SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for quarter period ended

June 30, 2009

[ ] 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 0-23726

GOLDEN EAGLE INTERNATIONAL, INC.
(Exact name of Golden Eagle as specified in its charter)

9661 South 700 East, Salt Lake City, UT 84070
(Address of principal executive offices) (Zip Code)

Golden Eagle’s telephone number, including area code: (801) 619-9320

Former Address if Changed Since Last Report

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 the filing requirements for the past 90 days.

[ X ] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filier, 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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

|_| Yes |X| No

At August 14, 2009, there were 1,834,784,819 shares of common stock outstanding, 80,000 shares of Series B Preferred Stock and 1 share of Series C Preferred Stock and 794,449 shares of our Series D Preferred Stock outstanding.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The unaudited Financial Statements for the three months ended June 30, 2009 are attached hereto and incorporated by reference herein. Please refer to pages F-1 through F-8 following the signature page.

Item 2. Management’s discussion and analysis of financial condition and results of operations

Golden Eagle International, Inc. is referred to herein as “we”, “our” or “us”.

Forward-looking statements and risks

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The following discussion should be read in conjunction with our financial statements and related notes appearing elsewhere in this Form 10-Q and our Annual Report on Form 10-K for our fiscal year ended December 31, 2008.

The statements contained in this quarterly report on Form 10-Q that are not historical are “forward-looking statements” that involve a number of risks and uncertainties. These forward-looking statements include, among others, the following:

These statements may be found under “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operation”, “Business and Properties” and other sections of this quarterly report. Forward-looking statements are typically identified by use of terms such as “may”, “will”, “could”, “should”, “expect”, “plan”, “project”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”, “target” or “continue”, the negative of such terms or other comparable terminology, although some forward-looking statements may be expressed differently.

The forward-looking statements contained in this quarterly report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this quarterly report are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to a number of factors, including:

You should also consider carefully the statements under “Risk Factors” and other sections of this quarterly report, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements.

All forward-looking statements speak only as of the date of this quarterly report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Golden Eagle International, Inc. is referred to herein as “we”, “our”, or “us”.

Overview

Our corporate headquarters are in Salt Lake City, Utah.

Up until June 10, 2009 we were engaged in contract gold milling operations in the state of Nevada in the United States. We had entered into an agreement with Queenstake Resources USA, Inc. (“Queenstake USA”), a wholly-owned subsidiary of Yukon-Nevada Gold Corp., to operate the Jerritt Canyon gold mill located 50 miles north of Elko, Nevada. However, on June 10, 2009 that agreement was abruptly terminated by Queenstake USA with 3 hours notice and we were compelled to engage in litigation in the Fourth District Court for Elko County, Nevada, which is still pending, to enforce our contractual rights. The suit includes cross claims for damages and performance obligations. (See, Item II, Part 1, Legal Proceedings below.)

We have also been actively engaged in the search for, and negotiations with, a company with sufficient oxide gold resources with which we could joint venture, or enter into another business relationship, that would result in the rehabilitation and reconditioning of our Gold Bar mill located 25 miles northwest of Eureka, Nevada, but we have not been successful in entering into any such arrangement.

In addition, we have been involved in the business of minerals exploration, mining and milling operations in Bolivia through our Bolivian-based wholly-owned subsidiary, Golden Eagle International, Inc. (Bolivia); however we are engaged in no operations in Bolivia at this time as certain of those operations are suspended pending changes in the social/political and mine taxing environments in Bolivia while we have terminated our interest in other Bolivian projects

We own two gold mills, neither of which is operating at the present time. The Gold Bar mill is collateral for a note payable to an unaffiliated party in the original principal amount of $220,000, which note was not paid when due:

As of June 30, 2009, we owned the following mineral prospects in Bolivia, all of which are inactive:

We entered into an agreement with Queenstake USA to operate the Jerritt Canyon gold mill located 50 miles north of Elko, Nevada on October 14, 2008. From mid September until March 23, 2009 we performed maintenance and environmental regulatory compliance functions at the mill and assisted the mill owner, Queenstake USA, in securing approval from the Nevada Division of Environmental Protection (NDEP) to restart milling operations at Jerritt Canyon. On March 25, 2009 approval was granted by the NDEP to recommence operations at the Jerritt Canyon mill. On April 1, 2009 we begin production operations at the Jerritt Canyon mill. On May 31, 2009 we voluntarily suspended operations at the Jerritt Canyon mill due to the fact that the deadline of May 31, 2009 established by the Nevada Division of Environmental Protection (NDEP) for the installation of a mercury emissions control system on the mill’s roasters had not been met due to financial difficulties incurred by Queenstake USA. On June 10, 2009 Queenstake USA terminated our mill operating agreement at the Jerritt Canyon mill. (See, Item II, Part 1, Legal Proceedings below.)

For the years ended December 31, 2008 and 2007, we reported net losses of $1,696,382 and $6,377,636, respectively. Our financial results over the past two years have been impacted by the shutdown of our Bolivian production operations and the obligations we have incurred in performing our contact with Queenstake USA. These results have carried forward through our second quarter results ending on June 30, 2009.

Any future financing will be used to:

Assets.

As of June 30, 2009, we had total net assets of $7,557,245 compared to total assets of $6,123,914 as of December 31, 2008. These assets include current assets, such as cash and prepaid expenses. Our current assets increased to $1,955,427 as of June 30, 2009 from $209,392 as of December 31, 2008.

Capital Expenditures and Requirements

Our capital commitments are set out below:

We have material capital commitments that will likely require us to obtain adequate financing to meet these obligations. Because of our lack of liquidity we may be unable to pay these capital commitments and as such they are subject to risks of default which could result in the forfeiture of property and mining claim rights. The occurrence of any such risks will negatively affect our operations and potential revenues. These commitments are:

Costs to maintain our properties have higher priority than other current capital requirements. As a result, we have delayed payment to some of our other creditors.

We have ongoing financing requirements pertaining to constructing the infrastructure necessary to continue our operations in the C Zone on our Precambrian properties, and then to later initiate operations on the A Zone Buen Futuro project. We no longer intend to move our Gold Bar mill and plant from Nevada to Bolivia; we may attempt to sell that asset or continue our ongoing efforts to enter into a joint venture or toll refining arrangement regarding its operation. We are unable to make these expenditures because of our financial condition, and we are unwilling to make these expenditures because of the political, social, and taxing situation in Bolivia.

Many of the foregoing obligations are past due, and we may not be able to timely pay others that become due in the near future. Should we be unable to generate sufficient revenues through business operations, or raise additional funding from outside investors, industry participants, or other sources, we will be forced to attempt to negotiate extensions to certain of our obligations or take other actions to protect our interest in our properties. Since Queenstake USA unilaterally and abruptly (and we believe wrongfully) terminated its operating agreement with us, we are no longer engaged in any operations and (therefore) we cannot expect to receive any revenues from operations (although we are seeking judicial assistance in resolving the outstanding issues). Historically, we have financed our capital requirements through short-term loans from affiliates and non-affiliates, as well as from private placements of our securities to accredited investors. There is no assurance that we will be successful in financing our business operations by these means. Further, if we seek to raise additional capital through the sale of our debt or equity securities there is no assurance that capital will be available to us on reasonable terms, if at all. Ultimately, our ability to finance our operations will be dependent on our ability to generate positive cash flow from operations in amounts sufficient to support all of our financial obligations. We have attempted, and will continue to attempt, to develop new grant and funding sources from United States, Canada, and overseas government agencies, private lenders, and financial institutions. We may also conduct negotiations with other mining companies regarding a possible merger or joint ventures to obtain economies of scale and access to capital markets

Equity

Stockholders’ equity increased to $4,831,847 as of June 30, 2009 from $4,700,317 as of December 31, 2008 representing a $131,530, or a 2.8%, increase in stockholders’ equity. This stockholders’ equity increase was primarily due to the issuance of our Series D Preferred Stock. .

We are authorized to issue 2,000,000,000 common shares; as of June 30, 2009, we had 1,834,784,819 shares outstanding. We have filed a preliminary proxy statement for a meeting of our shareholders at which they will be asked to approve an increase in our authorized common shares through a reverse stock split and other means. Because of our focus on other operational and administrative issues we have not been able to respond to SEC comments to that preliminary proxy statement, we have not filed an amendment thereto, and we have not scheduled a shareholders’ meeting to consider that issue or other issues to be presented to the shareholders. Any matters to be presented to the shareholders for consideration will be presented in a definitive proxy statement.

In addition, we are authorized to issue 10,000,000 preferred shares, (a) we have designated 3.5 million as Series A shares, none of which have been issued; (b) an additional 4.5 million of our preferred shares were designated as Series B preferred shares of which 80,000 are outstanding and convertible into 20,000,000 common shares; (c) one share of our authorized preferred stock is designated as a Series C preferred share which is outstanding and convertible into 487,746,250 common shares if and when sufficient shares are authorized and available for conversion; and, 999,999 shares of our Series D contingent convertible preferred shares, of which 794,449 shares were issued subsequent to the end of the second quarter and are contingently convertible into 1,986,122,500 common shares only once 5 billion comment shares are authorized. We also have $131,000 in convertible debentures outstanding convertible into 372,583,333 shares of our common stock. Additionally we have granted options to Blane Wilson our Chief Operating Officer totaling 55,904,718 shares of our common stock. Including all of our commitments for common shares (being outstanding shares of preferred stock which are convertible into common stock,, including those that are subject to the availability of authorized and unissued shares prior to conversion, and outstanding convertible debentures) our outstanding common stock on a fully diluted basis as of June 30, 2009 would be 4,757,141,620, and as of the date of this report would be the same. As noted above our articles of incorporation permit us to issue 2,000,000,000 shares of common stock. It is our intent to schedule a shareholders’ meeting to seek shareholder approval to reverse the number of outstanding shares by 500 to 1 to accommodate the potential number of common shares necessary within our current number of authorized shares.

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents as detailed in the following chart (even though common stock in excess of two billion shares cannot be issued). The inclusion of these shares would have resulted in a weighted average shares fully diluted number that was anti-dilutive and as such they are excluded from the weighted average shares basic and diluted calculation

Results of Operations

The following sets forth certain information regarding our results of operations for the three-month and six-month periods ended June 30, 2009, compared with the same period in 2008.

(a) Three Months Ended June 30, 2009/Three Months Ended June 30, 2008

Revenues.   During the three months ended June 30, 2009, we generated revenues of $3,359,083 compared to $0 in revenue during the same 2008 period. All revenues generated during the three-month period ended June 30, 2009, were from our mill operating agreement with Queenstake Resources USA, Inc. (“Queenstake”) for maintenance and milling operations at the Jerritt Canyon gold mill in central Nevada (which agreement has been terminated by Queenstake USA as we have discussed above, as well as in Part II, Item 1 below). Through the termination of our mill operating agreement by Queenstake USA at the Jerritt Canyon mill we had 82 employees working on-site at the Jerritt Canyon mill performing duties related to its operation. Of the total revenues generated during the quarter ended June 30, 2009, $2,640,937 were related expenses we incurred on behalf of Queenstake USA and $718,147 were related to our fee for services provided.

In order to better understand the revenues reported for the first six months of 2009, it is important to note that $2,231,672 (less an allowance for collectability of $446,334) are reflected as accounts receivable and current assets – meaning that we have only received cash from Queenstake USA of approximately $1.1 million. We are in litigation with Queenstake USA at the present time and do not expect to receive the cash for the amount due until the litigation is resolved, and then only to the extent that Queenstake USA is capable of making payment to us, or to the extent we are able to hold its parent liable for its debts. To the extent that we do not receive the cash payments from Queenstake USA timely, we will likely have to write the collectible balance to zero and reverse the accounting entry into income – which will reduce our revenues during this period by more than $1.785 million.

Production Costs. During the three-month period ending June 30, 2009, we had cost of goods sold of $2,714,740 related to expenses at our Jerritt Canyon mill operations. During the corresponding 2008 period we recorded no production costs.  It should be noted that the production costs incurred during the six month period is greater than the amount of cash received from Queenstake USA (although less than the amount we believe is due to us). We have an obligation to pay these expenses notwithstanding Queenstake USA’s failure to make payment to us.

Exploration and Development Expenses. Exploration and development costs decreased by $34,080, or 59%, to $23,957 for the three months ended June 30, 2009, from $58,037 for the comparable 2008 period.  Exploration and development costs decreased as a result of the discontinuation of operations at the C Zone in Bolivia. Most exploration and development costs that were incurred were related to the shutdown of operations and are not expected to be recurring items.

General & Administrative Expenses. General and administrative expenses decreased by $136,989, or 40%, to $202,654 for the three months ended June 30, 2009, from $339,643 during the three months ended June 30, 2008.  The decrease in our general administrative expense is primarily attributable to the suspension of our Bolivian operations including the reduction of our Bolivian staff. We do not know when, if ever, we will return to operations in Bolivia.

Bad Debt Expense. Bad debt expense increased to $446,334 during the three months ended June 30, 2009 from $0 during the three month period ended June 30, 2008. This increase in other expenses was primarily the result of an allowance for uncollectible Queenstake receivables of $446,334. Due to the suspension of our contract with Queenstake Resources USA and the subsequent lawsuit we cannot guarantee that we will be able to collect all fund s owed to us under the operating contract. We have entered an allowance for uncollectible receivables in the amount of $446,334 to account for the risk of this uncertainty. We will evaluate this allowance as time goes on and we may increase this allowance in future periods if conditions warrant and increase.

Depreciation and Depletion Expenses.  Depreciation and depletion increased by $9,554 to $14,734 during the three months ended June 30, 2009, from $5,180 during the same period in 2008. 

Operating Loss.  Operating loss decreased by $359,524, to $43,335 for the three months ended June 30, 2009, from an operating loss of $402,859 for the three months ended June 30, 2008.  The decreased loss was primarily due to revenues from our Jerritt Canyon mill operations. As noted above, our operating income is dependent on our ability to recognize revenues from our Jerritt Canyon mill operations. If the amounts due to us from Queenstake USA prove not to be collectible, or of delayed collectability, we may not be able to recognize those amounts as revenues. Such a restatement of financial statements (if required) would increase our operating loss for the period.

Interest Expense.  Interest expense for the three-month period ended June 30, 2009, increased by $4,125 to $30,063, from $25,938 during the same 2008 period.  The increase was due to additional debt incurred during the period which was converted into our Series D Preferred Stock.

Loss on Sale of Assets.  During the quarter ended June 30, 2009, we incurred a net loss $59,350 from the sale and disposition of assets in Bolivia. This total resulted from a gain of $15,852 on certain fixed assets retired offset by a $75,202 loss on the retirement of other fixed assets. During the same 2008 period there was a $12,000 gain on the sale of fixed assets.

Accretion of Note Discount. During the three-month period ended June 30, 2009, we incurred $99,295 in costs related to the accretion of the discount on debentures and convertible notes payable compared to $26,733 during the same 2008 period. As of March 31, 2009, we had seven Convertible Debentures outstanding totaling $204,000. We entered into an additional debenture totaling $52,000 during the period. Each of these debentures carries an interest rate of 8% per annum payable at maturity and matures two years from the date of the debenture with the exception of the debenture entered into during the period which matures one year from the date of the debenture. Each debenture, and its accrued interest, except for the one debenture totaling $52,000, is convertible into restricted shares of our common stock at any time by the holder of the debenture. If converted into restricted common stock, the conversion shall be at 50% of the average closing price of our common stock for the five trading days prior to the date of the debenture, or 50% of the average closing price for our common stock for the five trading days prior to the notice of conversion within the first 120 days immediately following the purchase of the debenture, whichever is less provided that the minimum conversion price is not less than $.002 per share. These debentures are convertible into 372,583,333 shares of our restricted common stock. As these debentures carry a conversion rate that is less than market rate the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the debenture, which in this case is 24 months or if the debenture is converted prior to maturity the remaining unaccreted amount is accreted in full. In consideration for additional investments, four of the above Convertible Debentures were approved for conversion into shares of our Series D contingent convertible preferred stock on June 30, 2009. Those debenture holders, and the additional consideration that they invested, were set out in a Current Report on Form 8-K filed by us dated July 8, 2009. The face amount of the four outstanding debentures is $131,000. On the balance sheet they have been discounted by $78,177 to $52,823. The discounted amount is accreted over the twenty-four month period or in its entirety if the debenture is converted during the term. During the three months ended June 30, 2009, $99,295 was accreted to financing costs.

Gain (Loss) on Valuation of Derivative Liability. As of June 30, 2009, the balance of the derivative liability was $226,618, which is the value of the shortage of 283,272,870 shares at the market price at June 30, 2009. The derivative is expensed and revalued at the end of each period financial statements are prepared, based on the market price at the end of the period. The Company is currently in the process of increasing its authorized shares to compensate for the shortfall.

Other Net Expenses and Income.  Other expenses net of other income for the quarter ended June 30, 2009, were $36,749 compared to other income of $40,130 during the same 2008 period. The increase costs were for one time costs related to the suspension of our operations in Bolivia.

Net Loss.  Net loss for the three-month period ended June 30, 2009, increased by $92,010 to $495,410 from $403,400 during the same 2008 period.  The increase was primarily due to the operating loss and the loss on valuation of derivative liability.

(b)     Six Months Ended June 30, 2009/Six Months Ended June 30, 2008 Revenues.   During the six months ended June 30, 2009, we generated revenues of $4,173,766 compared to $0 in revenue during the same 2008 period. All revenues generated during the six-month period ended June 30, 2009, were from our mill operating agreement with Queenstake Resources USA, Inc. (“Queenstake USA”) for maintenance and milling operations at the Jerritt Canyon gold mill in central Nevada (which agreement has been terminated by Queenstake USA as we have discussed above, as well as in Part II, Item 1 below). Through the termination of our mill operating agreement by Queenstake USA at the Jerritt Canyon mill we had 82 employees working on-site at the Jerritt Canyon mill performing duties related to its operation. Of the total revenues generated during the quarter ended June 30, 2009, $3,319,452 were related expenses we incurred on behalf of Queenstake USA and $854,315 were related to our fee for services provided.

In order to better understand the revenues reported for the first six months of 2009, it is important to note that $2,231,672 (less an allowance for collectability of $446,334) are reflected as accounts receivable and current assets – meaning that we have only received cash from Queenstake USA of approximately $1.1 million. We are in litigation with Queenstake USA at the present time and do not expect to receive the cash for the amount due until the litigation is resolved, and then only to the extent that Queenstake USA is capable of making payment to us, or to the extent we are able to hold its parent liable for its debts. To the extent that we do not receive the cash payments from Queenstake USA timely, we will likely have to write the collectible balance to zero and reverse the accounting entry into income – which will reduce our revenues during this period by more than $1.785 million.

Production Costs. During the six-month period ending June 30, 2009, we had cost of goods sold of $3,391,072 related to expenses at our Jerritt Canyon mill operations. During the corresponding 2008 period we recorded no production costs. It should be noted that the production costs incurred during the six month period is greater than the amount of cash received from Queenstake USA (although less than the amount we believe is due to us). We have an obligation to pay these expenses notwithstanding Queenstake USA’s failure to make payment to us.

Exploration and Development Expenses. Exploration and development costs decreased by $48,130, or 42%, to $65,785 for the six months ended June 30, 2009, from $113,915 for the comparable 2008 period.  Exploration and development costs decreased as a result of the discontinuation of operations at the C Zone in Bolivia. Most exploration and development costs that were incurred were related to the shutdown of operations and for work done on our Gold Bar mill and are not expected to be recurring items .

General & Administrative Expenses. General and administrative expenses decreased by $109,463, or 19%, to $471,698 for the six months ended June 30, 2009, from $581,161 during the six months ended June 30, 2008.  The decrease in our general administrative expense is primarily attributable to the suspension of our Bolivian operations including the reduction of our Bolivian staff. We do not know when, if ever, we will return to operations in Bolivia.

Bad Debt Expense. Bad debt expense increased to $446,334 during the six months ended June 30, 2009 from $0 during the six month period ended June 30, 2008. This increase in other expenses was primarily the result of an allowance for uncollectible Queenstake receivables of $446,334. Due to the suspension of our contract with Queenstake Resources USA and the subsequent lawsuit we cannot guarantee that we will be able to collect all fund s owed to us under the operating contract. We have entered an allowance for uncollectible receivables in the amount of $446,334 to account for the risk of this uncertainty. We will evaluate this allowance as time goes on and we may increase this allowance in future periods if conditions warrant and increase.

Depreciation and Depletion Expenses.  Depreciation and depletion increased by $22,633 to $33,610 during the six months ended June 30, 2009, from $10,977 during the same period in 2008.  This increase was due to the sale and disposition of certain fixed assets in Bolivia related to our suspension of operations.

Operating Loss.  Operating loss decreased by$471,320, to $234,732 for the six months ended June 30, 2009, from an operating loss of $706,052 for the six months ended June 30, 2008.  The decreased loss was primarily due to revenues from our Jerritt Canyon mill operations. As noted above, our operating income is dependent on our ability to recognize revenues from our Jerritt Canyon mill operations. If the amounts due to us from Queenstake USA prove not to be collectible, or of delayed collectability, we may not be able to recognize those amounts as revenues. Such a restatement of financial statements (if required) would increase our operating loss for the period.

Interest Expense.  Interest expense for the six-month period ended June 30, 2009, decreased by $14,665 to $50,481, from $65,146 during the same 2008 period.  The decrease was due to the conversion of debt to Series C and D Preferred Stock.

Loss on Sale of Assets.  During the six months ended June 30, 2009, we incurred a net loss $55,385 from the sale and disposition of assets in Bolivia. This total resulted from a gain of $50,216 on certain fixed assets retired offset by a $105,600 loss on the retirement of other fixed assets. During the same 2008 period there was a $12,000 gain on the sale of fixed assets.

Accretion of Note Discount. During the six-month period ended June 30, 2009, we incurred $136,218 in costs related to the accretion of the discount on debentures and convertible notes payable compared to $40,235 during the same 2008 period. As of March 31, 2009, we had seven Convertible Debentures outstanding totaling $204,000. We entered into an additional debenture totaling $52,000 during the period. Each of these debentures carries an interest rate of 8% per annum payable at maturity and matures two years from the date of the debenture with the exception of the debenture entered into during the period which matures one year from the date of the debenture. Each debenture, and its accrued interest, except for the one debenture totaling $52,000, is convertible into restricted shares of our common stock at any time by the holder of the debenture. If converted into restricted common stock, the conversion shall be at 50% of the average closing price of our common stock for the five trading days prior to the date of the debenture, or 50% of the average closing price for our common stock for the five trading days prior to the notice of conversion within the first 120 days immediately following the purchase of the debenture, whichever is less provided that the minimum conversion price is not less than $.002 per share. These debentures are convertible into 372,583,333 shares of our restricted common stock. As these debentures carry a conversion rate that is less than market rate the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the debenture, which in this case is 24 months or if the debenture is converted prior to maturity the remaining unaccreted amount is accreted in full. In consideration for additional investments, four of the above Convertible Debentures were approved for conversion into shares of our Series D contingent convertible preferred stock on June 30, 2009. Those debenture holders, and the additional consideration that they invested, were set out in a Current Report on Form 8-K filed by us dated July 8, 2009. The face amount of the four outstanding debentures is $131,000. On the balance sheet they have been discounted by $78,177 to $52,823. The discounted amount is accreted over the twenty-four month period or in its entirety if the debenture is converted during the term. During the six months ended June 30, 2009, $136,218 was accreted to financing costs.

Gain (Loss) on Valuation of Derivative Liability. As of June 30, 2009, the balance of the derivative liability was $226,618, which is the value of the shortage of 283,272,870 shares at the market price at June 30, 2009. The derivative is expensed and revalued at the end of each period financial statements are prepared, based on the market price at the end of the period. The Company is currently in the process of increasing its authorized shares to compensate for the shortfall.

Other Net Expenses and Income.  Other expenses net of other income for the six months ended June 30, 2009, were $245,903 compared to other income of $84,887 during the same 2008 period. This increase in other expenses was primarily the result of the incurred loss of $117,263 related to currency fluctuations associated with the revaluation of fixed assets in Bolivia.

Net Loss.  Net loss for the six-month period ended June 30, 2009, increased by $234,791 to $949,337 from $714,546 during the same 2008 period.  The increase was primarily due to our allowance for uncollectible receivables totaling $446,334 and the expense taken for currency fluctuations related to the revaluation of fixed assets in Bolivia totaling $117,263 and loss on valuation of derivative liability of $226,618.

Liquidity and capital resources

Our auditors issued a going concern opinion on our audited financial statements for the fiscal year ended December 31, 2008 as we had a significant working capital deficit and we had substantial losses since our inception. These and other matters raise substantial doubt about our ability to continue as a going concern. Due to our working capital deficit of $657,148 at June 30, 2009 and $1,117,599 at December 31, 2008, we are unable to satisfy our current cash requirements for any substantial period of time through our existing capital. We anticipate total operating expenditures of approximately $1,000,000 pending adequate financing over the next twelve months for general and administrative expenses.

Our cash balance of $86,508 as June 30, 2009, is insufficient to meet these planned expenses. In order to continue to pay our expenses, we intend to generate revenue from our contract to operate the Jerritt Canyon mill and may seek to raise additional cash by means of debt and/or equity financings. We have substantial commitments as summarized under our Capital Commitments and Requirements Section above that are subject to risks of default and forfeiture of property and mining rights. If we are unable to meet our obligations, or negotiate satisfactory arrangements, we may have to liquidate our business and undertake any or all the steps outlined below.

If we have any liabilities that we are unable to satisfy and we qualify for protection under the U.S. Bankruptcy Code, we may voluntarily file for reorganization under Chapter 11 or liquidation under Chapter 7. Our creditors may also file a Chapter 7 or Chapter 11 bankruptcy petition. If our creditors or we file for Chapter 7 or Chapter 11 bankruptcy, our creditors will take priority over our stockholders. If we fail to file for bankruptcy under Chapter 7 or Chapter 11 and we have creditors; such creditors may institute proceedings against us seeking forfeiture of our assets, if any. At the date of this filing, we have not contemplated seeking any protection in bankruptcy and have always been able to resolve our pending liabilities satisfactorily. However, we cannot guarantee that this will always be the case in the future.

We do not know and cannot determine which, if any, of these actions we will be forced to take. If any of these foregoing events occur, investors could lose their entire investment in our shares.

Recent Accounting Pronouncements

SFAS No. 161   In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”), which is effective January 1, 2009. SFAS 161 requires enhanced     disclosures about derivative instruments and hedging activities to allow for a better understanding of their effects on an entity’s financial position, financial performance, and cash flows. Among other things, SFAS 161 requires disclosures of the fair values of derivative instruments and associated gains and losses in a tabular formant. SFAS 161 is not currently applicable to the Company since the Company does not have derivative instruments or hedging activity. 

SFAS No. 162   In May 8, 2008, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 162, The Hierarchy of Generally Accepted Accounting Principles, which will provide framework for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. With the issuance of SFAS No. 162, the GAAP hierarchy for nongovernmental entities will move from auditing literature to accounting literature.  The Company is currently assessing the impact of SFAS No. 162 on its financial position and results of operations.

SFAS No. 163   The FASB has issued Statement of Financial Accounting Standards No. 163, Accounting for Financial Guarantee Insurance Contracts. SFAS No. 163 clarifies how SFAS No. 60, Accounting and Reporting by Insurance Enterprises, applies to financial guarantee insurance contracts issued by insurance enterprises, and addresses the recognition and measurement of premium revenue and claim liabilities. It requires expanded disclosures about contracts, and recognition of claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also requires disclosure about (a) the risk-management activities used by an insurance enterprise to evaluate credit deterioration in its insured financial obligations, and (b) the insurance enterprise’s surveillance or watch list. The Company is currently evaluating the impact of SFAS No. 163.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events. SFAS No. 165 is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. SFAS No. 165 requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date – that is, whether that date represents the date the financial statements were issued or were available to be issued. The disclosure is intended to alert all users of financial statements that an entity has not evaluated subsequent events after the date in the set of financial statements being presented. SFAS No. 165 is effective for interim and annual periods ending after June 15, 2009, or the Company’s fiscal quarter beginning July 1, 2009. The Company does not believe that the implementation of SFAS No. 165 will have a material impact on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets- an Amendment to FASB Statement No. 140. SFAS No. 166 is a revision to SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and will require more information about transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS No. 166 eliminates the concept of a “qualifying special purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS No. 166 is effective at the start of a company’s first fiscal year beginning after November 15, 2009, or the Company’s fiscal year beginning January 1, 2010. The Company is currently unable to determine what impact the future application of SFAS No. 166

In June 2009, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 167 Amendments to FASB Interpretation No. (46R). SFAS 167 is a revision of FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, and changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that is  most significantly impacts the entity’s economic performance. SFAS No. 167 is effective at the start of a company’s first fiscal year beginning after November 15, 2009, or the Company’s fiscal year beginning January 1, 2010. The Company is currently unable to determine what impact the future application of SFAS No. 167 may have on its consolidated financial statements.

Plan of Operations

i. The Jerritt Canyon Gold Mill

As part of our program of diversification into north-central Nevada, on October 14, 2008 we entered into a Mill Operating Agreement (the “Agreement”) with Queenstake USA, the wholly-owned subsidiary of Queenstake Resources, Ltd. and Yukon-Nevada Gold Corp., to operate the 4,000 ton-per-day (tpd) Jerritt Canyon CIL gold mill (the “Mill”) located 50 miles north of Elko, Nevada. After failing to pay us all amounts we believe were due under the Agreement, in June 2009 Queenstake USA abruptly (and we believe wrongfully) terminated the Agreement and filed litigation against us alleging our breach of the Agreement (as described in more detail below). We have filed an answer denying their material allegations and have filed counter-claims. Our plan of operations at the present time is to successfully prosecute and defend this litigation, to recover our rights under the Agreement, and to collect damages and other amounts due to us from Queenstake USA and its parent and affiliates. We cannot offer any assurance that we will be successful in so doing.

ii. The Gold Bar Mill.

In 2004, we purchased the 4,000 tpd Gold Bar CIP gold mill (the “Gold Bar Mill” or the “Mill”) located 25 miles northwest of Eureka, Nevada.  Initially, our plan was to disassemble the Gold Bar Mill and transport it to Bolivia to be reconstructed on our A Zone project in eastern Bolivia. Due to the current political climate and tax structure in Bolivia, we have determined that the best course of action with regards to the Gold Bar Mill is to leave it in place and explore our options related to the Mill in Nevada. In April 2008 we hired Blane Wilson as our Chief Operating Officer. Mr. Wilson’s primary responsibility was to help us determine the best course of action with regards to this asset and implement a Gold Bar strategy. We have entered into confidentiality agreements and had detailed negotiations with various parties regarding the potential of this Mill. These possibilities include

All of the foregoing is contingent on obtaining sufficient financing and/or a willing joint venture partner or a suitable buyer. The Mill is currently not operating and we do not currently have plans to commence any operations at the Gold Bar Mill. It is easily accessible by well-maintained, all-weather gravel roads for 15 miles off of all-weather paved state highways from the nearest urban center, which is Eureka, Nevada.

iii.     The C Zone Gold Mill and Mine, Mine Camp for A & C Zone Projects, and A Zone Buen Futuro Gold and Copper Project.

At the present time we have no plans to recommence operations in Bolivia because of the unfavorable political, social, and taxing environment. Should those conditions improve, we will consider recommencing operations in Bolivia.

iv. Cangalli Gold Project.

After careful analysis of the current political situation and the pending tax changes in Bolivia, as described in iii. C Zone Gold Operation, above, we have determined to discontinue our efforts to develop our Cangalli and Tipuani Valley gold project in Western Bolivia. On March 1, 2009, we elected not to renew our claims in this region. At some point in time should we attempt to reestablish our operations at Cangalli, we would be required to negotiate with COMIBOL, the Bolivian state mining company, as a joint venture partner.

v. Summary of Plan of Operations

To accomplish our strategy we intend to carry out the steps in our Plan of Operations that are summarized below:

In order to assist in financing our planned operations, we will continue to seek joint venture partners, as well as merger and acquisition candidates, or other industry participants who would enter into joint development efforts on our Precambrian prospects or northern Nevada milling possibilities; however, there is no assurance that any potential joint-venture or merger partners will be interested in evaluating these prospects or in negotiating an agreement with us on reasonable or acceptable terms.

Impact of inflation and changing prices

We have not experienced any material impact from the effects of inflation during the last two annual operating periods or during the first three months of 2009. We have, however, seen a significant increase in the cost of diesel fuel, when we have been able to obtain fuel in Bolivia. Such fuel cost increases will impact our operations as we ramp up mining and recovery operations. We have been informed by our contract miner that they intend to increase costs above that which was originally quoted to recover the increased cost of fuel. We are currently evaluating the impact of these fuel cost increases on our projected income.

Off balance sheet arrangements

None

Item 3. Controls and procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Principal Financial and Accounting Officer. Following this inspection, these officers concluded that our disclosure controls and procedures are effective as of June 30, 2009, the end of the period covered by this report.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

There have been no changes to our internal control over financial reporting during the past quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal proceedings

On June 10, 2009, we received a notice (the “Notice”) from Queenstake Resources USA, Inc. (“Queenstake USA”), the wholly owned subsidiary of Yukon-Nevada Gold Corp., (“YNG”), advising us that Queenstake USA allegedly terminated the agreement between Golden Eagle and Queenstake USA regarding the operation of the Jerritt Canyon gold mill (the “Mill”). The Notice provided that Queenstake USA believed that the termination was effective immediately.

Also on June 10, 2009, Queenstake USA filed a Complaint against the Company in the Fourth Judicial District Court of the state of Nevada for Elko County (Queenstake Resources USA, Inc.(Plaintiff) v. Golden Eagle International, Inc (Defendant).; Golden Eagle International, Inc. (Counterclaimant) v. Queenstake Resources USA, Inc. (Counter Defendant); Golden Eagle International, Inc. (Third Party Plaintiff) v. Francois Marland, John Does 1-10, Queenstake Resources, Ltd. and Yukon-Nevada Gold Corp. (Third-Party Defendants), case no. CVC-C-09-544 Dept 2). In the Complaint, Queenstake USA alleges that Golden Eagle breached an agreement between the parties with respect to the operation of the Mill; breached an implied covenant of good faith and fair dealing; and committed negligence in the operation of the Mill. Further, in the Complaint Queenstake USA has sought a declaratory judgment that Golden Eagle is obligated to leave the Mill site and cease operating the Mill.

We believed then, and continue to believe, that Queenstake USA’s allegations are false and wholly without merit. Subsequent to the end of the second quarter, on July 9, 2009, we filed an Answer, Counterclaim and Third-Party Complaints. Our Answer specifically denies those allegations made in the Complaint filed (but never served) by Queenstake USA on June 10, 2009 (See our Current Reports filed on Form 8-K on June 12, 2009, July 9, 2009, and July 17, 2009).

Our Counterclaim against Queenstake USA alleges that by a pattern of fraud, misrepresentation, material omissions and deceptive business practices Queenstake USA induced Golden Eagle to enter into a mill operating agreement on October 14, 2008, which called for Golden Eagle to operate the Mill for a 5-year period and provide extensive services to prepare the Mill for operations and bring it into environmental compliance. The Counterclaim further alleges that Queenstake USA continued between October 2008 and June 2009, through fraudulent and deceptive means, to induce Golden Eagle to continue to provide its administrative services and contract with up to 82 employees, providers, suppliers and third-party contractors, which resulted in a liability for costs incurred by Golden Eagle, and administrative fees owed to Golden Eagle, in excess of $2.23 million. Our allegations include that Yukon-Nevada and one of its significant investors deemed Golden Eagle’s contract “too lucrative” and then tortiously interfered with the mill operating agreement by compelling Queenstake USA to breach its agreement and covenant of good faith and fair dealing with Golden Eagle on June 10, 2009. We allege that this breach, based on the Counterclaim and Third Party Complaints, caused Golden Eagle to lose the “benefit of the bargain,” or lost profit from the agreement, in excess of $40 million based on Queenstake USA’s own calculations and representations to Golden Eagle and the Nevada Division of Environmental Protection (NDEP).

We also allege in our Counterclaim that the mill operating agreement had all of the characteristics of a lease, putting Golden Eagle in possession of the mill property and its full use; ensuring Golden Eagle’s quiet enjoyment of the premises; requiring Golden Eagle to maintain and repair the property; granting Golden Eagle access to the “common areas” on the mill complex, etc. As a result of these lease characteristics, we have sought statutory relief under the Nevada Forcible Entry and Detainer statutes and seek an order of the court based on those statutes putting Golden Eagle back in immediate possession of the mill property.

We further allege in our Counterclaim and Third-Party Complaints that Queenstake USA, Yukon-Nevada (Yukon USA’s parent corporation) and a significant Queenstake USA investor have caused us irreparable harm. As a result, we ask the court for a Declaratory Judgment and a Writ of Mandamus that order that Golden Eagle be allowed full possession of the mill property so that it may complete its contract term of 5 years.

We claim in our Counterclaim and Third-Party Complaints that Queenstake USA, Yukon-Nevada and a significant Queenstake USA investor have committed acts of oppression, fraud or malice, express or implied, and that Golden Eagle is entitled under Nevada law to recover punitive damages, which are calculated as three times the amount of compensatory damages.

Finally, we allege in our Counterclaim and Third-Party Complaints that Queenstake Canada unconditionally guaranteed the agreement between Golden Eagle and Queenstake USA, and furthermore, unconditionally guaranteed the covenant of good faith and fair dealing between the parties. As a result, Queenstake Canada was also named as a Third-Party Defendant sharing joint liability with its wholly owned subsidiary, Queenstake USA.

On July 15, 2009 we recorded a Notice of Mechanics/Materialmen’s Lien and a Notice of Mill Lien (the “Liens”) against the Jerritt Canyon mill located 50 miles north of Elko, Nevada, in the total amount of $1,307,813 in the official records of the Elko County Recorder, State of Nevada. Notice of the liens was served on Queenstake Resources, USA and Yukon-Nevada Gold Corp. pursuant to Nevada State law by certified or registered mail on July 15 and 16, 2009.

On July 17, 2009 we filed an Amended Answer, Counterclaim and Third-Party Complaints seeking to foreclose on the Liens described above, as well as maintaining the causes of action originally set out in the pleading filed on July 9, 2009 in the matter of Queenstake Resources USA, Inc.(Plaintiff) v. Golden Eagle International, Inc (Defendant).; Golden Eagle International, Inc. (Counterclaimant) v. Queenstake Resources USA, Inc. (Counter Defendant); Golden Eagle International, Inc. (Third Party Plaintiff) v. Francois Marland, John Does 1-10, Queenstake Resources, Ltd. and Yukon-Nevada Gold Corp. (Third-Party Defendants), CV-C-09-544, in the Fourth Judicial District Court for Nevada, In and For the County of Elko.

Item 2. Unregistered sales of equity securities and use of proceeds.

Any unregistered sales of equity securities during the quarter ended June 30, 2009 and subsequently have been previously reported within a form 8-K.

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

The Company held its most recent shareholders meeting in September 2007. The Company has not yet set a date for its 2009 shareholders meeting but currently expects to hold the meeting in November 2009. Although we have not yet set a definitive date for our 2009 shareholders meeting we are requiring that proposals from our shareholders for consideration at the meeting must be presented to the Company not later than September 1, 2009. After September 1, 2009, any shareholder proposal will be considered untimely. If we extend the date of our shareholders’ meeting further, we will provide a new date for receipt of proposals. Proposals from shareholders intended to be present at the Annual Meeting of shareholders should be addressed to Golden Eagle International, Inc., Attention: Corporate Secretary, 9661 South 700 East, Salt Lake City, Utah 84070. Upon receipt of any such proposal, we shall determine whether or not to include any such proposal in the Proxy Statement and proxy in accordance with applicable law. It is suggested that shareholders forward such proposals by Certified Mail-Return Receipt Requested.

Item 6. Exhibits:

Exhibits required by Item 601 of Regulation S-K:

3.1(i) Restated Bylaws, filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Golden Eagle has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GOLDEN EAGLE INTERNATIONAL, INC.

(Golden Eagle)

EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECURITIES EXCHANGE ACT OF 1934: RULES 13a-14, 13a-15, 15d-14, and 15d-15
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Terry C. Turner, certify that:

EXHIBIT 31.2

CERTIFICATION PURSUANT TO
SECURITIES EXCHANGE ACT OF 1934: RULES 13a-14, 13a-15, 15d-14, and 15d-15
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tracy A. Madsen, certify that:

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTIONS 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Golden Eagle International, Inc. (“the Company”) on Form 10-Q for the period ended June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), I, Terry C. Turner, President and Principal Executive Officer, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTIONS 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Golden Eagle International, Inc. (“the Company”) on Form 10-Q for the period ended June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), I, Tracy A. Madsen, Vice President and Principal Accounting Officer, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

Golden Eagle International, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note A – Basis of Presentation

The accompanying financial statements are unaudited. However, in our opinion, the accompanying financial statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for fair presentation. Interim results of operations are not necessarily indicative of results for the quarter ended June 30, 2009. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2008.

Except for the historical information contained in this Form 10-Q, this Form contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in this Report. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Report and any documents incorporated herein by reference, as well as the Annual Report on Form 10-K for the year ended December 31, 2008.

Note B — Organization and Nature of Business

For a complete description of our mineral prospects and the organization and nature of our business, please see our Form 10-K for the year ended December 31, 2008.

Going Concern Considerations
The 2008 audit opinion included an explanatory paragraph from our auditors indicating a substantial doubt about our ability to continue as a going concern. The accompanying financial statements have been presented assuming Golden Eagle will continue as a going concern, which contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. We had a working capital deficit as of June 30, 2009 and have incurred substantial losses since our inception.

Up until June 10, 2009 we were engaged in contract gold milling operations in the state of Nevada in the United States. We had entered into an agreement with Queenstake Resources USA, Inc. (“Queenstake USA”), a wholly-owned subsidiary of Yukon-Nevada Gold Corp., to operate the Jerritt Canyon gold mill located 50 miles north of Elko, Nevada. However, on June 10, 2009 that agreement was abruptly terminated by Queenstake USA with 3 hours notice and we were compelled to engage in litigation in the Fourth District Court for Elko County, Nevada, which is still pending, to enforce our contractual rights. (See, Item II, Part 1, Legal Proceedings below.)

We have also been actively engaged in the search for, and negotiations with, a company with sufficient oxide gold resources with which we could joint venture, or enter into another business relationship, that would result in the rehabilitation and reconditioning of our Gold Bar mill located 25 miles northwest of Eureka, Nevada.

In addition, we have been involved in the business of minerals exploration, mining and milling operations in Bolivia through our Bolivian-based wholly-owned subsidiary, Golden Eagle International, Inc. (Bolivia); however we are engaged in no operations in Bolivia at this time as certain of those operations are suspended pending changes in the social/political and mine taxing environments in Bolivia while we have terminated our interest in other Bolivian projects

As of June 30, 2009, we owned the following mineral prospects in Bolivia, all of which are inactive:

¹ On March 1, 2009, we elected to reduce our mining concessions in the Precambrian Shield in eastern Bolivia from 136,500 acres to 42,731 acres. We retained the Buen Futuro claims containing the A Zone on which we have generated the most drill and other sampling data, as well as the Gran Serpiente claims on which the C Zone gold mill and mine are located. We also retained the highly prospective Cobra claims on the northern end of the Ascension Gold-Copper Trend.

We entered into an agreement with Queenstake USA to operate the Jerritt Canyon gold mill located 50 miles north of Elko, Nevada on October 14, 2008. From mid September until March 23, 2009 we performed maintenance and environmental regulatory compliance functions at the mill and assisted the mill owner, Queenstake USA, in securing approval from the Nevada Division of Environmental Protection (NDEP) to restart milling operations at Jerritt Canyon. On March 25, 2009 approval was granted by the NDEP to recommence operations at the Jerritt Canyon mill. On April 1, 2009 we begin production operations at the Jerritt Canyon mill. On May 31, 2009 we voluntarily suspended operations at the Jerritt Canyon mill due to the fact that the deadline of May 31, 2009 established by the Nevada Division of Environmental Protection (NDEP) for the installation of a mercury emissions control system on the mill’s roasters had not been met due to financial difficulties incurred by Queenstake USA. On June 10, 2009 Queenstake USA terminated our mill operating agreement at the Jerritt Canyon mill. (See, Note I, Legal Proceedings below.)

None of our mining prospects are currently in the production stage. Our production operations on our Cangalli property ceased in June 2004 as a result of a local farmers’ strike and certain legal issues particular to Bolivia with which we were not associated. Since then, the Bolivian government has become more hostile to investment from the United States, and we have reduced our operations in Bolivia significantly.

We also discontinued mining and milling operations on our C Zone mine and mill in December of 2008 due to the shortage of diesel fuel, political instability and a substantial change in the Bolivian tax structure for mining companies that severely limited our ability to become profitable on our Bolivian operations.

For the years ended December 31, 2008 and 2007, we reported net losses of $1,696,382 and $6,377,636, respectively. Our financial results over the past two years have been impacted by the shutdown of our production operations as discussed in annual report on Form 10-K for the year ended December 31, 2008 and this quarterly report on Form 10-Q for June 30, 2009, in connection with our financial results for the years ended December 31, 2008 and 2007.

Reclassifications
Certain amounts for the three months ended June 30, 2009 have been reclassified to conform to the June 30, 2009 presentation. These reclassifications were not material to the financial statements.

Note C – (Loss) Per Share

Stockholders’ equity increased to $4,831,847 as of June 30, 2009 from $4,700,317 as of December 31, 2008 representing a $131,530, or a 2.8%, increase in stockholders’ equity. This stockholders’ equity increase was primarily due to the issuance of our Series D Preferred Stock.

We are authorized to issue 2,000,000,000 common shares; as of June 30, 2009, we had 1,834,784,819 shares outstanding. We have filed a preliminary proxy statement for a meeting of our shareholders at which they will be asked to approve an increase in our authorized common shares through a reverse stock split and other means. Because of our focus on other operational and administrative issues we have not been able to respond to SEC comments to that preliminary proxy statement, we have not filed an amendment thereto, and we have not scheduled a shareholders’ meeting to consider that issue or other issues to be presented to the shareholders. Any matters to be presented to the shareholders for consideration will be presented in a definitive proxy statement.

In addition, we are authorized to issue 10,000,000 preferred shares, (a) we have designated 3.5 million as Series A shares, none of which have been issued; (b) an additional 4.5 of our preferred shares were designated as Series B preferred shares of which 80,000 are outstanding and convertible into 20,000,000 common shares; (c) one share of our authorized preferred stock is designated as a Series C preferred share which is outstanding and convertible into 487,746,250 common shares if and when sufficient shares are authorized and available for conversion; and, 999,999 shares of our Series D contingent convertible preferred shares, of which 794,449 shares were issued subsequent to the end of the second quarter and are contingently convertible into 1,986,122,500 common shares only when the authorized capital is increased to 5 billion common share, or other split which provides the availability of the shares needed for the conversion.

We also have $131,000 in convertible debentures outstanding convertible into 372,583,333 shares of our common stock.

Additionally we have granted options to Blane Wilson our Chief Operating Officer totaling 55,904,718 shares of our common stock.

Including all of our commitments for common shares (being outstanding shares of preferred stock which are convertible into common stock, excluding those that are subject to the availability of authorized and unissued shares prior to conversion, and outstanding convertible debentures) our outstanding common stock on a fully diluted basis as of June 30, 2009 would be 2,283,272,870. As noted above our articles of incorporation permit us to issue 2,000,000,000 shares of common stock. It is our intent to schedule a shareholders’ meeting and reverse the number of outstanding shares by 500 to 1 to accommodate the potential number of common shares necessary within our current number of authorized shares.

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents as detailed in the following chart. The inclusion of these shares would have resulted in a weighted average shares fully diluted number that was anti-dilutive and as such they are excluded from the weighted average shares basic and diluted calculation

Note D – Statement of Cash Flows Information and Supplemental Non-Cash Financing Activities

Cash and cash equivalents include cash and short-term investments with original maturities of three months or less. Non-cash investing and financing transactions during the periods consist of the following:

(1)     On January 25, 2008 we entered into two agreements with Kevin K. Pfeffer (“Mr. Pfeffer”), which became effective February 1, 2008 based on certain conditions subsequent being met. Mr. Pfeffer is a former director in Golden Eagle International, Inc., having served on our board of directors from January 23, 2003 through December 4, 2006. The two subject agreements settle any and all outstanding debts that we had with Mr. Pfeffer, as well as any and all outstanding allegations, claims, disputes and controversies. The first agreement was titled, “Settlement and Release Agreement.” Terry C. Turner (“Mr. Turner”), our President, Chief Executive Officer and Chairman of the Board, was also a party to this agreement. In this agreement Mr. Turner, Mr. Pfeffer and we agreed to the following: a. That Mr. Turner and we would dismiss with prejudice our case alleging certain causes of action against Mr. Pfeffer filed in the Federal District Court for Utah, Central Division, on September 5, 2007 titled, Golden Eagle International, Inc. and Terry C. Turner v. Kevin K. Pfeffer, 2:07-CV-662-TC (D.Utah; 2007). This voluntary dismissal was filed on January 28, 2008 and was acknowledged by the Court on January 29, 2008; b. Mr. Turner and we also agreed to release and hold Mr. Pfeffer harmless regarding any and all allegations, claims, disputes and controversies between the parties, and entered into a covenant not to sue Mr. Pfeffer or otherwise take any action to harm him or his reputation. c. Mr. Pfeffer agreed to release and hold Mr. Turner and us harmless regarding any and all allegations, claims, disputes and controversies between the parties, and entered into a covenant not to sue Mr. Turner or us or otherwise take any action to harm Mr. Turner or us or our reputation. We acknowledged certain sums that we owed to Mr. Pfeffer, including a promissory note dated June 6, 2005 for an operating loan that Mr. Pfeffer had made to us, accumulated interest and penalties on that note, and expenses that Mr. Pfeffer had incurred while serving on our board of directors, which totaled $230,434.37, which we agreed to convert into 57,608,593 shares of our common stock. e. All parties agreed to a two-year “Quiet Period” in which all parties will cease to comment, publicly or privately, in Internet forums and blogs, or any other written or verbal venue, regarding any of the other parties. The second agreement was titled, “Stock Purchase Agreement.” In this agreement we agreed with Mr. Pfeffer to the following: a. All of the terms and conditions of the Settlement and Release Agreement set out above, as well as the agreement for the actual issuance to Mr. Pfeffer of 57,608,593 shares of our common stock in exchange for $230,434.37 in debt that we owed to Mr. Pfeffer pursuant to exemptions from registration for accredited investors found in Sections 4(2) and 4(6) of the Securities Act of 1933.

On February 4, 2008, we issued 5,997,564 shares of our common stock to Harlan (Mac) DeLozier a Bolivian resident at $0.009 per share or an aggregate of $53,978.08. The shares were issued for a convertible note payable to Mr. DeLozier dated February 6, 2007 for services provided to the company.

On February 5, 2008 we entered into a settlement agreement with CEOcast, for the payment of trade payable from March 2005. Rachel Glicksman was issued 2,000,000 shares of our common stock in exchange for a payable totaling $17,600 including principal and interest at .0088 per share.

On February 5, 2008 we entered into a settlement agreement with RAF y CIA, LLC, which had acquired the debt owned by Tio Rico Ltd. which originally was for a note to purchase a company aircraft. RAF y CIA, LLC was issued 5,137,231 shares of our common stock in exchange for a note payable totaling $51,372 including principal and interest. We also issued 1 million shares of our common stock as a settlement fee. Additionally we issued 2,180,000 shares of our common stock to RAF y CIA, LLC in exchange for $21,800 in debt which we originally owed as an account payable to Redstone Ltd. dating back to June 30, 2005.

On February 15, 2008, we issued 3,750,000 shares of our common stock and on May 5, 2008, we issued an additional 3,750,000 and on September 23, 2008 we issued an additional 3,750,000 shares of our common stock to Burns, Figa & Will at $0.004 per share for an aggregate of $45,000. The shares were issued for a convertible note payable to Burns, Figa & Will dated January 16, 2007 for legal services provided to the company which were past due.

On April 11, 2008, we issued 77,345,203 shares of our restricted common stock to Edmundo Arauz in exchange for $262,974 in debt at a price of $.0034 per share.

On January 28, 2009 we issued 182,000,000 shares of our restricted common stock to Jose Edmundo Arauz in exchange for $262,974 in debt at a price of $.0034 per share.

On January 28, 2009 we issued 58,867,486 shares of our restricted common stock to Nestor Dimas Perez in exchange for $39,945 in debt and $1,262 in accrued interest at a price of $.0034 per share.

(2)     Between January 1, 2008, and December 31, 2008, nine of our Series B Convertible Preferred shareholders had converted an additional 232,628 Series B Preferred shares into 58,157,000 restricted common shares.

(3)     On January 28, 2009 we issued 29,448,571 shares of our restricted common stock to Dewey Williams in exchange for $20,000 in debentures and $614 in accrued interest. Additionally we issued Mr. Williams 28,571,429 shares of our restricted common stock for $20,000 in cash.

(4)     On July 2 and 3, 2009, we entered into seven separate Series D Contingent Convertible Preferred Stock Subscription Agreements (“Subscription Agreement” or “Subscription Agreements”) that became effective July 6, 2009 when we filed the Articles of Amendment to our Articles of Incorporation with the Colorado Secretary of State designating our new Series D Stock. These Subscription Agreements provide for the issuance of an aggregate of 794,449 shares of our newly created Series D contingent convertible preferred stock (the “Series D Stock”) for satisfaction in full of debt totaling $794,449. The debt retired by the issuance was comprised of debt owed to the seven separate subscribers. A more detailed description of this transaction may be found in Note G, (3).

Note E – Payables

Note F – Beneficial Conversion Feature of Debentures, Convertible Notes Payable and Convertible Preferred Stock

In accordance with Emerging Issues Task Force No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, we recognize the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert his debt into common stock at a price per share that is less than the trading price to the public on the day the loan is made to us. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of debentures and related accruing interest is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the interest method.

During the six-month period ended June 30, 2009, we incurred $136,218 in costs related to the accretion of the discount on debentures and convertible notes payable compared to $40,235 during the same 2008 period. As of March 31, 2009, we had seven Convertible Debentures outstanding totaling $204,000. We entered into an additional debenture totaling $52,000 during the period. Each of these debentures carries an interest rate of 8% per annum payable at maturity and matures two years from the date of the debenture with the exception of the debenture entered into during the period which matures one year from the date of the debenture. Each debenture, and its accrued interest, except for the one debenture totaling $52,000, is convertible into restricted shares of our common stock at any time by the holder of the debenture. If converted into restricted common stock, the conversion shall be at 50% of the average closing price of our common stock for the five trading days prior to the date of the debenture, or 50% of the average closing price for our common stock for the five trading days prior to the notice of conversion within the first 120 days immediately following the purchase of the debenture, whichever is less provided that the minimum conversion price is not less than $.002 per share. These debentures are convertible into 372,583,333 shares of our restricted common stock. As these debentures carry a conversion rate that is less than market rate the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the debenture, which in this case is 24 months or if the debenture is converted prior to maturity the remaining unaccreted amount is accreted in full. In consideration for additional investments, four of the above Convertible Debentures were approved for conversion into shares of our Series D contingent convertible preferred stock on June 30, 2009. Those debenture holders, and the additional consideration that they invested, were set out in a Current Report on Form 8-K filed by us dated July 8, 2009. The face amount of the four outstanding debentures is $131,000. On the balance sheet they have been discounted by $78,177 to $52,823. The discounted amount is accreted over the twenty-four month period or in its entirety if the debenture is converted during the term. During the six months ended June 30, 2009, $136,218 was accreted to financing costs.

With the issuance of the Series D Preferred Stock, the company calculated the beneficial conversion feature using the intrinsic value method, however, due to the contingent convertibility feature, and with the lack of available common shares to allow a conversion, pursuant to EITF 98-5 paragraph 13, the contingent beneficial conversion feature was measured using the commitment date stock price but has not been recognized in earnings until the contingency is resolved. The amount that will be recorded as a preferred dividend once the contingency has been resolved will be $794,449. Pursuant to EITF 98-5 paragraph 8, any recorded discount resulting from an allocation of proceeds to the beneficial conversion feature is analogous to a dividend and should be recognized as a return to the preferred shareholders using the effective yield method.

Note G – Unregistered sales of equity securities (not previously reported on Forms 10K, 10Q or 8K).

1. Common Stock

All unregistered sales of common stock during the two quarters ended June 30, 2009 have been previously reported on forms 10K, 10-Q or 8K.

2. Convertible Debentures

On March 18, 2009 we entered into a Convertible Debenture Agreement and issued a Convertible Debenture totaling $52,000 to the Dewey Williams Profit Sharing Plan & Trust. This debenture carries an interest rate of 8% per annum payable at maturity and mature one year from the date of the debenture. The debenture, and its accrued interest, is convertible into restricted shares of our common stock at any time by the holder of the debenture. If converted into restricted common stock, the conversion shall be at 50% of the average closing price of our common stock for the three trading days prior to the date of the debenture, or $.0005 per share, whichever is less provided that the minimum conversion price is not less than $.0005 per share. As we had only received $12,000 in proceeds for this debenture as of March 31, 2009 we classified the $12,000 as a note payable on the accompanying financial statements. The remaining $40,000 in cash was received by April 22, 2009 and the full $52,000 is classified as a convertible debenture on the financial statements dated June 30, 2009. We relied upon Sections 4(2) and 4(6) of the Securities Act of 1933 (the “Securities Act”) for the offer and sale of this convertible debenture. We believed that Sections 4(2) and 4(6) was available because the offer and sale did not involve a public offering, there was no general solicitation or general advertising involved in the offer or sale and the purchaser was an accredited investor. Further, we made available to the Dewey Williams Profit Sharing Plan & Trust or its advisors with disclosure of all aspects of our business, including our reports filed with the Securities and Exchange Commission, our press releases, and other financial, business, and corporate information and we believe that the investor obtained all information regarding the Company it requested, received answers to all questions it posed, and otherwise understood the risks of accepting our securities for investment purposes .

3. Series D Preferred Stock

On July 2 and 3, 2009, we entered into seven separate Series D Contingent Convertible Preferred Stock Subscription Agreements (“Subscription Agreement” or “Subscription Agreements”) that became effective July 6, 2009 when we filed the Articles of Amendment to our Articles of Incorporation with the Colorado Secretary of State designating our new Series D Stock. These Subscription Agreements provide for the issuance of an aggregate of 794,449 shares of our newly created Series D contingent convertible preferred stock (the “Series D Stock”) for satisfaction in full of debt totaling $794,449. The debt retired by the issuance was comprised of debt owed to the seven separate subscribers named below. The subscribers with whom we entered into Subscription Agreements, and the terms upon which we issued each subscriber shares of Series D Stock, are summarized below:

We relied on the exemption from registration provided by Sections 4(2) and 4(6) and Rule 506 of Regulation D under the Securities Act of 1933 for these transactions. 

Subject to our having sufficient authorized capital to permit the conversion of the Series D Stock into common stock, the Series D Stock is convertible for common shares of our stock at the conversion ratio of 2,500 shares of common stock for every 1 share of Series D Stock.  We have no registration obligation with respect to the shares of

We currently have no plans to issue any additional shares of the Corporation’s Series D Stock, although we may later determine it is appropriate to do so.

The Certificate of Designation made each share of Series D Preferred stock convertible to 2,500 shares of our common stock. The conversion may only occur following the occurrence of a “Conversion Event” as defined in the Certificate of Designation. A Conversion Event will occur upon additional common shares being available after the authorization by our shareholders of an increase in our number of common shares or the reorganization of our common stock through a reverse split. Each share of Series D Stock votes with the common stock, and is entitled to as many votes as the shares of common stock into which the Series D Stock is convertible, assuming that a Conversion Event has occurred. The Series D Stock is entitled to dividends and distributions upon liquidation as though it were fully converted to common stock. The conversion may only occur following the occurrence of a “Conversion Event” as defined in the Certificate of Designation. The outstanding shares of Series B preferred stock and Series C preferred stock are “Senior Securities” with respect to the Series D Stock.

Note H – Recent accounting pronouncements

SFAS No. 161   In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”), which is effective January 1, 2009. SFAS 161 requires enhanced     disclosures about derivative instruments and hedging activities to allow for a better understanding of their effects on an entity’s financial position, financial performance, and cash flows. Among other things, SFAS 161 requires disclosures of the fair values of derivative instruments and associated gains and losses in a tabular formant. SFAS 161 is not currently applicable to the Company since the Company does not have derivative instruments or hedging activity. 

SFAS No. 162   In May 8, 2008, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 162, The Hierarchy of Generally Accepted Accounting Principles, which will provide framework for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. With the issuance of SFAS No. 162, the GAAP hierarchy for nongovernmental entities will move from auditing literature to accounting literature.  The Company is currently assessing the impact of SFAS No. 162 on its financial position and results of operations.

SFAS No. 163   The FASB has issued Statement of Financial Accounting Standards No. 163, Accounting for Financial Guarantee Insurance Contracts. SFAS No. 163 clarifies how SFAS No. 60, Accounting and Reporting by Insurance Enterprises, applies to financial guarantee insurance contracts issued by insurance enterprises, and addresses the recognition and measurement of premium revenue and claim liabilities. It requires expanded disclosures about contracts, and recognition of claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also requires disclosure about (a) the risk-management activities used by an insurance enterprise to evaluate credit deterioration in its insured financial obligations, and (b) the insurance enterprise’s surveillance or watch list. The Company is currently evaluating the impact of SFAS No. 163.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events. SFAS No. 165 is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. SFAS No. 165 requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date – that is, whether that date represents the date the financial statements were issued or were available to be issued. The disclosure is intended to alert all users of financial statements that an entity has not evaluated subsequent events after the date in the set of financial statements being presented. SFAS No. 165 is effective for interim and annual periods ending after June 15, 2009, or the Company’s fiscal quarter beginning July 1, 2009. The Company does not believe that the implementation of SFAS No. 165 will have a material impact on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets- an Amendment to FASB Statement No. 140. SFAS No. 166 is a revision to SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and will require more information about transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS No. 166 eliminates the concept of a “qualifying special purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS No. 166 is effective at the start of a company’s first fiscal year beginning after November 15, 2009, or the Company’s fiscal year beginning January 1, 2010. The Company is currently unable to determine what impact the future application of SFAS No. 166

In June 2009, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 167 Amendments to FASB Interpretation No. (46R). SFAS 167 is a revision of FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, and changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that is  most significantly impacts the entity’s economic performance. SFAS No. 167 is effective at the start of a company’s first fiscal year beginning after November 15, 2009, or the Company’s fiscal year beginning January 1, 2010. The Company is currently unable to determine what impact the future application of SFAS No. 167 may have on its consolidated financial statements.

Note I – Stock based compensation

As of January 1, 2006, we elected to measure and record compensation cost relative to stock option costs in accordance with SFAS 123 (Revised 2004), “Accounting For Stock Based Compensation,” (SFAS 123(R)) which requires the company to use the Black-Scholes pricing model to estimate the fair value of the options at the grant date. No options were granted or outstanding as of December 31, 2008.

As part of employment agreement with Blane Wilson, our Chief Operating Officer, dated April 18, 2008 we agreed to the following options:

We expensed $87,800 during 2008 in connection with the issuance of these options, $11,354. During the quarter ended March 31, 2009 and $13,842 during the quarter ended June 30, 2009.

Note J – Legal action

On June 10, 2009, we received a notice (the “Notice”) from Queenstake Resources USA, Inc. (“Queenstake USA”), the wholly owned subsidiary of Yukon-Nevada Gold Corp., (“YNG”), advising us that Queenstake USA allegedly terminated the agreement between Golden Eagle and Queenstake USA regarding the operation of the Jerritt Canyon gold mill (the “Mill”). The Notice provided that Queenstake USA believed that the termination was effective immediately.

Also on June 10, 2009, Queenstake USA filed a Complaint against the Company in the Fourth Judicial District Court of the state of Nevada for Elko County (Queenstake Resources USA, Inc.(Plaintiff) v. Golden Eagle International, Inc (Defendant).; Golden Eagle International, Inc. (Counterclaimant) v. Queenstake Resources USA, Inc. (Counter Defendant); Golden Eagle International, Inc. (Third Party Plaintiff) v. Francois Marland, John Does 1-10, Queenstake Resources, Ltd. and Yukon-Nevada Gold Corp. (Third-Party Defendants), case no. CVC-C-09-544 Dept 2). In the Complaint, Queenstake USA alleges that Golden Eagle breached an agreement between the parties with respect to the operation of the Mill; breached an implied covenant of good faith and fair dealing; and committed negligence in the operation of the Mill. Further, in the Complaint Queenstake USA has sought a declaratory judgment that Golden Eagle is obligated to leave the Mill site and cease operating the Mill.

We believed then, and continue to believe, that Queenstake USA’s allegations are false and wholly without merit. Subsequent to the end of the second quarter, on July 9, 2009, we filed an Answer, Counterclaim and Third-Party Complaints. Our Answer specifically denies those allegations made in the Complaint filed (but never served) by Queenstake USA on June 10, 2009 (See our Current Reports filed on Form 8-K on June 12, 2009, July 9, 2009, and July 17, 2009).

Our Counterclaim against Queenstake USA alleges that by a pattern of fraud, misrepresentation, material omissions and deceptive business practices Queenstake USA induced Golden Eagle to enter into a mill operating agreement on October 14, 2008, which called for Golden Eagle to operate the Mill for a 5-year period and provide extensive services to prepare the Mill for operations and bring it into environmental compliance. The Counterclaim further alleges that Queenstake USA continued between October 2008 and June 2009, through fraudulent and deceptive means, to induce Golden Eagle to continue to provide its administrative services and contract with up to 82 employees, providers, suppliers and third-party contractors, which resulted in a liability for costs incurred by Golden Eagle, and administrative fees owed to Golden Eagle, in excess of $2.23 million. Our allegations include that Yukon-Nevada and one of its significant investors deemed Golden Eagle’s contract “too lucrative” and then tortiously interfered with the mill operating agreement by compelling Queenstake USA to breach its agreement and covenant of good faith and fair dealing with Golden Eagle on June 10, 2009. We allege that this breach, based on the Counterclaim and Third Party Complaints, caused Golden Eagle to lose the “benefit of the bargain,” or lost profit from the agreement, in excess of $40 million based on Queenstake USA’s own calculations and representations to Golden Eagle and the Nevada Division of Environmental Protection (NDEP).

We also allege in our Counterclaim that the mill operating agreement had all of the characteristics of a lease, putting Golden Eagle in possession of the mill property and its full use; ensuring Golden Eagle’s quiet enjoyment of the premises; requiring Golden Eagle to maintain and repair the property; granting Golden Eagle access to the “common areas” on the mill complex, etc. As a result of these lease characteristics, we have sought statutory relief under the Nevada Forcible Entry and Detainer statutes and seek an order of the court based on those statutes putting Golden Eagle back in immediate possession of the mill property.

We further allege in our Counterclaim and Third-Party Complaints that Queenstake USA, Yukon-Nevada (Yukon USA’s parent corporation) and a significant Queenstake USA investor have caused us irreparable harm. As a result, we ask the court for a Declaratory Judgment and a Writ of Mandamus that order that Golden Eagle be allowed full possession of the mill property so that it may complete its contract term of 5 years.

We claim in our Counterclaim and Third-Party Complaints that Queenstake USA, Yukon-Nevada and a significant Queenstake USA investor have committed acts of oppression, fraud or malice, express or implied, and that Golden Eagle is entitled under Nevada law to recover punitive damages, which are calculated as three times the amount of compensatory damages.

Finally, we allege in our Counterclaim and Third-Party Complaints that Queenstake Canada unconditionally guaranteed the agreement between Golden Eagle and Queenstake USA, and furthermore, unconditionally guaranteed the covenant of good faith and fair dealing between the parties. As a result, Queenstake Canada was also named as a Third-Party Defendant sharing joint liability with its wholly owned subsidiary, Queenstake USA.

On July 15, 2009 we recorded a Notice of Mechanics/Materialmen’s Lien and a Notice of Mill Lien (the “Liens”) against the Jerritt Canyon mill located 50 miles north of Elko, Nevada, in the total amount of $1,307,813 in the official records of the Elko County Recorder, State of Nevada. Notice of the liens was served on Queenstake Resources, USA and Yukon-Nevada Gold Corp. pursuant to Nevada State law by certified or registered mail on July 15 and 16, 2009.

On July 17, 2009 we filed an Amended Answer, Counterclaim and Third-Party Complaints seeking to foreclose on the Liens described above, as well as maintaining the causes of action originally set out in the pleading filed on July 9, 2009 in the matter of Queenstake Resources USA, Inc.(Plaintiff) v. Golden Eagle International, Inc (Defendant).; Golden Eagle International, Inc. (Counterclaimant) v. Queenstake Resources USA, Inc. (Counter Defendant); Golden Eagle International, Inc. (Third Party Plaintiff) v. Francois Marland, John Does 1-10, Queenstake Resources, Ltd. and Yukon-Nevada Gold Corp. (Third-Party Defendants), CV-C-09-544, in the Fourth Judicial District Court for Nevada, In and For the County of Elko

Note K – Derivative Liability

The Company has authorized for issuance 2,000,000,000 shares of common stock at $0.0001 par value. At June 30, 2009 the Company had 1,834,784,719 common shares issued and outstanding. In addition to the issued shares, the Company has Convertible Series B Preferred shares, Convertible Debentures and Stock options outstanding that could convert into 448,488,051 additional shares as of June 30, 2009 (see Note C – earnings (loss) per common share). If each of the equity instruments were exercised for conversion to common stock, the Company does not have enough authorized shares to satisfy each of the equity conversions. Pursuant to Emerging Issues Task Force (“EITF”) No. 00-19, this creates a situation that does not allow the Company to satisfy these obligations with stock, and therefore, the Company would have to settle the conversions in cash creating a derivative liability. As a result, the Company has recorded a derivative liability to account for the shortfall and potential liability if amounts were demanded for conversion. As of June 30, 2009, the balance of the derivative liability was $226,618, which is the value of the shortage of 283,272,870 shares at the market price at June 30, 2009. The derivative is expensed and revalued at the end of each period financial statements are prepared, based on the market price at the end of the period. The Company is currently in the process of increasing its authorized shares to compensate for the shortfall.

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