10-Q/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

  X  . QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

or

.TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________to___________________________

Commission File Number: 333-169701

DESERT HAWK GOLD CORP.

(Exact name of registrant as specified in its charter)

Nevada	82-0230997
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
7723 N. Morton St., Spokane, WA	99208
(Address of principal executive offices)	(Zip Code)
(509) 434-8161
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   X  . No  .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   X  . No  .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer .

 .

Accelerated filer .

 .

Non-accelerated filer .

 .

Smaller reporting company

   X ..

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  . No   X  .

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of August 14, 2012: 8,428,831.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to the Quarterly Report of Desert Hawk Gold Corp. on Form 10-Q for the quarterly period ended June 30, 2012, filed with the Securities and Exchange Commission on August 20, 2012 (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T.  Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).  As permitted by Rule 405(a)(2)(ii) of Regulation S-T, Exhibit 101 is required to be furnished by amendment within 30 days of the original filing date of the Form 10-Q.

No other changes have been made to the Form 10-Q.  This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

PART II.  OTHER INFORMATION

Item 6. Exhibits

The Exhibits filed as part of this amended report are listed on the Exhibit Index immediately following the signature page hereto, which Exhibit Index is incorporated herein by reference.  

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Desert Hawk Gold Corp.

Date: August 24,2011

By /s/ Robert E. Jorgensen                                      

      Robert E. Jorgensen, Chief Executive Officer (Principal Executive and Financial Officer)

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EXHIBIT INDEX

Exhibit No.

Description

31.1

Rule 15d-14(a) Certification by Principal Executive Officer and Principal Financial Officer(1)

32.1

Section 1350 Certification of Principal Executive Officer and Principal Financial Officer(1)

101.

INS

XBRL Instance Document

101.

SCH

XBRL Taxonomy Extension Schema Document

101.

CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.

DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.

LAB

XBRL Taxonomy Extension Label Linkbase Document

101.

PRE

XBRL Taxonomy Extension Presentation Linkbase Document

___________________

(1) These exhibits were previously included in the Quarterly Report of Desert Hawk Gold Corp. on Form 10-Q for the quarterly period ended June 30, 2012, filed with the Securities and Exchange Commission on August 20, 2012.

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DMRJ Group Funding Second Amendment (Details) (USD $)	Feb. 25, 2011
Loan advance to be received as per the second amendment	$ 125,000

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Commitments Mining Properties (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2009
Number of restricted common stock shares received by Moeller Family Trust	0	250,000
Annual payments required to the Trust	$ 0	$ 50,000
Percentage of required to pay of net smelter royalty	0	6
Percentage of net smelter royalty on gold and silver minimum	0	2
Percentage of net smelter royalty on gold and silver maximum	0	15
Royalty payments to the Moeller Family Trust	90,360	0
Annual payments to Clifton Mining per each of the three locations	$ 0	$ 50,000

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DMRJ Group Funding Forbearance Agreement (Details) (USD $)	Jun. 29, 2012
Number of preferred stock shares series A 2 exchanged	80,000
Amount of repayment obligation of previous loan from DMRJ Group	$ 1,550,000
Number of preferred stock shares series A 2 issued to DMRJ Group	80,000
Value of preferred stock shares series A 2	920,000
Convertible common stock shares,.	800,000
Recent sales price of common stock	$ 1.15
Proceeds from equity financing	$ 3,000,000
Percentage of option to require the company to pay of the proceeds over $ 3000000 to DMRJ Group	25

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Convertible Debt Agreement (Details) (USD $)	Jul. 05, 2011
Number of shares issued by the note holders	75,000
Convertible price	$ 0.70
Additional common stock shares required to issue	300,000

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Capital Stock Preferred Stock Convertible Price (Details) (USD $)	Jun. 29, 2012
Series A 1 Preferred Stock Issue Price	$ (0.70)
Series A 2 Preferred Stock Issue Price	$ (1.00)
Initial conversion price of Series A 1 Preferred stock	$ 0.70
Initial conversion price of Series A 2 Preferred stock	$ 1.00
Percentage of beneficial conversion feature	4.9
Additional series A 2 Preferred Stock Issued	80,000
Number of convertible common stock share	800,000

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Commitments Employment Agreements (Details) (USD $)	Aug. 30, 2010
Base salary or fees to CEO and President	$ 120,000

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DMRJ Group Funding Debt Modifications And Extinguishments (Details) (USD $)	Jun. 30, 2011
Loss recognized on extinguishment of the DMRJ note by the company	$ 2,149,404

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DMRJ Group Funding Series A Preferred Stock (Details) (USD $)	Jul. 31, 2010
Series A Preferred Stock issued to DMRJ Group	958,033
Series A Preferred Stock par value	$ 0.001
Series A Prferred Stock value	$ 958
Discount on DMRJ Group Loan	$ 669,664
Common Stock Price	$ 0.70

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DMRJ Group Funding Finance Expenses (Details) (USD $)	3 Months Ended
	Jun. 30, 2012
Financing expenses recognized	$ 920,000

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MINERAL PROPERTIES AND LEASES

6 Months Ended

Jun. 30, 2012

MINERAL PROPERTIES AND LEASES

MINERAL PROPERTIES AND LEASES

NOTE 4 – MINERAL PROPERTIES AND LEASES

Mineral properties and leases as of June 30, 2012 and December 31, 2011 are as follows:

		June 30, 2012		December 31, 2011
Yellow Hammer Site
Initial Lease Fee	$	175,000	$	175,000
Asset retirement obligation		30,908		30,908
Total		205,908		205,908
Kiewit, Cactus Mill and all other sites
Initial Lease Fee		600,000		600,000
Asset retirement obligation		26,913		26,594
Total		626,913		626,594
Blue Fin Claims
Initial Purchase Price		2,735		2,735
Total		2,735		2,735
Total Mineral Properties and Leases	$	835,556	$	835,237

The Company holds operating interests within the Gold Hill Mining District in Tooele County, Utah, consisting originally of 419 unpatented mining claims, including an unpatented mill site claim, 42 patented claims, and seven Utah state mineral leases located on state trust lands, all covering approximately 33 square miles.  In August 2010, as a result of further evaluation, the Company allowed certain of the claims and leases to lapse back to Clifton Mining.  The Company has retained 334 unpatented claims, including the unpatented mill site claim, 42 patented claims, and five Utah state mineral leases located on state trust lands.  All but four of these mining claims and leases were obtained under the terms of the Amended and Restated Lease Agreement effective July 24, 2009, with Clifton Mining Company and Woodman Mining Company as lessors.  Rights to the four Yellow Hammer patented claims were obtained under the terms of the Amended and Restated Lease Agreement dated July 24, 2009, with the Jeneane C. Moeller Family Trust.  The properties are located approximately 190 miles west-southwest of Salt Lake City, Utah, and 56 miles south southeast of Wendover, Utah.  The Company intends to concentrate its exploration activities on the four patented Yellow Hammer claims, the Kiewit project consisting of seven of the unpatented Kiewit claims, Cane Springs, Oquirrh Springs, the Frankie, the Rustler, the Lion Vein, and the Lucy L sites.  Each of these is a potential near-term development target.  Mineral extraction activities on the property at this time will be open-pit and the Company anticipates conducting underground mining exploration in the future.  Annual lease fees are required on the 334 claims that make up the Company’s Gold Hill property.  Of these, four claims are within the Yellow Hammer site.  Annual claims fees are currently $140 per claim plus administrative fees.  The Company intends to renew 299 of the above claims in August 2012, at a total cost of about $42,000.

Kiewit Gold Project

The Company, through its lease agreement with Clifton Mining, has purchased all data, core samples and related reports from Dumont Nickel Inc. (which in 2010 changed its name to DNI Metals Inc. and was the former owner of the leases) associated with the aforementioned properties.  In addition, the Company has access to all data and related information available and held by Clifton Mining.  Desert Hawk has made application for a Large Mining Operations Permit to construct a heap leach facility and commence exploration activities on these claims.  This permit is estimated by management to be issued in the fall of 2012.

In January 2010 the Company submitted a Notice of Intent to Commence Large Mining Operations application for three surface mines and a heap leach gold operation on the Kiewit unpatented claims.  In February 2010 the Company submitted a Plan of Operation to the Bureau of Land Management and the Utah Division of Oil, Gas and Mining for exploratory drilling on the claims.  Issuance of these two permits is estimated for fall of 2012.

Cactus Mill Plant

Located on the Cactus Mill site are two process facilities, a 150 ton per day mill built by Woodman Mining and operated until the 1980’s.  The mill has equipment used to process copper, gold, silver, and tungsten ores from the district.  In addition there is a second facility constructed in the 1990’s for custom milling precious metals concentrates.  Equipment from both mills was used to construct a 240 ton per day pilot mill capable of recovering copper, gold, silver and tungsten ores initially extracted from the Yellow Hammer claims.  In September 2010 the Company completed its rebuild of the pilot mill and testing of the pilot plan was conducted.  Commencement of processing activities began in fourth quarter 2010.  Pursuant to the Company’s lease agreement with Clifton Mining, it has access to Cane Springs, a natural flowing spring approximately 1,000 feet above the Cactus Mill site, as well as the Cane Springs mine shaft located approximately one-quarter mile south of the Cactus Mill property.  The Company holds a permit from the Utah Division of Oil, Gas and Mining for the pilot plant which allows flotation and gravity concentration.  The Company has filed an application to amend its permit to operate the pilot mill to allow construction of a heap leach facility near the mill to process mineralized material from the Yellow Hammer claims.  Due to the extended response time from the permitting agencies, this application has temporarily been placed on hold.

The Company commenced operation of the Cactus Mill pilot plant in November 2010, processed and sold concentrates on a pilot test basis through June of 2011.  Operations at the Cactus Mill pilot plant have been temporarily suspended.

Yellow Hammer Claims

The Company holds a Small Mine Permit for the Yellow Hammer site from the Utah Division of Oil, Gas and Mining and has posted reclamation bonds totaling $60,800.  This permit stipulates that the Company may conduct exploration or mining operations on these claims so long as such activities are limited to an area within nine acres.

Blue Fin Claims

Additionally, the Company, through its wholly-owned subsidiary, Blue Fin Capital, Inc., holds eight unpatented mining claims in Yavapai County, Arizona.  The Company has no current plans to explore these claims.

Exploration Expenditures

Exploration expenditures incurred by the Company during the three and six months ended June 30, 2012 and 2011 were as follows:

		Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Six Months Ended June 30, 2012		Six Months Ended June 30, 2011
Assaying	$	1,133	$	4,836		12,602	$	12,220
Permitting		-		65,731		146,840		82,697
Equipment rental		-		-		-		-
Geological consulting fees		-		13,305		-		28,105
Maps and miscellaneous		38		1,708		77		6,614
Site development		65,157		-		-		-
Total Exploration Expenditures	$	66,328	$	85,580	$	159,519	$	129,636

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DMRJ Group Funding Related Amounts (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Yellow Hammer Advances	$ 2,500,000	$ 2,500,000
Accrued repayment obligation of 20 Percentage	588,235	588,235
Accrued prepaid interest obligation 15 of Percentage	441,175	441,175
Total Yellow Hammer Advances	3,529,410	3,529,410
Term Loan Advance Principal	1,000,000	1,000,000
Accrued repayment obligation 20 Percantage	235,294	235,294
Accrued prepaid interest obligation 15 Percentage	176,470	176,470
Total Term Loan Advance Principal	1,411,764	1,411,764
Total principal	4,941,174	4,941,174
Less related discounts and unamortized balances	(56,062)	(230,888)
Carrying Value	$ 4,885,112	$ 4,710,286

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Mineral Properties And Leases Yellow Hammer Claims (Details) (USD $)	Jun. 30, 2012
Total reclamation bonds posted	$ 60,800

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Mineral Properties And Leases Cactus Mill Plant (Details)	Jun. 30, 2012
Number of tons per day mill built by Woodman Mining and operated until the 1980s	150
Number of tons per day pilot mill capable of recovering copper, gold, silver and tungsten ores initially extracted from the Yellow Hammer claims	240

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DMRJ Group Funding Debt Current(Details) (USD $)	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012
Debt current including interest payable	$ 1,370,492	$ 2,945,000	$ 1,550,000

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Mineral Properties And Leases Exploration Expenditures (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Assaying	$ 12,602	$ 12,220	$ 12,602	$ 12,220
Permitting	146,840	82,697	146,840	82,697
Equipment rental	0	0	0	0
Geological consulting fees	0	13,305	0	28,105
Maps and miscellaneous	38	1,708	77	0
Site development	65,157	0	0	0
Total Exploration Expenditures	$ 66,328	$ 85,580	$ 159,519	$ 129,636

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Joint Venture (Details) (USD $)	Feb. 07, 2012
Percentage of interest acquired by Shoshone	50
Contribution from Shoshone	$ 10,000,000
Project Loan	2,000,000
Amount to be provided exclusive right by Shoshone	10,000,000
Non refundable advance deposit	100,000
Loan from Shoshone	2,000,000
Rate of interest on loan	10
Additional deposit agreed	200,000
Additional proceeds received	100,000
Additional fund to be received from Shoshone	$ 100,000

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CAPITAL STOCK

6 Months Ended

Jun. 30, 2012

CAPITAL STOCK

CAPITAL STOCK

NOTE 3 - CAPITAL STOCK

Common Stock

The Company is authorized to issue 100,000,000 shares of common stock.  All shares have equal voting rights and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.

An equity financing was initiated in third quarter of 2011.  This financing raised $355,833 through sales of 309,420 shares of common stock.  This offering concluded January 31, 2012.   A separate equity financing was initiated February 20, 2012 for the sale of up to 2,000,000 shares of stock.  No sales were recorded in conjunction with this offering, which ended June 30, 2012.

Preferred Stock

In July 2010 the Company filed a Certificate of Designations with the State of Nevada to create 958,033 shares of Series A Preferred Stock. The Series A Preferred Shares have voting rights with the common stock equal to the conversion value of the preferred shares into common shares.

In July 2010 the Company issued 958,033 shares of its Series A Preferred Stock to DMRJ Group in connection with financing (see Note 8). These preferred shares are convertible into shares of the Company’s common stock at the rate of one common share for each preferred share converted, subject to certain adjustments.

In connection with the Fourth Amendment to the DMRJ Group funding (see Note 8), on May 3, 2011, the Company created and designated 2,500,000 shares of its authorized preferred stock as Series A-1 Preferred Stock and 1,000,000 shares as Series A-2 Preferred Stock.  During the quarter ended June 30, 2011, 100,000 shares of Series A-2 Preferred stock were issued in connection with this Fourth Amendment.  These shares are convertible by the holder into 1,000,000 shares of the Company’s common stock, subject to the beneficial ownership rules detailed below.

Each share of Series A-1 Preferred Stock and Series A-2 Preferred Stock is convertible at the option of the holder at any time into that number of shares of common stock equal to (i) for the Series A-1 Preferred Stock ten times the Series A-1 Issue Price ($0.70) divided by the conversion price for Series A-1 Preferred and (ii) for the Series A-2 Preferred Stock ten times the Series A-2 Issue Price ($1.00) divided by the conversion price for such Series A-2 Preferred Stock.  The initial conversion price of the Series A-1 preferred stock is $0.70 per share and the conversion price of the Series A-2 preferred stock is $1.00.  If the Company issues or sell shares of its common stock, or grant options or other convertible securities which are exercisable or convertible into common shares, at prices less than the conversion price of Series A-1 or A-2 shares, except in certain exempted situations, then the conversion price of the Series A-1 and A-2 shares will be reduced to this lower of sale or conversion price.  The Series A-1 and A-2 shares may not be converted into common shares if the beneficial owner of such shares would thereafter exceed 4.9% of the outstanding common shares.

In connection with the Forbearance Agreement of the DMRJ Group funding arrangement (see Note 8) dated June 29, 2012, an additional 80,000 shares of Series A-2 Preferred stock were issued.  These shares are convertible by the holder into 800,000 shares of the Company’s common stock, subject to the beneficial ownership rules mentioned above. 

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Convertible Debt Promissoy Notes (Details) (USD $)	Nov. 18, 2009
Convertible promissoy notes to two minority shareholders	$ 600,000
Interest rate of convertible promissoy notes	15
Monthly interest payable	7,500
Conversion price per share	$ 1.50
Reduced conversion price	$ 0.70
Convertible common stock shares	857,143
Bonues shares issued	300,000
Rate of amount for on share of loaned	2
Debt discount accreted over the life of the loan	$ 210,000

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DMRJ Group Funding Third Amendment (Details) (USD $)	Mar. 11, 2011
Loan advance to be received as per the third amendment	$ 500,000
Amount of two term loan advances received	125,000
Amount of failed to make its mandatory prepayment to DMRJ Group by the Company	$ 1,011,616

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CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash	$ 72,849	$ 415,090
Accounts Receivable	0	66,883
Prepaid expenses and other current assets	50,504	92,195
Total Current Assets	123,353	574,168
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $123,590 and $88,976	343,142	377,757
MINERAL PROPERTIES AND LEASES (Note 4)	835,556	835,237
RECLAMATION BONDS (Note 4)	150,581	149,981
TOTAL ASSETS	1,452,632	1,937,143
CURRENT LIABILITIES
Accounts payable	33,489	6,771
Accrued expenses	1,072	22,886
Deposit on joint venture agreement	100,000	0
Derivative liability-put option (Notes 4, 7 and 9)	0	25,193
Derivative liability-conversion option (Notes 7 and 8)	231,518	230,714
Interest payable	720,588	419,559
Notes payable-net of discount (Note 8)	4,885,112	4,710,286
Convertible debt-net of discount (Note 6)	569,764	534,764
Total Current Liabilities	6,541,543	5,950,173
LONG-TERM LIABILITIES
Asset retirement obligation	60,701	57,502
TOTAL LIABILITIES	6,602,244	6,007,675
COMMITMENTS (Note 9)
STOCKHOLDERS' DEFICIT (Note 3)
Preferred Stock, $0.001 par value, 10,000,000 shares authorized Series A: 958,033 shares issued and outstanding	958	958
Preferred Stock, $0.001 par value, 10,000,000 shares authorized Series A 1: No shares issued and outstanding	0	0
Preferred Stock, $0.001 par value, 10,000,000 shares authorized Series A 2: 180,000 and 100,000 shares issued and outstanding, respectively	180	100
Common stock, $0.001 par value, 100,000,000 shares authorized; 8,428,831 and 8,314,883 shares issued and outstanding, respectively	8,431	8,316
Additional paid-in capital	6,066,019	5,058,563
Accumulated deficit prior to exploration stage	(1,016,591)	(1,016,591)
Accumulated deficit during exploration stage	(10,208,609)	(8,121,878)
Total Stockholders' Deficit	(5,149,612)	(4,070,532)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 1,452,632	$ 1,937,143

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DMRJ Group Funding Series A 1 And Series A 2 Preferred Stock (Details) (USD $)	Jun. 30, 2012
Fair value of the embedded conversion option liability	$ 108,279
Percentage of dividend yield	0
Percentage of expected volatility	96.8
Risk free interest rate	0.40
Expected life	1.25
Conversion option derivative liability	231,518
Series A 2 Preferred Stock Shares issued to DMRJ Group	100,000
Series A 2 Preferred Stock Value DMRJ Group	$ 700,000
Convertible common stock shares,	1,000,000
Fair value of common stock shares	$ 0.70

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ORGANIZATION AND DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2012

ORGANIZATION AND DESCRIPTION OF BUSINESS

ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Desert Hawk Gold Corp. (the “Company”) was incorporated on November 5, 1957, in the State of Idaho as Lucky Joe Mining Company.  On July 17, 2008 the Company merged with its wholly-owned subsidiary, Lucky Joe Mining Company, a Nevada corporation, for the sole purpose of effecting a change in domicile from the State of Idaho to the State of Nevada.  Lucky Joe Mining Company (Nevada) was the continuing and surviving corporation and each outstanding share of Lucky Joe Mining Company (Idaho) was converted into one outstanding share of Lucky Joe Mining Company (Nevada).  On April 3, 2009, the Company filed a Certificate of Amendment with the State of Nevada changing the name of the Company to Desert Hawk Gold Corp.

The Company was originally incorporated to pursue the mining business through the acquisition of prospective mining claims in the Wallace and Kellogg mining districts of Northern Idaho.  The Company never successfully generated any revenue or joint ventures from any of the activities it pursued and abandoned the mining business as a viable business model when the commodity prices cycled downward.  The Company remained dormant until it recommenced its mining activities and entered the exploration stage on May 1, 2009.  The Company is considered an exploration stage company and its financial statements are presented in a manner similar to a development stage company as defined in ASC 915-10-05 and interpreted by the Securities and Exchange Commission for mining companies in Industry Guide 7.

On December 31, 2009, the Company acquired all of the outstanding stock of Blue Fin Capital, Inc. (“Blue Fin”), a Utah corporation owning mining claims in Arizona.  The Company issued a total of 2,713,636 shares of its common stock to the shareholders of Blue Fin for all of the outstanding shares of Blue Fin.  Blue Fin was acquired from a related party, so the acquisition was recorded at the historical cost of Blue Fin.  Blue Fin became a wholly-owned subsidiary of the Company and all inter-company accounts have been eliminated.

These unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information.  Accordingly, these financial statements do not include all of the disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.  These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2011.  In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented.  Operating results for the six month period ended June 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

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Derivative Liabilities OutStanding Derivative Instruments (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Derivative Instruments Put option expired on March 30, 2012	$ 0	$ 25,193
Derivative Instruments Conversion option	$ 231,518	$ 230,714

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Capital Stock Common Stock (Details) (USD $)	Jun. 30, 2012	Feb. 20, 2012
Common stocks shares authorized	100,000,000	0
Finanicing raised through sales of common stock	$ 355,833	$ 0
Number of common stock shares sold	309,420	2,000,000

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DMRJ Group Funding Loan (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011	Jul. 14, 2010
Committed Loan Amount From DMRJ	$ 0	$ 0	$ 6,500,000
The maximum amounts allocable to the Yellow Hammer	0	0	2,500,000
The maximum amounts allocable to the Kiewit projects	0	0	2,750,000
Proceeds received loan advances from DMRJ Group	$ 3,500,000	$ 3,500,000	$ 0
Interest rate of principal advance amount	15	0	0
Percentage of additional amount equal to the principal and interest amount being repaid or prepaid.	20	0	0

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Capital Stock Series A 2 Preferred Stock (Details)	3 Months Ended
	Jun. 30, 2011
Series A 2 Preferred Stock shares issued	100,000
Number of convertible common stock shares	1,000,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Mineral Exploration and Development Costs

The Company accounts for mineral exploration and development costs in accordance with ASC Topic 930 Extractive Activities - Mining.  All exploration expenditures are expensed as incurred, previously capitalized costs are expensed in the period the property is abandoned.  Expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and amortized on units of production basis over proven and probable reserves.

Mineral Properties and Leases

The Company accounts for mineral properties in accordance with ASC Topic 930 Extractive Activities-Mining.  Costs of acquiring mineral properties and leases are capitalized by project area upon purchase of the associated claims (see Note 4).  Mineral properties are periodically assessed for impairment of value.

Earnings Per Share

Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period.  Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share.  At June 30, 2012, common stock equivalents outstanding are 1,178,575 and 2,038,033 shares of common stock into which the convertible debt (see Note 6) and preferred stock (see Note 3), respectively, can be converted.  However, the diluted earnings per share are not presented because its effect would be anti-dilutive due to the Company’s net loss.

Going Concern

As shown in the accompanying financial statements, the Company had an accumulated deficit incurred through June 30, 2012, which raises substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

The Company will need significant funding to continue operations and increase development through the next fiscal year.  The timing and amount of capital requirements will depend on a number of factors, including demand for products and services and the availability of opportunities for expansion through affiliations and other business relationships.  Management intends to continue to seek new capital from equity securities issuances to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan.

If the going concern assumption were not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

Reclassifications

Certain reclassifications have been made to conform the prior period’s data to the current presentation.  These reclassifications have no effect on the results of reported operations or stockholders’ deficit.

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CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $)	Jun. 30, 2012	Dec. 31, 2011
Accumulated depreciation on Property and Equipment	$ 123,590	$ 88,976
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	10,000,000	50,000,000
Preferred Stock Series A, shares issued	958,033	958,033
Preferred Stock Series A, shares outstanding	958,033	958,033
Preferred Stock Series A 1, shares issued	0	0
Preferred Stock Series A 1, shares outstanding	0	0
Preferred Stock Series A-2, shares issued	180,000	180,000
Preferred Stock Series A-2, shares outstanding	100,000	100,000
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	100,000,000	100,000,000
Common Stock, shares issued	8,396,689	8,314,883
Common Stock, shares outstanding	8,396,689	8,314,883

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MINERAL PROPERTIES AND LEASES (TABLES)

6 Months Ended

Jun. 30, 2012

MINERAL PROPERTIES AND LEASES (TABLES)

MINERAL PROPERTIES AND LEASES (TABLES)

Mineral properties and leases as of June 30, 2012 and December 31, 2011 are as follows:

		June 30, 2012		December 31, 2011
Yellow Hammer Site
Initial Lease Fee	$	175,000	$	175,000
Asset retirement obligation		30,908		30,908
Total		205,908		205,908
Kiewit, Cactus Mill and all other sites
Initial Lease Fee		600,000		600,000
Asset retirement obligation		26,913		26,594
Total		626,913		626,594
Blue Fin Claims
Initial Purchase Price		2,735		2,735
Total		2,735		2,735
Total Mineral Properties and Leases	$	835,556	$	835,237

Exploration Expenditures (Tables)

Exploration Expenditures

Exploration expenditures incurred by the Company during the three and six months ended June 30, 2012 and 2011 were as follows:

		Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Six Months Ended June 30, 2012		Six Months Ended June 30, 2011
Assaying	$	1,133	$	4,836		12,602	$	12,220
Permitting		-		65,731		146,840		82,697
Equipment rental		-		-		-		-
Geological consulting fees		-		13,305		-		28,105
Maps and miscellaneous		38		1,708		77		6,614
Site development		65,157		-		-		-
Total Exploration Expenditures	$	66,328	$	85,580	$	159,519	$	129,636

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 14, 2012
Document and Entity Information
Entity Registrant Name	Desert Hawk Gold Corp.
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Entity Central Index Key	0001168081
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		8,428,831
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

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DERIVATIVE LIABILITIES (TABLES)

6 Months Ended

Jun. 30, 2012

DERIVATIVE LIABILITIES (TABLES)

Fair Value Of Outstanding Derivative Instruments

The Fair Value Of Outstanding Derivative Instruments not designed as hedging instruments on the accompanying Consolidated Balance Sheets was as follows:

Derivative Instruments		June 30, 2012		December 31, 2011
Put option		Expired – 3/30/12	$	25,193
Conversion option	$	231,518	$	230,714

Black-Scholes Option-Pricing Model

A Black-Scholes Option-Pricing Model was used to estimate the fair value, using Level 2 inputs, of the Company’s derivatives using the following assumptions at June 30, 2012 and December 31, 2011:

	Number of Shares	Volatility	Risk-Free Rate	Expected Life (in years)		Stock price
June 30, 2012
Conversion option	413,021	128.73%	.13%	.38	$	1.15
December 31, 2011
Put option	60,824	116.41%	.06%	.164	$	1.15
Conversion option	407,435	91.72%	.90%	.77	$	1.15

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CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (USD $)	3 Months Ended		6 Months Ended		38 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012
INCOME EARNED DURING EXPLORATION STAGE
Concentrate sales	$ 0	$ 669,580	$ 0	$ 884,580	$ 969,905
EXPENSES
General project costs	42,025	415,850	103,898	922,728	1,589,643
Exploration expense	66,328	85,580	159,519	129,636	1,530,103
Consulting	33,000	89,670	71,940	120,670	534,344
Officers and directors fees	46,154	136,837	106,923	190,298	947,858
Legal and professional	13,556	42,955	52,410	65,496	416,859
General and administrative	31,360	38,196	83,460	107,418	529,000
Depreciation	17,402	16,542	34,615	32,255	124,957
Total of Expenses	249,825	825,630	612,765	1,568,501	5,672,764
OPERATING LOSS	(249,825)	(156,050)	(612,765)	(683,921)	(4,702,859)
OTHER INCOME (EXPENSE)
Interest and other income	0	0	0	15	63,986
Change in fair value of derivatives	17,558	23,328	24,389	23,328	(96,843)
Loss on extinguishment of debt (Note 8)	0	(2,149,404)	0	(2,149,404)	(2,149,404)
Gain or loss on sale of investment	0	0	0	0	(1,135)
Financing expense	(966,099)	(44,842)	(1,037,568)	(300,787)	(1,885,331)
Interest expense	(245,850)	(234,466)	(460,787)	(370,145)	(1,437,023)
Total of Other Expense	(1,194,391)	(2,405,384)	(1,473,966)	(2,796,993)	(5,505,750)
LOSS BEFORE INCOME TAXES	(1,444,216)	(2,561,434)	(2,086,731)	(3,480,914)	(10,208,609)
INCOME TAXES	0	0	0	0	0
NET LOSS	$ (1,444,216)	$ (2,561,434)	$ (2,086,731)	$ (3,480,914)	$ (10,208,609)
BASIC AND DILUTED NET LOSS PER SHARE	$ (0.17)	$ (0.33)	$ (0.25)	$ (0.45)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED	8,397,046	7,827,960	8,376,802	7,719,002

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DERIVATIVE LIABILITIES

6 Months Ended

Jun. 30, 2012

DERIVATIVE LIABILITIES

DERIVATIVE LIABILITIES

NOTE 7 – DERIVATIVE LIABILITIES

The fair value of outstanding derivative instruments not designed as hedging instruments on the accompanying Consolidated Balance Sheets was as follows:

Derivative Instruments		June 30, 2012		December 31, 2011
Put option		Expired – 3/30/12	$	25,193
Conversion option	$	231,518	$	230,714

A Black-Scholes option-pricing model was used to estimate the fair value, using Level 2 inputs, of the Company’s derivatives using the following assumptions at June 30, 2012 and December 31, 2011:

	Number of Shares	Volatility	Risk-Free Rate	Expected Life (in years)		Stock price
June 30, 2012
Conversion option	413,021	128.73%	.13%	.38	$	1.15
December 31, 2011
Put option	60,824	116.41%	.06%	.164	$	1.15
Conversion option	407,435	91.72%	.90%	.77	$	1.15

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CONVERTIBLE DEBT

6 Months Ended

Jun. 30, 2012

CONVERTIBLE DEBT

CONVERTIBLE DEBT

NOTE 6 – CONVERTIBLE DEBT

On November 18, 2009, the Company issued convertible promissory notes to two of its minority shareholders, for a total of $600,000.  The notes bear interest at 15% per annum.  Interest-only is payable in equal monthly installments of $7,500.  The notes were originally convertible at any time at a rate of $1.50 per share, but on July 14, 2010 the promissory notes were amended thereby reducing the conversion price to $.70 due to the note holders’ agreement to subordinate their debt to DMRJ Group (see Note 8).  The notes are convertible into potentially 857,143 shares of common stock, and principal and interest are due November 30, 2012, or 30 months from the date of issuance.  On November 18, 2009, the holders of the notes were issued 300,000 bonus shares at a rate of one share for each $2 loaned, resulting in a debt discount of $210,000 that is being accreted over the life of the loan.

On July 5, 2011 the Company entered into an agreement with the two holders of the convertible debt to begin paying their monthly interest in stock rather than cash.  The note holders have been issued 75,000 shares of stock each, valued at $.70, to convert accrued interest for the months of May 2011 through June 2012.

In the event the Company fails to repay the loan or interest thereon in full on the maturity date of November 30, 2012, the Company will be required to issue an additional 300,000 shares of common stock.  Funding of these notes payable is under discussion as part of the negotiations with DMRJ Group regarding a future business relationship.  See Note 8.

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Capital Stock Preferred Stock (Details)	May 03, 2011	Jul. 31, 2010
Designated preferred stock shares series A	0	958,033
Preferred stock shares series A issued to DMRJ Group	0	958,033
Designated preferred stock shares series A 1	2,500,000	0
Designated preferred stock shares series A 2	1,000,000	0

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DMRJ GROUP FUNDING (TABLES)

6 Months Ended

Jun. 30, 2012

DMRJ GROUP FUNDING (TABLES)

Summary Of DMRJ Group Related Amounts

A Summary Of DMRJ Group-Related Amounts as of June 30, 2012 and December 31, 2011 is as follows:

	June 30, 2012	December 31, 2011
	$		$
Yellow Hammer Advances		2,500,000		2,500,000
20% accrued repayment obligation		588,235		588,235
15% accrued prepaid interest obligation		441,175		441,175
		3,529,410		3,529,410
Term Loan Advance Principal		1,000,000		1,000,000
20% accrued repayment obligation		235,294		235,294
15% accrued prepaid interest obligation		176,470		176,470
		1,411,764		1,411,764
Total principal		4,941,174		4,941,174
Less related discounts and unamortized balances		(56,062)		(230,888)
Carrying Value	$	4,885,112	$	4,710,286

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2012

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 10 – SUBSEQUENT EVENTS

 On June 29, 2012, the Company entered into a forbearance agreement with DMRJ which extended the due date of the June 30 loan payment to September 30, 2012 in exchange for 80,000 shares of Series A-2 Preferred stock.  Pursuant to the Company’s Investment Agreement with DMRJ Group, on June 30, 2012, the Company was obligated to repay $1,550,000 of the funds previously loaned to the Company by DMRJ Group.  Pursuant to the forbearance agreement DMRJ Group agreed to forbear from exercising its rights relating to a payment default if the payment due on June 30, 2012, was not paid.  The Company failed to make the payment on June 30, 2012, and therefore an event of default occurred under the investment agreement, subject to DMRJ Group’s agreement to forbear exercise its rights because of this default.  Because the terms of the forbearance agreement were not met, it was terminated or expired on July 31, 2012.  Under the Investment Agreement, DMRJ Group therefore has the right at its option to notify the Company and declare the full amount of all of the loans immediately due and payable, foreclose on the security for the loans, or exercise any other legal rights based upon breach of the agreement.  DMRJ Group has not notified the Company of its intent to exercise any of its rights based upon default of the Company under the agreement.  Negotiations regarding a future business relationship to fund the DMRJ Group note and provide equity for operations capital are currently ongoing.

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DMRJ GROUP FUNDING

6 Months Ended

Jun. 30, 2012

DMRJ GROUP FUNDING

DMRJ GROUP FUNDING

NOTE 8 – DMRJ GROUP FUNDING

On July 14, 2010, the Company entered into an Investment Agreement with DMRJ Group I, LLC (“DMRJ Group”).  According to the original terms of the agreement, DMRJ Group has committed to loan the Company up to $6,500,000 pursuant to certain terms and conditions as evidenced by a promissory note, under which advances made to the Company were due not later than July 14, 2012.  These loan advances could only be used by the Company to pay transaction fees and expenses incurred in connection with the loan transaction, to purchase certain mining equipment, and as working capital to advance our Yellow Hammer and Kiewit mining activities.  The maximum amounts allocable to the Yellow Hammer and Kiewit projects were $2,500,000 and $2,750,000, respectively, and were subject to meeting certain milestones on the projects.  Advances for operations on the Kiewit project are conditioned upon the Company’s ability to obtain and maintain all environmental and mining permits necessary to commence mining activities and the timely payment of the initial Yellow Hammer advances.  The Company had received loan advances from DMRJ Group for total principal due of $3,500,000 at June 30, 2012 and December 31, 2011.

Each principal advance amount bears interest of 15% per annum from the date of borrowing.  The Company was required to prepay interest on any advance that would accrue during the first year following the advance, or a shorter period if the advance is less than one year prior to the maturity date of the promissory note.  This prepayment of interest was nonrefundable if the Company prepays the advance or goes into default.  In addition, at the time the Company repays or prepays the advance, it was required to pay an additional amount equal to 20% of the principal and interest amount being repaid or prepaid.

In July 2010, in connection with this agreement, the Company issued 958,033 shares of its Series A Preferred Stock to DMRJ Group at $.001 par value for $958 cash.  The Company recorded a discount to the DMRJ Group loan proceeds in the amount of $669,664, which was the common stock price of $.70 less the cash received for the preferred stock.

Loan advances made for the Yellow Hammer and Kiewit projects were subject to mandatory prepayments by the Company.  Yellow Hammer advances were originally to be repaid, together with prepayment interest and any outstanding monthly interest, commencing on or before the fifth business day of the month beginning February 2011 and each month thereafter through September 2011.  Kiewit advances were to be repaid, together with prepayment interest and any outstanding monthly interest, beginning month seven after the initial advance on this project through month twelve.  However, the repayment dates have been deferred due to waivers, forbearances, and amendments to the Initial Investment Agreement as stated in the following paragraphs.

Pursuant to a Security Agreement dated July 14, 2010, the Company has secured repayment of any advances made by DMRJ Group with all of its assets, including its shares of Blue Fin Capital, Inc., the Company’s wholly-owned subsidiary.

In connection with the DMRJ Group transaction, both of the Company’s convertible note holders, each of whom had loaned $300,000 to the Company on November 18, 2009, agreed to subordinate their debt to DMRJ Group.  In consideration for their agreement to subordinate their loans, the Company reduced the conversion price of the loans from $1.50 to $0.70 per share (see Note 6).  All other material terms of the loans remain unchanged.

On February 25, 2011, the Company entered into a Second Amendment to Investment Agreement with DMRJ Group which amended the Investment Agreement, dated as of July 14, 2010, as amended by the First Amendment and Waiver dated as of November 8, 2010.  The Second Amendment allowed the Company to receive a term loan advance of up to $125,000.  This advance was made without satisfying the provisions requiring the Company to meet certain milestones in connection with its Kiewit properties and permitting the Company to use the funds for working capital and ordinary course general corporate purposes not inconsistent with or prohibited by the Investment Agreement.  The advance was not deemed to be a Kiewit Advance, which means that it was not subject to the mandatory prepayment requirements under the Investment Agreement.

On March 6, 2011, the Company entered into a Forbearance Agreement with DMRJ Group pursuant to which DMRJ Group agreed to forbear until April 6, 2011, from exercising its rights and remedies with respect to an event of default by virtue of the Company’s failure to make a mandatory prepayment as required under the Investment Agreement.  The Company failed to make the mandatory prepayment to DMRJ Group on March 7, 2011, as required in the Investment Agreement.  Pursuant to the Forbearance Agreement if the Company cured this prepayment default on or prior to April 6, 2011; no default interest will be due with respect to the period between the date of the prepayment default and April 6, 2011.

On March 11, 2011, the Company entered into a Third Amendment to Investment Agreement with DMRJ Group.  This amendment allows the Company to make a further request for a term loan advance under the Investment Agreement of up to $500,000 without satisfying the provisions requiring the Company to meet certain milestones in connection with the Kiewit properties and permitting the Company to use the funds for working capital and ordinary course general corporate purposes not inconsistent with or prohibited by the Investment Agreement.  Two $125,000 term loan advances were received as part of this amendment.  These advances are not deemed to be Kiewit Advances, which means that they were not subject to the mandatory prepayment requirements under the Investment Agreement.

The Company failed to make its mandatory prepayment of $1,011,616 to DMRJ Group on April 7, 2011, as required pursuant to the Investment Agreement with DMRJ Group, and thus entered into a Fourth Amendment.

On April 21, 2011, the Company entered into a Fourth Amendment to Investment Agreement with DMRJ Group.  This amendment allowed the Company to make a further request for a term loan advance under the Investment Agreement of up to $625,000 without satisfying the provisions requiring the Company to meet certain milestones in connection with the Kiewit properties and permitting the Company to use the funds for working capital and ordinary course general corporate purposes not inconsistent with or prohibited by the Investment Agreement.  The advance was not deemed to be a Kiewit Advance, which means that it was not subject to the mandatory prepayment requirements under the Investment Agreement.  The Amendment also eliminated the requirement of the Investment Agreement to make mandatory prepayments for the Yellow Hammer advances.

The Company considered the impact of ASC 470-50 “Debt-Modifications and Extinguishments” on the accounting treatment of the Fourth Amendment.  ASC 470-50 states that a transaction resulting in a significant change in the nature of a debt instrument should be accounted for as an extinguishment of debt.  The difference between the reacquisition price and the net carrying amount of the extinguished debt was recognized currently in income of the period of extinguishment.  The Company concluded that the amendment constituted a substantial modification.  During the quarter ended June 30, 2011, the Company recognized a loss on extinguishment of the DMRJ note of $2,149,404 representing the difference between the fair value of the amended note, including consideration and fees, and the carrying value of the original note, including related unamortized discount.

A summary of DMRJ Group-related amounts as of June 30, 2012 and December 31, 2011 is as follows:

	June 30, 2012	December 31, 2011
	$		$
Yellow Hammer Advances		2,500,000		2,500,000
20% accrued repayment obligation		588,235		588,235
15% accrued prepaid interest obligation		441,175		441,175
		3,529,410		3,529,410
Term Loan Advance Principal		1,000,000		1,000,000
20% accrued repayment obligation		235,294		235,294
15% accrued prepaid interest obligation		176,470		176,470
		1,411,764		1,411,764
Total principal		4,941,174		4,941,174
Less related discounts and unamortized balances		(56,062)		(230,888)
Carrying Value	$	4,885,112	$	4,710,286

This debt is all current in nature and was due in three installments (which include interest payable) of $1,550,000 on June 30, 2012, $2,945,000 on September 30, 2012 and $1,370,492 on December 31, 2012.  On June 29, 2012 a forbearance agreement was signed and the payment terms were changed to allow the Company three additional months to repay the DMRJ note.

The Fourth Amendment contained provisions for DMRJ Group to elect to convert the outstanding payable balances to shares of Series A-1 preferred stock (for the Yellow Hammer Advances) and Series A-2 Preferred Stock (for the Term Loan Advances).  See description of the Preferred Stock in Note 3.

The Series A-1 and Series A-2 Preferred Stock are convertible into shares of the Company’s common stock.  The conversion rate of the Preferred Stock to shares of the Company’s common stock is adjustable based upon factors not found in a standard fixed-for-fixed pricing model. As such, the Company considered the provisions of ASC 815 “Derivatives and Hedging”, and recorded the fair value of $108,279 for the embedded conversion option liability associated with the amended agreement with an offset to the carrying value of the debt.  The assumptions used in the Black-Scholes option pricing model at May 3, 2011, were as follows: (1) dividend yield of 0%; (2) expected volatility of 96.8%, (3) risk-free interest rate of 0.40%, and (4) expected life of 1.25 years.  The conversion option liability is adjusted to its fair value at the end of each reporting period with the change in fair value recognized in net income (loss).  The conversion option derivative liability at June 30, 2012 is recorded at $231,518 (see Note 7).

Also in connection with entering the Fourth Amendment the Company issued 100,000 shares of Series A-2 Preferred Stock valued at $700,000 to DMRJ Group.  The value was determined by calculating the number of common shares into which the Series A-2 preferred shares were convertible (1,000,000 common shares) times the current fair value for shares of common stock ($0.70).  The Company recognized the amount in the loss on extinguishment of debt related to the Fourth Amendment.

On June 29, 2012, the Company entered into a forbearance agreement with DMRJ which extended the due date of the June 30, 2012 loan payment to September 30, 2012 in exchange for 80,000 shares of Series A-2 Preferred stock.  Pursuant to the Company’s Investment Agreement with DMRJ Group, on June 30, 2012, the Company was obligated to repay $1,550,000 of the funds previously loaned to the Company by DMRJ Group.  Pursuant to the forbearance agreement DMRJ Group agreed to forbear from exercising its rights relating to a payment default if the payment due on June 30, 2012, was not paid.  The Company failed to make the payment on June 30, 2012, and therefore an event of default occurred under the investment agreement, subject to DMRJ Group’s agreement to forbear exercise its rights because of this default.  Because the terms of the forbearance agreement were not met, it was terminated or expired on July 31, 2012.  Under the Investment Agreement, DMRJ Group therefore has the right at its option to notify the Company and declare the full amount of all of the loans immediately due and payable, foreclose on the security for the loans, or exercise any other legal rights based upon breach of the agreement.  DMRJ Group has not notified the Company of its intent to exercise any of its rights based upon default of the Company under the agreement.  Negotiations regarding a future business relationship to fund the DMRJ Group note and provide equity for operations capital are currently ongoing.

In connection with the DMRJ Group Forbearance Agreement signed June 29, 2012, the Company issued 80,000 shares of Series A-2 Preferred Stock valued at $920,000 to DMRJ Group.  This value was determined by calculating the number of common shares into which the Series A-2 preferred shares were convertible (800,000 common shares) times the current fair value (most recent sales price) for shares of common stock ($1.15).  Financing expense in the amount of $920,000 was recognized for the quarter ended June 30, 2012 for this stock issuance pursuant to the Forbearance Agreement.

In the event the Company completes an equity financing with net proceeds of more than $3,000,000, DMRJ Group will have the option to require the Company to pay 25% of the proceeds over $3,000,000 to satisfy our indebtedness to them.

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COMMITMENTS

6 Months Ended

Jun. 30, 2012

COMMITMENTS

COMMITMENTS

NOTE 9 – COMMITMENTS

Mining Properties

During the year ended December 31, 2009 the Company entered into a Joint Venture Agreement with the Moeller Family Trust for the leasing of the Trust’s Yellow Hammer property in the Gold Hill Mining District of Utah.  Pursuant to the agreement, Moeller Family Trust received 250,000 shares of the Company’s restricted common stock.  If the Company does not place the Yellow Hammer property into commercial production within a three year period it will be required to make annual payments to the Trust of $50,000.  Under the terms of the Joint Venture agreement, the Company will be required to pay a 6% net smelter royalty on the production of base metals and a net smelter royalty on gold and silver based on a sliding scale of between 2% and 15% based on the price of gold and silver, as applicable.  The Company put the property into commercial production in 2011 which resulted in royalty payments to the Moeller Family Trust in the amount of $90,360 during 2011.  Operations have been temporarily suspended and royalties are not currently accruing.

Also during the year ended December 31, 2009, the Company entered into a Joint Venture Agreement with the Clifton Mining Company and the Woodman Mining Company for the leasing of their property interests in the Gold Hill Mining District of Utah. Under the terms of the Joint Venture agreement, the Company will be required to pay a 4% net smelter royalty on base metals in all other areas except for production from the Kiewit gold property and a net smelter royalty on gold and silver, except for production from the Kiewit gold property, based on a sliding scale of between 2% and 15% based on the price of gold or silver, as applicable.  The Company will also be required to pay a 6% net smelter return on any production from the Kiewit gold property.  Additionally, if the Company does not place the Kiewit, Clifton Shears/smelter tunnel deposit, and the Cane Springs deposits into commercial production within the  three year period ending July 24, 2012, it will be required to make annual payments to Clifton Mining in the amount of $50,000 per each of the three locations.  The terms of this lease were renegotiated on June 30, 2012 and payment due dates for the properties for 2012 have been extended as shown below.  The July 24, 2012 payment was timely made.

                                Kiewit property                                                   July 24, 2012

                                Clifton Shears/smelter tunnel property           October 24, 2012

                                Cane Springs property                                        December 24, 2012

In September 2009, the Company acquired all of the rights and interests of Clifton Mining in a $42,802 reclamation contract and cash surety deposit with the State of Utah Division of Oil, Gas and Mining for the property covered by the joint venture.  As consideration for Clifton Mining selling its interest in the reclamation contract and surety deposit, the Company issued 60,824 shares to Clifton Mining.  For a period of two years the Company had the right to repurchase the shares for $48,000 or during the 180-day period after this two year period, Clifton Mining had the option to put the shares to the Company for $48,000.  In connection with the issuance of this put option, management concluded that the 60,824 shares should be recorded as a derivative liability, and not as equity.  The put option expired March 30, 2012.

Employment Agreements

In September 2010, the Company entered into employment agreements with its Chief Executive Officer (“CEO”) and its President and entered into a consulting agreement with one of its directors.  Each agreement is for an initial term of between three months and four years and provides for base salary or fees of $120,000 per year.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (POLICIES)

6 Months Ended

Jun. 30, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (POLICIES)

Mineral Exploration and Development Costs

Mineral Exploration and Development Costs

The Company accounts for mineral exploration and development costs in accordance with ASC Topic 930 Extractive Activities - Mining.  All exploration expenditures are expensed as incurred, previously capitalized costs are expensed in the period the property is abandoned.  Expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and amortized on units of production basis over proven and probable reserves.

Mineral Properties and Leases

Mineral Properties and Leases

The Company accounts for mineral properties in accordance with ASC Topic 930 Extractive Activities-Mining.  Costs of acquiring mineral properties and leases are capitalized by project area upon purchase of the associated claims (see Note 4).  Mineral properties are periodically assessed for impairment of value.

Earnings Per Share

Earnings Per Share

Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period.  Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share.  At June 30, 2012, common stock equivalents outstanding are 1,178,575 and 2,038,033 shares of common stock into which the convertible debt (see Note 6) and preferred stock (see Note 3), respectively, can be converted.  However, the diluted earnings per share are not presented because its effect would be anti-dilutive due to the Company’s net loss.

Going Concern

Going Concern

As shown in the accompanying financial statements, the Company had an accumulated deficit incurred through June 30, 2012, which raises substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

The Company will need significant funding to continue operations and increase development through the next fiscal year.  The timing and amount of capital requirements will depend on a number of factors, including demand for products and services and the availability of opportunities for expansion through affiliations and other business relationships.  Management intends to continue to seek new capital from equity securities issuances to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan.

If the going concern assumption were not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

Reclassifications

Reclassifications

Certain reclassifications have been made to conform the prior period’s data to the current presentation.  These reclassifications have no effect on the results of reported operations or stockholders’ deficit.

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Derivativ Liability Fair Value (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Conversion Option Number Of Shares expected life 0.38 years and 0.77 years	413,021	407,435
Put Option Number Of Shares expected life 0.164 years	0	60,824
Conversion Option Volatility	128.73	91.72
Put Option Volatility	0	116.41
Conversion Option risk free rate	0.13	0.90
Put Option risk free rate	0	0.06
Conversion Option Stock Price	$ 1.15	$ 1.15
Put Option Stock Price	$ 0	$ 1.15

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Subsequent Events (Details) (USD $)	Jun. 29, 2012
Number of Series A 2 Preferres Stock Shares exchanged	80,000
Amount of repayment obligation of loan from DMRJ Group	$ 1,550,000

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Summary Of Significant Accounting Policies Earnings Per Share (Details)	Jun. 30, 2012
Common stock equivalents outstanding	1,178,575
Common stock convertible into debt and preferred stock	2,038,033

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Mineral Properties And Leases (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Yellow Hammer Site
Initial Lease Fee	$ 175,000	$ 175,000
Asset retirement obligation.	30,908	30,908
Total	205,908	205,908
Kiewit, Cactus Mill and all other sites
Initial Lease Fee	600,000	600,000
Asset retirement obligation'	26,913	26,594
Total'	626,913	626,594
Blue Fin Claims
Initial Purchase Price	2,735	2,735
Total'.	2,735	2,735
Total Mineral Properties and Leases	$ 835,556	$ 835,237

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Commitments Clifton Mining (Details) (USD $)	Aug. 30, 2009
Value of reclamation contract and cash surety deposit	$ 42,802
Value of right to repurchase of shares by the company	48,000
Value of the option to put the shares to the company	$ 48,000
Number of shares recordes as a derivative liability	60,824

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DMRJ Group Funding Fouth Amendment (Details) (USD $)	Apr. 11, 2011
Loan advance to be received as per the fourth amendment	$ 625,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $)	6 Months Ended		38 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.	$ (2,086,731)	$ (3,480,914)	$ (10,208,609)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation.	34,615	32,255	124,958
Common stock issued for services	0	136,841	530,009
Common stock issued for interest expense	45,000	0	82,500
Preferred stock issued for financing agreement	920,000	0	920,000
Accretion of debt-related discounts	209,826	491,980	1,374,675
Accretion of asset retirement obligation	2,880	0	2,880
Change in fair value of derivatives.	(24,389)	(23,328)	96,843
Loss on extinguishment of debt	0	2,149,404	2,149,404
(Gain) on sale of marketable securities	0	0	(2,540)
Changes in operating assets and liabilities:
(Increase) decrease in inventory	0	(16,900)	0
(Increase) decrease in accounts receivable	66,883	(439,519)	0
(Increase) decrease in prepaid expenses and other current assets	41,691	20,079	8,927
Increase (decrease) in accounts payable	26,718	15,929	30,315
Increase (decrease) in accrued liabilities - officer wages	0	0	(40,691)
Increase (decrease) in accrued expenses	(21,814)	37,511	1,072
Increase (decrease) in interest payable	323,530	147,353	743,089
Net cash used by operating activities	(461,791)	(929,309)	(4,187,168)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	0	(9,960)	(452,104)
Payments on mineral leases	0	0	(309,681)
Acquisition of reclamation bonds	(600)	(13,000)	(107,780)
Notes Receivable	27,500	0	27,500
Deposit on joint venture	100,000	0	100,000
Proceeds from marketable securities	0	0	48,920
Net cash provided (used) by investing activities	99,400	(22,960)	(693,145)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible notes payable	0	0	600,000
Proceeds from notes payable	0	1,000,000	3,500,000
Payment of note payable - equipment	0	(15,995)	(15,995)
Proceeds from issuance of common stock	20,150	0	1,363,833
Proceeds from issuance of preferred stock	0	0	958
Financing fees paid	0	(55,000)	(521,281)
Net cash provided by financing activities	20,150	929,005	4,927,515
NET INCREASE (DECREASE) IN CASH	(342,241)	(23,264)	47,202
CASH, BEGINNING OF PERIOD	415,090	566,549	25,647
CASH, END OF PERIOD	72,849	543,285	72,849
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued for mineral lease	0	0	525,000
Common stock issued as incentive with convertible notes	0	0	210,000
Common stock issued for reclamation bond	0	0	42,802
Equipment acquired with note payable	0	0	15,995
Common stock issued for accrued liabilities-officer wages	0	0	131,259
Prepaid interest liability	0	0	441,175
Repayment premium obligation	0	0	588,325
Common stock issued for accrued interest	$ 22,500	$ 0	$ 45,000

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JOINT VENTURE

6 Months Ended

Jun. 30, 2012

JOINT VENTURE

JOINT VENTURE

NOTE 5 – JOINT VENTURE

On February 7, 2012, we signed a letter of intent (“LOI”) with Shoshone Silver/Gold Mining Company (“Shoshone”) whereby Shoshone would acquire a 50% interest in our mineral properties located in Tooele County, Utah.  The terms of the LOI were that Shoshone would contribute $10 million in project equity, as well as a $2 million project loan to have been used for the startup of the Kiewit gold heap leach operation.  Under the terms of the deal, Shoshone had a 120 day exclusive right to provide the $10 million, for which $100,000 was advanced to us as a nonrefundable deposit.  Shoshone would also provide a $2 million, 10% interest loan, with a four year maturity, which bears a preferential payback from operational cash flow.  The two companies would have been 50-50 partners on the entire project with a four man operating committee consisting of two members from each company.  The proceeds of the Shoshone transaction, which was originally scheduled to close in June but had been extended to September 30, 2012, would have been used to retire the DMRJ Group debt as well as fund a portion of the heap leach operation.  The joint venture had not been finalized as of June 30, 2012 and an additional deposit of $200,000 had been agreed to as of June 29, 2012 to extend the agreement to joint venture the property until September 30, 2012.  $100,000 of these additional proceeds was received by the Company on July 9, 2012 with the remaining $100,000 to have been received on or before July 31, 2012.  The July 31, 2012 payment was not received and Shoshone has notified the Company that it will not be funding the additional $100,000.  Effective July 31, 2012 the joint venture agreement is no longer in effect.

These joint venture transactions have resulted in an event of default in regard to the DMRJ Group note payable.  Negotiations regarding a future business relationship to fund the DMRJ Group note and provide equity for operations capital are currently ongoing.  See Note 8.

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Mineral Properties And Leases Operating Interests (Details) (USD $)	Jun. 30, 2012
Number of unpatented mining claims	419
Number of patented mining claims	42
Total area of mines in square miles	33
Number of claims requiring annual lease fees	334
Annual claim fees including administrative fees	$ 140
Number of claims to renew in August, 2012	299
Total costs	$ 42,000

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DMRJ Group Funding Transaction (Details) (USD $)	Nov. 18, 2009
Loan by the two convertible note holders	$ 300,000
Conversion price	$ 1.50
Reduced conversion price,	$ 0.70

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Organization And Description Of Business (Details)	Dec. 31, 2009
Shares issued to Blue Fin Shareholders	2,713,636