Metalline Mining

Company Overview

Metalline Mining Company’s focus is its Sierra Mojada Project located in Sierra Mojada, Coahuila, Mexico. Mineralization in the area contains silver, copper, zinc and lead. A feasibility study is in progress on an oxide zinc deposit that is amenable to acid leach electrowinning extraction of zinc metal.

Metalline has been working at Sierra Mojada since 1997. The Sierra Mojada property consists of concessions totaling 19,408 hectares (47,939 acres). Two mineral systems separated by the east-west trending Sierra Mojada Fault, are present in the area. North of the fault the mineralization is silver, copper, zinc and lead sulfide deposits. South of the fault the mineralization consists of zinc and lead oxide deposits.

Projects

Metalline’s Sierra Mojada Project is located in the west central part of the state of Coahuila, Mexico, near the Coahuila-Chihuahua state border 200 kilometers south of the Big Bend of the Rio Grande River and 250 kilometers north of Torreon, the nearest large city. It consists of concessions that total 19,408 hectares (47,939 acres). Sierra Mojada has paved road access from Torreon, high voltage electric power, an operating railroad and a well maintained 1100 meter gravel airstrip. See Location Map, Concessions and District Concessions.

History

The Sierra Mojada District is a high grade silver mining area extending more than 6 kilometers in an east-west direction and over 1.5 kilometer in a north-south direction along the base of the precipitous Sierra Mojada Range. District ore has been selectively mined for high grade silver, copper, zinc and lead mineralization of sufficient grade to be shipped directly to smelters, the district has never had a mill to concentrate lower grade mineralization. See Sierra Mojada Range.

Discovered in 1879, Sierra Mojada was one of the early bonanza silver districts of Mexico. High grade silver bearing lead carbonate was the first ore mined in the district, known as the Lead Manto (manto is a near horizontal tabular body). The Lead Manto has been mined from discovery through the 1950’s and was the only ore mined until 1906 when the San Jose Mine was discovered. The San Jose Mine was the first silver copper ore discovered in the district, with silver grades of 3000 to 4000 grams per tonne (31.1 grams = 1 troy ounce) and 3% to 4% copper. The San Jose mine started a new period of exploration, discovery and mine development north of the east-west trending Sierra Mojada fault. The fault separates silver, copper, cobalt, zinc, and lead sulfide mineralization, north of the fault, from lead and zinc oxide mineralization south of the fault. From discovery through the 1950’s over 45 mines were discovered and all produced high grade direct shipping ore. The waste dumps of all of these mines contain lower grade mineralization that is amenable to concentration in a standard flotation mill. See Sierra Mojada Fault, Geology Map, District Cross Section and Sierra Mojada Geology Presentation which contains examples of mineralization and grades.

Exploration

In 1997 Metalline Mining acquired concessions in the Sierra Mojada District. All available historic data from literature and previous operators was acquired, this included work by Peñoles, Asarco and Kennecott Copper Corporation. Two areas were selected for evaluation: the La Nortena area of the Encantada mine which is silver, copper, cobalt, zinc, lead sulfide mineralization and oxide zinc mineralization in the San Salvador, Encantada, Fronteriza mines. See Mines, Workings and Stopes.

From 1997 through 1999 Metalline channel sampled and percussion drilled the underground workings and in 1999 completed a surface reverse circulation drill program which consisted of 24 holes and 6,630 meters. Fifteen holes were drilled in the La Nortena area and nine holes were drilled in the oxide zinc mineralization in the San Salvador and Encantada mines. High grade mineralization over thick intervals was intersected in both mineral systems.

Metallurgy advances, the ability to leach oxide zinc mineralization with sulfuric acid combined with electrolytic reduction to refined zinc metal shifted exploration activity to the oxide zinc mineralization.

Metalline received inquiries for joint venture from mining companies and decided to seek a joint venture partner to pursue the evaluation and development of Sierra Mojada. In October 1999 an agreement was signed with North Limited of Australia that allowed North Ltd. to earn a 60% interest in Sierra Mojada by completing a bankable feasibility study.

North Ltd mapped the surface and underground geology and continued channel sampling and percussion drilling of the mine workings. A program consisting of surface reverse circulation drilling of 6,753 meters and 26 holes and 8,339 meters of percussion drill and channel samples from the underground workings was completed. Rio Tinto Ltd. purchased North Ltd. in October 2000 and decided that the Sierra Mojada project did not match their corporate priorities and terminated the joint venture agreement.

In November 2001 Metalline signed a joint venture agreement with Minas Peñoles S.A. de C.V. The agreement allowed Peñoles to earn 60% interest in the project by completing a bankable feasibility study. Peñoles is Mexico’s second largest mining company and the world’s largest silver refiner. Peñoles continued to explore and evaluate the oxide zinc mineralization by surface and underground drilling, driving raises vertically through the mineral horizon in order to bulk sample the mineralization and mapping and channel sampling the mine workings in the San Salvador, Encantada and Fronteriza mines. In December 2003 Peñoles and Metalline terminated the joint venture agreement by mutual consent.

In January 2004 Metalline initiated an underground diamond drill program and continued percussion drilling and channel sampling. During 2004 in excess of 30,000 meters of diamond drilling in the San Salvador, Encantada and Fronteriza mines was completed.

Feasibility Study

Reserva International, an independent contractor specializing in resource evaluation, was retained to complete a block model evaluation of the oxide zinc data. The results, at a cut off grade of 5%, estimated 17,926,988 tonnes with a grade of 8.78% zinc for the Iron Oxide Manto, located in the San Salvador, Encantada and Fronteriza mines, and 5,431,050 tonnes with a grade of 12.08% zinc for the Smithsonite Manto, located only in the San Salvador mine.

Metalline is of the opinion that this mineralization is sufficient to justify a mine, concentrator and acid leach electrowinning plant and has commissioned Green Team International to complete a bankable feasibility study that will address metallurgy, mining, extraction method and economic evaluation studies of a quality to satisfy bankable standards.

The feasibility study consists of two base cases: 1. Determine if the oxide zinc concentrate produced is marketable to existing smelters and refineries. 2. Construct an acid leach electrowinning refinery to process the Sierra Mojada concentrate.

Management

Merlin Bingham, President and Chairman of the Board

Since October 1996, Mr. Bingham has been the President and Chairman of the Board of Directors of the Company. From 1963 to 1983 Mr. Bingham worked in exploration for mining and oil companies in the western U.S. and Alaska, Zambia, the United Arab Emirates, Ecuador and Mexico. From 1983 to 1996, Mr. Bingham has been a consulting geologist. Mr. Bingham received a B.S. degree in Mineralogy from the University of Utah in 1963

Roger Kolvoord, Executive Vice President and Director

Dr. Kolvoord has been a director of the Company since August 2002 and was appointed Vice President, Business in April 2003. Dr. Kolvoord has a B.S. degree in geology from the University of Michigan, a M.S. in Mineralogy form the University of Utah, and a Ph.D. in geochemistry from the University of Texas at Austin. He worked in exploration and exploration research for Kennecott Copper Company, Ranchers Exploration and Development Corporation, and ARCO, and operated a services company providing field services to oil and gas and mining companies. He has extensive mining and energy exploration experience. He was a manager with the Boeing Company for 14 years, working mainly in program management and new business development capacities in information systems and in remote sensing and geospatial information (mapping) ventures. An Associate Technical Fellow of the Boeing Company, he returned to private consulting practice in 2000. Mr. Kolvoord is an active member of the American Association of Petroleum Geologists and the Society of Mining Engineers. He resides in the Puget Sound region of Washington.

Wesley Pomeroy, Director

Mr. Pomeroy was appointed to the Board of Directors in September 2005. Mr. Pomeroy is currently President of The Joe Dandy Mining Company, which has had gold properties in Cripple Creek, Colorado since 1887. He is a member of the Front Range Oil and Gas LLC and the POMOCO LLC (Pomeroy Oil Company). He is also currently a consulting geologist with Vortex Petroleum Inc. and has been associated since 1977 with various exploration and oil and gas companies. Also since 1977 Mr. Pomeroy has been a member in good standing of the American Association of Petroleum Geologists and the Rocky Mountain Association of Geologists. Mr. Pomeroy received a Bachelor of Science degree in geology from Colorado State University in 1977 and an MBA from the University of Colorado in 1990. Mr. Pomeroy is a registered Professional Geologist for the State of Wyoming. He resides in the Denver, Colorado area.

Robert Kramer, Director

Robert Kramer, C.A., was elected to the Board of Directors in July 2006. Mr. Kramer is the co-founder and Chief Executive Officer of Current Technology Corporation (OTCBB:CRTCF). The company was formed in 1987 to research, develop and commercialize electrotherapeutic products for the treatment of hair loss. An entrepreneur by nature, with a particular interest in the financial sector, he has been a founder/principal of a number of private companies offering commercial mortgages, venture capital and tax driven investments. Prior to co-founding Current Technology, he was a joint venture partner in an enterprise that raised funding for approximately 20 public mining companies conducting exploration activities in Western Canada. A graduate of the University of California, Berkeley with a degree in economics, Mr. Kramer has been a member of the Canadian Institute of Chartered Accountants and the Institute of Chartered Accountants of British Columbia for over 30 years. Mr. Kramer is a Registered Certified Public Accountant in the State of Illinois. In 2005 he was admitted as a Fellow to The Institute of Chartered Securities and Administrators.

Terry Brown, Vice President-Operations

Mr. Brown was appointed Vice President-Operations in September 2005. Mr. Brown has 22 years experience in the mining industry in the United States, Mexico and Chile and has most recently been active as a consulting geologist in Mexico. His background is in exploration and project management, mine development and feasibility studies, and mining operations. Mr. Brown is a Certified Professional Geologist and is a member of the American Institute of Professional Geologists and the Society of Economic Geologists. He received a Bachelor of Science degree in geology from the New Mexico Institute of Mining & Technology in 1983. Mr. Brown resides in Chihuahua, Mexico.

Wayne Schoonmaker, Treasurer and Secretary

Mr. Schoonmaker was appointed Secretary & Treasurer of the Company in August 1997 and has held that position since that time. He is also Secretary & Treasurer and Director of Independence Lead Mines Company of Wallace, Idaho. During the period of 1979 through 1993, Mr. Schoonmaker was employed at Asarco Incorporated as Chief Accountant of the Troy Mine and as Financial Manager of Asarco's Northwest Mining Department. From July 1978 to December 1978, Mr. Schoonmaker was Assistant Treasurer of the Bunker Hill Mining Company, and from 1964 to 1978, he was Assistant Secretary of Hecla Mining Company. Mr. Schoonmaker received a Bachelor of Science degree in Accounting from the University of Montana in 1962 and an MBA from the University of Idaho in 1987. Mr. Schoonmaker is a Certified Public Accountant in the states of Idaho and Montana.

Robert J. Devers, Chief Financial Officer

Mr. Dever was previously Senior Director – Financial Analysis and Internal Audit of The Broe Companies Inc. since March 2004. From June 2001 to December 2003, Mr. Devers was Vice President Finance of NAREX Inc. and from September 2000 to June 2001, Mr. Devers was Controller. From May 1994 to March 2000, Mr. Devers was Corporate Controller of Wireless Broadcasting Systems of America Inc. He has also served as a corporate officer and financial executive for other privately-held and publicly traded companies. Mr. Devers received his Bachelors degree in Accounting from Western State College in Gunnison, Colorado and is a Certified Public Accountant.

Gregory A. Hahn, Director

Gregory A. Hahn received a B.A. degree in Earth Sciences from Dartmouth College and M.S. in Geology and Geological Engineering from Michigan Technological University. He has spent 30 years in exploration and mine development with the majors Anaconda, U.S. Steel, and Noranda, and with junior precious metal miner CoCa Mines, where as Chief Geological Engineer he helped bring on line and operate the Cactus and Shumake open pit heap leach gold-silver operations in southern California in the late 1980s to early 1990s. He joined Constellation as President & CEO in 1995 to shepherd the Lisbon Valley copper open pit heap leach and SX-EW processing operation through permitting, feasibility, engineering design, financing and construction, and into operation in early 2006.

Recent MMG News:

January 8 - President's Letter to Metalline Mining Company Shareholders

Metalline Mining Company (Amex: MMG) -- The objective of this letter is to provide an update to our shareholders regarding the activity and progress during 2008 at Metalline's Sierra Mojada Project, Coahuila, Mexico. As previously announced the mining method has changed from an underground to an open pit method. The surface dimensions of the baseline model for an open pit to exploit the oxide zinc mineralization is approximately 2000 meters in an east-west direction and 700 to 900 meters in a north-south direction. Evaluation of this open pit volume will be accomplished by both surface and underground drilling of both the oxide zinc and the polymetallic mineralization and any mineralization above the known mineralization to the surface. At present mineralization is reasonably well defined between about the 1200 meter and 1350 meter elevations. Mineralization above the 1350 meter elevation to surface is poorly known. Any mineralization defined in this interval will improve the open pit strip ratio. The strip ratio is the ratio of mined ore to mined waste, and improving this ratio (increasing ore relative to waste) improves the economics of open pit mining. The Lead Manto horizon is known to be present above the 1350 elevation and is also know to contain oxide zinc mineralization. In addition polymetallic mineralization is known to be present above the 1350 elevation. The volume of the open pit model contains a mixture of waste rock and mineralized material that totals approximately 500 million tonnes. It could increase in size as work progresses and the limits of mineralization are defined.

The Sierra Mojada Project is a polymetallic, many metal, project. In addition to the oxide zinc mineralized material the open pit mine, as currently understood, will produce, silver, copper, zinc and lead. Some of this will be produced as sulfide minerals which are amenable to processing using conventional metallurgical methods. An additional objective of the work in progress is to provide data to better understand the ratio and distribution of sulfide versus oxide mineralization and the related engineering issues.

Since defining a resource estimate for the oxide zinc mineralization the majority of the drilling and sampling has been concentrated on defining a resource for the polymetallic mineralization within the open pit mine volume. Work on the polymetallic mineralization dates back to the first work done by Metalline in the district from 1996 through 1999. During this period about 20,000 meters of drilling and channel sampling was completed. From 1999 to 2004 work was restricted to defining a resource in the oxide zinc mineralization and a feasibility study was initiated on this resource which has resulted in the current open pit mine plan. Emphasis now is the systematic drilling of the open pit volume. During 2008 19,620 meters of surface and underground drilling was completed. Underground drilling totaled 11,813 meters, almost all of which was done on polymetallic targets north of the Sierra Mojada Fault. Surface drilling totaled 7,807 meters and was a mixture of north and south side mineral targets, including Lead Manto targets and is the start of systematic drilling of the open pit volume.

A resource block model on the open pit volume mineralized material is being continued by Pincock Allen & Holt.

The current lack of a speculative equity market and the massive de-leveraging and liquidation by investors has created a market that is a challenge to operate in. We believe this lack of liquidity will have a very beneficial result for projects that have a known resource and could come to production in the next 3 to 5 years as new discovery, the metal industry's primary need, has been further delayed. For the next 5 to 10 years and beyond, mine reserve depletion, for most all metals, will likely exceed discovery and reserve replacement by a very large amount. Between 2010 and 2015 we believe at least 19% of annual zinc production will be lost due to resource depletion. This loss of 2 million tonnes of annual production includes Century, the second largest zinc mine (600,000 tonnes), and Skorpion, one of the more recent zinc mines to come to production. There are few known projects to fill this need, and some low grade projects that have recently come on-line are likely to fail if extremely low metal prices continue for long.

Metalline management is considering all options available to ensure that the project continues to progress. These include possibly exploring additional equity funding, joint venture, strategic partner and smelter and metal trading companies willing to fund projects for a commitment of product.

We realize 2009 will likely be a challenging year. We thank all of our shareholders for their continued support and wish you all a Happy and Rewarding New Year. We look forward to getting a year closer to a producing mine. Although it is, indeed, a long road, the reward appears increasingly attractive.

Metalline Mining Company
1330 E. Margaret Ave.
Coeur d'Alene, ID 83815
TEL: 208.665.2002

Website: http://www.metallinemining.com/