** | **Mineralization** | | **85** | | | | | | **84** | **45** | **80** | **0.03** | **0.084** | | | **170** | **245** | **0.036** | **0.072** | | | **295** | **355** | **0.046** | **0.089** | | | **455** | **485** | **0.028** | **1.151** | | **83** | **0** | **20** | **0.051** | **0.877** | | | **125** | **415** | **0.02** | **0.46** | | **82** | **0** | **90** | **0.01** | **0.297** | | | **90** | **110** | **0.031** | **1.444** | | | **110** | **125** | **0.014** | **0.186** | | | **160** | **195** | **0.021** | **0.293** | | **81** | **115** | **265** | **0.113** | **0.908** | | **80** | **180** | **235** | **0.015** | **0.04** | | | **370** | **450** | **0.049** | **1.211** | | **79** | **350** | **390** | **0.012** | **0.131** | | **78** | **5** | **40** | **0.011** | **0.337** | | | **45** | **90** | **0.029** | **0.152** | | | **100** | **195** | **0.065** | **1.139** | | **77** | **0** | **15** | **0.039** | **0.33** | | | **65** | **185** | **0.05** | **1.059** | | **76** | **0** | **90** | **0.041** | **0.627** | | | **105** | **330** | **0.12** | **0.937** | | **75** | **60** | **65** | **0.125** | **0.296** | | | **120** | **125** | **0.071** | **0.372** | | | **140** | **185** | **0.097** | **0.195** | | | **190** | **195** | **0.013** | **0.063** | | | **310** | **405** | **0.023** | **0.394** | 42 | | | | | | | ---: | ---: | ---: | ---: | ---: | | **74** | **0** | **30** | **0.061** | **0.586** | | | **140** | **325** | **0.024** | **0.162** | | **73** | **0** | **120** | **0.016** | **0.702** | | | **140** | **175** | **0.019** | **1.038** | | **72** | **0** | **15** | **0.017** | **0.234** | | | **50** | **85** | **0.052** | **0.937** | | | **335** | **345** | **0.062** | **1.586** | | **71** | **50** | **65** | **0.017** | **0.21** | | | **80** | **135** | **0.023** | **0.12** | | | **165** | **240** | **0.04** | **0.29** | | | **260** | **280** | **0.064** | **1.75** | | **70** | **0** | **65** | **0.02** | **0.48** | | | **130** | **175** | **0.029** | **0.4** | | | **190** | **245** | **0.027** | **0.3** | | | **295** | **380** | **0.029** | **0.36** | | **69** | **0** | **35** | **0.061** | **0.059** | | | **140** | **325** | **0.024** | **0.16** | | **68** | **15** | **35** | **0.045** | **0.74** | | | **45** | **55** | **0.029** | **0.25** | | | **70** | **80** | **0.041** | **0.82** | | | **80** | **90** | **0.031** | **1.07** | | | **90** | **105** | **0.021** | **0.72** | | | **105** | **120** | **0.175** | **0.68** | | | **120** | **145** | **0.036** | **0.8** | | | **145** | **170** | **0.035** | **1.45** | | | **170** | **185** | **0.024** | **0.62** | | **67** | **55** | **260** | **0.064** | **1.17** | | **66** | **0** | **50** | **0.014** | **0.35** | | | **50** | **155** | **0.057** | **1.05** | | | **155** | **185** | **0.016** | **0.33** | | **65** | **0** | **50** | **0.017** | **0.11** | | | **115** | **130** | **0.039** | **0.11** | | | **160** | **320** | **0.025** | **0.14** | | | **320** | **420** | **0.156** | **0.62** | | | **420** | **500** | **0.024** | **0.11** | | **64** | **0** | **25** | **0.057** | **0.51** | | | **115** | **420** | **0.044** | **0.3** | | **63** | **125** | **170** | **0.03** | **0.47** | | | **300** | **315** | **0.11** | **0.69** | | **62** | **100** | **120** | **0.033** | **0.56** | | **61** | **0** | **15** | **0.036** | **0.96** | | | **210** | **225** | **0.053** | **0.48** | | | **240** | **310** | **0.053** | **0.84** | | | **385** | **405** | **0.022** | **0.02** | | **60** | **275** | **335** | **0.02** | **0.18** | | | **375** | **435** | **0.012** | **0.02** | | | **665** | **685** | **0.065** | **0.08** | | **59** | **105** | **265** | **0.035** | **0.56** | 43 | | | | | | | ---: | ---: | ---: | ---: | ---: | | | **300** | **315** | **0.019** | **0.07** | | **58** | **130** | **285** | **0.018** | **0.48** | | **57** | **90** | **105** | **0.018** | **0.43** | | | **135** | **155** | **0.023** | **0.06** | | | **270** | **425** | **0.017** | **0.18** | | **56** | **435** | **445** | **0.191** | **0.1** | | | **750** | **765** | **0.07** | **0.04** | | **55** | **345** | **355** | **0.104** | **0.17** | | | **385** | **410** | **0.016** | **0.05** | | | **450** | **605** | **0.026** | **0.02** | | **54** | **315** | **355** | **0.043** | **0.93** | | | **450** | **470** | **0.033** | **0.08** | | | **505** | **520** | **0.048** | **0.23** | | | **635** | **675** | **0.022** | **0.09** | | **53** | **0** | **25** | **0.018** | **0.69** | | | **225** | **260** | **0.033** | **0.13** | | **52** | **70** | **90** | **0.046** | **0.16** | | | **120** | **170** | **0.12** | **0.52** | | | **190** | **255** | **0.022** | **0.35** | | | **290** | **325** | **0.015** | **1.13** | | **51** | **55** | **120** | **0.041** | **0.23** | | | **175** | **295** | **0.024** | **0.46** | | **50** | **0** | **50** | **0.128** | **0.43** | | | **155** | **275** | **0.068** | **0.83** | | | | | **Bottom in high grade @ 275** | | | **49** | **0** | **50** | **0.018** | **0.73** | | | **165** | **290** | **0.025** | **0.15** | | | **310** | **355** | **0.119** | **0.37** | | **48** | **0** | **90** | **0.041** | **0.86** | | **47** | **0** | **85** | **0.04** | **0.81** | | **46** | **0** | **15** | **0.012** | **0.5** | | | **105** | **115** | **0.019** | **0.06** | | | **220** | **305** | **0.058** | **0.46** | | | **325** | **350** | **0.031** | **0.07** | | **45** | **90** | **95** | **0.257** | **1.64** | | | **165** | **255** | **0.012** | **0.08** | | | **255** | **345** | **0.077** | **0.82** | | **44** | **215** | **275** | **0.172** | **1.19** | | | **230** | **235** | **1.559** | **6.35** | | | **345** | **430** | **0.064** | **0.06** | | | **355** | **370** | **0.242** | **0.2** | | **43** | **335** | **410** | **0.01** | **0.43** | | **42** | **615** | **715** | **Low grade** | **Low grade** | | **41** | **10** | **25** | **0.03** | **0.17** | | | **135** | **155** | **0.137** | **0.61** | | | **185** | **270** | **0.015** | **0.04** | | | **295** | **405** | **0.037** | **0.61** | 44 | | | | | | | ---: | ---: | ---: | ---: | ---: | | | **540** | **560** | **0.025** | **0.31** | | **40** | **210** | **260** | **0.238** | **0.16** | | | **235** | **240** | **1.937** | **0.7** | | | **325** | **340** | **0.043** | **0.68** | | **39** | **0** | **120** | **0.031** | **0.43** | | | **120** | **170** | **0.009** | **0.37** | | | **170** | **210** | **0.04** | **1** | | **38** | **0** | **20** | **0.087** | **0.83** | | | **60** | **170** | **0.025** | **0.38** | | | **190** | **235** | **0.031** | **0.73** | | | **400** | **425** | **0.021** | **0.35** | | **37** | **0** | **155** | **0.032** | **0.53** | | **36** | **95** | **110** | **0.191** | **0.18** | | | **175** | **195** | **0.019** | **0.2** | | | **205** | **255** | **0.044** | **0.31** | | | **285** | **315** | **0.025** | **0.08** | | | **330** | **400** | **0.025** | **0.09** | | | **410** | **520** | **0.173** | **1.08** | | | **585** | **625** | **0.01** | **0.04** | | **35** | **0** | **15** | **0.03** | **0.63** | | | **170** | **190** | **0.033** | **0.16** | | | **320** | **380** | **0.026** | **0.16** | | | **400** | **420** | **0.016** | **0.35** | | | **465** | **560** | **0.014** | **0.52** | | **34** | **0** | **10** | **0.055** | **0.95** | | | **195** | **205** | **0.025** | **0.12** | | | **305** | **335** | **0.021** | **0.41** | | | **365** | **420** | **0.029** | **0.58** | | | **540** | **550** | **0.02** | **0.44** | | **33** | **0** | **15** | **0.019** | **0.16** | | | **30** | **40** | **0.05** | **0.21** | | | **160** | **170** | **0.025** | **0.72** | | | **240** | **250** | **0.045** | **0.08** | | | **310** | **325** | **0.015** | **0.5** | | | **365** | **380** | **0.025** | **0.02** | | | **395** | **420** | **0.025** | **0.02** | | **32** | **0** | **60** | **0.039** | **0.27** | | | **195** | **265** | **0.026** | **0.33** | | | **295** | **315** | **0.019** | **0.25** | | | **420** | **460** | **0.02** | **0.15** | | | **555** | **585** | **0.017** | **0.74** | | **31** | **0** | **15** | **0.053** | **1.67** | | | **225** | **370** | **0.041** | **0.12** | | | **390** | **420** | **0.014** | **0.06** | | | **575** | **635** | **0.08** | **0.52** | | **30** | **0** | **55** | **0.037** | **0.63** | | | **280** | **350** | **0.017** | **0.31** | | | **375** | **410** | **0.06** | **0.22** | | | **570** | **630** | **0.02** | **0.89** | 45 | | | | | | | ---: | ---: | ---: | ---: | ---: | | **29** | **0** | **15** | **0.04** | **0.63** | | | **405** | **485** | **0.113** | **2.09** | | | **495** | **570** | **0.017** | **0.19** | | | **600** | **640** | **0.078** | **0.32** | | **28** | **0** | **15** | **0.023** | **0.78** | | | **65** | **210** | **0.083** | **0.63** | | | **255** | **290** | **0.051** | **0.6** | | | **310** | **410** | **0.02** | **0.65** | | **27** | **0** | **20** | **0.044** | **0.94** | | | **140** | **150** | **0.063** | **0.56** | | | **175** | **255** | **0.044** | **0.38** | | | **315** | **495** | **0.04** | **1.13** | | **26** | **0** | **25** | **0.025** | **0.88** | | | **240** | **375** | **0.065** | **0.41** | | | **395** | **435** | **0.029** | **0.69** | | **25** | **0** | **60** | **0.033** | **0.8** | | | **135** | **150** | **0.034** | **0.06** | | | **165** | **230** | **0.029** | **0.5** | | | **315** | **330** | **0.014** | **0.09** | | | **525** | **595** | **0.015** | **0.14** | | **24** | **0** | **25** | **0.052** | **0.64** | | | **150** | **235** | **0.103** | **0.54** | | | **285** | **420** | **0.022** | **1.03** | | **23** | **75** | **235** | **0.058** | **0.78** | | | **260** | **300** | **0.03** | **1.04** | | **22** | **0** | **20** | **0.012** | **0.24** | | | **30** | **40** | **0.134** | **1.57** | | | **70** | **140** | **0.04** | **0.43** | | **21** | **210** | **305** | **0.046** | **0.61** | | **20** | **70** | **75** | **0.013** | **0.04** | | | **390** | **395** | **0.015** | **0.04** | | **19** | **0** | **45** | **0.01** | **0.13** | | | **140** | **180** | **0.045** | **0.63** | | | **205** | **230** | **0.013** | **0.56** | | **18** | **0** | **40** | **0.01** | **0.29** | | | **260** | **265** | **0.022** | **1.63** | | **17** | **60** | **130** | **0.031** | **0.5** | | **16** | **290** | **300** | **0.088** | **0.07** | | | **385** | **535** | **0.047** | **0.07** | | | **555** | **755** | **0.032** | **0.25** | | **15** | **10** | **25** | **0.054** | **1.74** | | | **115** | **320** | **0.118** | **1.32** | | | **325** | **365** | **0.029** | **3.53** | | **14** | **10** | **40** | **0.034** | **0.72** | | | **55** | **80** | **0.109** | **0.75** | | | **210** | **225** | **0.082** | **0.08** | | | **290** | **330** | **0.091** | **0.23** | | **13** | **0** | **70** | **0.025** | **0.34** | 46 | | | | | | | ---: | ---: | ---: | ---: | ---: | | **12** | **0** | **60** | **0.012** | **0.18** | | | **445** | **460** | **0.062** | **0.14** | | **11** | **175** | **265** | **0.043** | **0.47** | | | **285** | **350** | **0.076** | **1.28** | | **10** | **20** | **400** | **0.109** | **0.66** | | **09** | **10** | **25** | **0.054** | **1.74** | | | **115** | **320** | **0.118** | **1.32** | | | **325** | **350** | **0.03** | **0.02** | | **08** | **40** | **55** | **0.037** | **0.17** | | | **85** | **150** | **0.06** | **1.04** | | **07** | **15** | **185** | **0.068** | **1.5** | | **06** | **35** | **55** | **0.029** | **1.27** | | | **120** | **130** | **0.164** | **1.19** | | | **135** | **215** | **0.033** | **0.29** | | | **245** | **275** | **0.037** | **1.29** | | | **275** | **325** | **0.003** | **1.71** | | **05** | **30** | **65** | **0.038** | **0.9** | | | **120** | **265** | **0.045** | **1.27** | | **04** | **50** | **60** | **0.006** | **0.09** | | **03** | **55** | **90** | **0.031** | **0.81** | | **02** | **160** | **275** | **0.074** | **0.69** | | **01** | **65** | **135** | **0.052** | **0.64** | All of the assays referenced herein and the data derived there from have been performed and analyzed by American Assay of Reno, Nevada, a certified independent commercial laboratory, utilizing industry standard analytical methods. In addition to the drilling program, the Company is continuing to work on the completion of a comprehensive mine plan. The results of the drilling program, combined with the mine plan, will form the basis for a preliminary feasibility report. The Company completed its initial report in the third quarter 2008. Completing the mine plan and the preliminary feasibility report and obtaining the required funding are the key elements in the Company’s plan to return to production. In determining the optimum time to resume production, the Company will seek advice from its team of mining industry experts. The Company continued to expand its footprint in the Comstock Lode in the first nine months of 2008. During the nine month period, the company acquired or staked approximately 71 new claims, bringing its total claims in the area to approximately 250. The average claim covers an area of 20 acres. In addition, the Company acquired mineral leases on 16 unpatented mineral claims, 6 patented mineral claims and 84 acres of mineral rights on private land. The Company intends to acquire additional properties and claims in the Comstock Lode region through the remainder of 2008 if suitable financing can be arranged. #### DWC Resources Letter of Intent On August 13, 2008, Goldspring, Inc. (the “Company”) entered into a binding letter of intent to purchase certain property owned by DWC Resources, Inc. in Storey County, Nevada. The purchase price is $7,500,000, but is subject to adjustment pursuant to the results of a fairness opinion and/or appraisal to be obtained by the Company. The purchase price will be paid through issuance of a $7,500,000 promissory note which shall bear interest at the rate of 9% per year with quarterly interest payments due throughout the term of the note which is 5 years. The purchased assets include patented and unpatented lode mining claims owned by DWC Resources, Inc. in the Comstock Lode district. The letter of intent also provides for the payment of royalties ranging from 2% - 6% of “net smelter returns” based upon the price of gold per ounce and a 1% royalty to be paid to the party which sold the subject property to DWC Resources in 2007. There is also a commitment to expend a minimum of $250,000 per year on exploration by the Company for five years. #### Sutro Tunnel Sublease The Company simultaneously entered into a binding letter of intent to sublease the Sutro Tunnel Lease dated January 1, 2008 between Sutro Tunnel Co. and John Winfield or his nominee. The purchase price for the sublease is $2,000,000 (which is subject to adjustment upon receipt of a third party fairness opinion/appraisal) payable pursuant to the issuance of a $2,000,000 promissory note which shall bear interest at the rate of 9%per year with quarterly interest payments due throughout the term of the note which is 5 years. The letter of intent also provides for the payment of royalties ranging from 6% - 8% of “net smelter returns” based upon the price of gold per ounce and a 1% royalty to be paid to Winfield if Winfield provides an acceptable buyout of the Sutro property. The Company is also required to fulfill lessee’s obligations under the Sutro Tunnel Lease with regard to payment of royalties and exploration expenditures. With the appointment of two new directors in the first quarter of 2008 (Rob Faber, the Company’s CEO, and Scott Jolcover, a former Company employee with significant mining experience in the region), the Company commenced the task of rebuilding its Board, which lost several independent Directors in early 2007. The Company further complemented its Board by the third quarter appointments of independent directors, Jonathan Jaffrey and Robert Reseigh. Mr. Jaffrey’s strong financial background and Mr. Reseigh’s strong mining background greatly augment the expansion in depth of expertise on the Board and with their appointments; the Board is now comprised of a majority of independent directors. In early March 2008, the Company appointed a new metallurgical team with resources and expertise geared toward efficiency maximization in anticipation of recommencement of production. The Company secured $4,500,000 in the first half of 2008 for further drilling and general corporate expenses and $150,000 in the second half of 2008 of which 100% has been funded as of December 31, 2008. The Company was also successful in extending several notes with Longview Fund, LP. On September 30, 2008, Longview extended the maturity date on three promissory notes issued to it by either the Company or its subsidiary, Plum Mine Special Purpose, LLC (“Plum Mine”), to September 30, 2010, with a principal amount totaling approximately $1.0 million. ### Comparative Financial Information | | Twelve Months ended December 31, 2008 | Twelve Months ended December 31, 2007 (Restated) | Difference | | --- | ---: | ---: | ---: | | Revenue | $0 | $395,541 | $(395,541) | | Depreciation, depletion & amortization | 148,466 | 277,578 | (129,112) | | Reclamation, Exploration and Test Mining Expenses | 3,896,931 | 473,594 | 3,423,337 | | Consulting and professional | 213,507 | 297,531 | (84,024) | | General and administrative | 3,882,372 | 535,739 | 3,346,633 | | Gain Extinguishment of debt | (1,348,199) | - | (1,348,199) | | Financing costs – warrant issuances | 1,129,220 | - | 1,129,220 | | Derivative change in fair value, net | 31,965 | - | 31,965 | | Other, net | (794,017) | - | (794,017) | | Interest Expense | 9,268,367 | 3,247,094 | 6,022,233 | | Net Loss | $(16,487,683) | $(4,435,995) | $9,881,688 | 48 In 2008, we did not produce or sell any gold or silver at our Comstock Project in Nevada. In February 2007, we suspended mining activity to focus on geology and exploration / developmental drilling. During 2007 the Merrill Crow process facility continued to operate at planned intervals and we sold 531 ounces of gold at an average price of $744 per ounce during the twelve-month period ended December 31, 2007. Reclamation, Exploration and Test Mining Expenses were $ 3,346,633 greater for the year ended December 31, 2008 compared to the year ended December 31, 2007. The variance reflects the commencement of our exploration and developmental drilling program at our Comstock project in December 2007. Consulting and professional expenses for 2008 were $213,507 compared to $297,531 for 2007, amounting to $84,024 year over year reduction. This positive variance stems from lower legal fees after the settlement of a vendor dispute with N.A. Degerstrom in December 2007. 2008 General and administrative expenses increased by $3,346,633 from 2007. The increase reflects $2.6 million of stock based compensation expense realized in 2008 from the issuance of stock options and stock grants (see Note 14 and Note 16 in the Notes to the Financial Statements section), the cost of a third-party investor relation firm and increased labor costs from the hiring of additional employees. The Gain on Extinguishment of Debt in of $1,348,199 in 2008 arises out of modification of a conversion feature in two convertible note resulting in debt extinguishment accounting guidance to be applied (refer to Note 20- “Extinguishment of Debt” in the Notes to the Financial Statements section for a detailed explanation). The 2008 Financing cost – warrant issuance expense represents the fair value calculation for the 84.2 million warrants issued in 2008 (see Note 18 – Stock Warrants in the Notes to the Financial Statements section). Other, net of $794,017 in 2008 reflects an accrual adjustment to liquidated damages resulting from the extinguishment of debt. Interest expense increased in 2008 by $6,022,223 from 2007. This increase reflects $6.3 million from the fair value calculation for convertible features (embedded derivatives) contained in various notes (see Note 10 – “Convertible Notes Payable -2008” and Note 20 “Extinguishment of Debt” in the Notes to the Financial Statements section). Our Company is an Exploration Stage enterprise as defined by SEC Industry Guide 7, and, in accordance with SEC Industry Guide 7, infrastructure expenditures such as haul roads, leach pads and start-up costs and all drilling were expensed. | | Quarter ended December 31, 2008 | Quarter ended December 31, 2007 (Restated) | Difference | | --- | ---: | ---: | ---: | | Revenue | $0 | $44,946 | $(44,946) | | Reclamation, Exploration and Test Mining Expenses | 1,481,100 | (197,356) | 1,678,456 | | Consulting and professional | 71,522 | 116,865 | (45,353) | | General and administrative | 2,349,598 | 231,373 | 2,118,225 | | Gain Extinguishment of debt | (1,348,199) | - | (1,348,199) | | Financing costs – warrant issuances | 1,025,220 | - | 1,129,220 | | Derivative change in fair value, net | 98,639 | - | 98,639 | | Other, net | (79,999) | - | (79,999) | | Interest Expense | 7,216,319 | 868,368 | 6,347,951 | | Net Loss | $(10,585,388) | $(1,026,304) | $9,549,191 | During the fourth quarter of 2008 we did not sell any precious metals compared to the fourth quarter of 2007 when we sold 74 ounces of gold at an average price of $607 per ounce. Reclamation, Exploration and Test Mining Expenses were $ 1,481,100 for the fourth quarter 2008 compared to ($197,356) for the fourth quart quarter 2007. The variance reflects the reduction in accrued contract mining liabilities of approximately $500,000 in the fourth quarter 2007 as a result reaching an agreement in the vendor dispute with N.A. Degerstrom and the commencement of our exploration / developmental drill program in mid December 2007 at our Comstock project. Fourth quarter 2008 General and administrative expenses increased by $2,118,225 compared to the fourth quarter of 2007. The increase reflects $1.8 million of stock based compensation expense realized in 2008 from the issuance of stock options and stock grants (see Note 14 and Note 16 in the Notes to the Financial Statements section), and increased labor costs from the hiring of additional employees in 2008. The Gain on Extinguishment of Debt of $1,348,199 in 2008 arises out of modification of a conversion feature in two convertible note resulting in debt extinguishment accounting guidance to be applied (refer to Note 20- “Extinguishment of Debt” in the Notes to the Financial Statements section for a detailed explanation). The fourth quarter 2008 Financing cost – warrant issuance expense of $1,025,220 represents the fair value calculation of warrants issued (see Note 18 – Stock Warrants in the Notes to the Financial Statements section). Interest expense for the fourth quarter 2008 was $7,216,319 compared to $898,368 in the fourth quarter 2007. The increase in interest expenses of $6,347,951 primarily represents the $6.3 million fair value calculation for convertible features (embedded derivatives) contained in various notes (see Note 10 – “Convertible Notes Payable -2008” and Note 20 “Extinguishment of Debt” in the Notes to the Financial Statements section). Our Company is an Exploration Stage enterprise as defined by SEC Industry Guide 7, and, in accordance with SEC Industry Guide 7, infrastructure expenditures such as haul roads, leach pads and start-up costs and all drilling were expensed ### Liquidity and Capital Resources We recognize that our cash resources are limited. Our continued existence and plans for future growth depend on our ability to obtain the capital necessary to operate, through the generation of revenue or the issuance of additional debt or equity. In 2008, we raised an aggregate of $5,520,000 through three financing transactions. Through March 20, 2009, we received $450,000 in additional funding. While this additional funding may meet our immediate working capital needs, if we are not able to generate sufficient revenues and cash flows or obtain additional or alternative funding, we will be unable to continue as a going concern. We have yet to realize an operating profit at our Company. As disclosed in the report of our independent registered public accounting firm in our financial statements included in this Form 10-K for the year ended December 31, 2008, our recurring losses and negative cash flow from operations raise substantial doubt about our ability to continue as a going concern. As of December 31, 2008, the Company is in default of the terms on several outstanding notes payable with the Winfield Group totaling $10,669,987 of principal and $2,946,385 of interest. The Winfield Group consists of Mr. Winfield, Sante Fe Financial Corporation, Portsmouth Square and InterGroup Corporation, Combined, the Winfield Group represent the Company’s largest creditor and a significant stockholder. Mr. Winfield is affiliated with these Companies through a direct controlling interest and/or as their Chairman of the Board. Because we are in default, the entire note balances of the defaulted notes have been recorded as current liabilities. ## Controls and procedures As filed, 3,595 characters. Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this Annual\[Quarterly on Form 10-K, management performed, with the participation of our Principal Executive Officer and Principal Accounting 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’s forms, and that such information is accumulated and communicated to our management including our Principal Executive Officer and our Principal Accounting Officer, to allow timely decisions regarding required disclosures. Our Principal Executive Officer and our Principal Accounting Officer concluded that, as of December 31, 2008, our disclosure controls and procedures were effective. Management's Annual Report on Internal Control Over Financial Reporting. 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: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized transactions. 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. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in *Internal Control - Integrated Framework* and *Internal Control over Financial Reporting-Guidance for Smaller Public Companies.* We believe that internal control over financial reporting is effective as of December 31, 2008. 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. There have been no changes during the quarter ended December 31, 2008 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. ### Item9B. Other Information Not applicable. Filed Mar 5, 2010. Source: SEC EDGAR, the filing index for accession 0001144204-10-011748. Last ingested by Listed: Nov 4, 2026, 17:20 ET. No prices; not investment advice.