BEACON EQUITY RESEARCH

Analyst: Victor Sula, PhD

Initial Report
March 17th, 2008

USMM daily 03/13/08

0.45

0.40

0.35

0.30

0.25

0.20
U.S. Mine Makers, Inc.
0.15

74-090 El Paseo Drive Suite 200 0.10

Palm Desert, CA 92260
volume

Phone: (760)360-9547 60

Fax: (509)561-4292

Thousands
40

Website: www.usminemakers.com 20

Email: info@usminemakers.com
0
08 Feb Mar

Market Data

Symbol / Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OTC PK: USMM

Coverage Initiated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mar 17th, 2008
Current Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.16
Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Speculative Buy
Price Target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.55
Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.72M
Market Cap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10.67M
52-Week Range. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.15 - $0.55
Average 3M Volume. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,148.39 .....

Company Overview
U.S. Mine Makers, Inc. (OTC PK: USMM; the Company) is US-based company en-
gaged in “eco friendly” mining and processing of precious metals in Idaho, Nevada and
Canada. The Company processes ore concentrate and hard rock ore to recover residual
gold, platinum, rhodium and other precious metals from waste rocks of old abandoned
mines. The Company`s goal is to process ore in a safely and economically manner with
little or no environmental impact.

In addition USMM offers a wide range of mine remediation services to minimize the re-
lease of contaminants from the mine site to the surrounding environment and to ensure
full compliance with regulatory agency requirements. USMM uses bromide processing
for mine remediation projects, cleaning up watersheds and dump sites.

The Company is in negotiations for a lease purchase agreement with a large west coast
producer of ore concentrate and acquisition of their fully operational and permitted
 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

facility in Idaho. The facility is situated on 9 acres and the ore-mining rate is expected to be approximately 10 tons per day of
ore with the ability to increase production up to 100 tpd ore on site.

The Company has assembled a solid staff of professional engineers, geologists, hydrologists, geotechnical specialists, profes-
sional biologists and sedimentologists whose skills bring the projects to timely and successful completion, taking in consider-
ation the Company`s motto “We Clean the Planet - One Mine Site at a Time.”

Investment Highlights

Business model to mine and process precious metals

USMM is focused on identifying, mining and processing of residual precious metals such as Gold, Platinum,
Rhodium from tailings of old abandoned mines. In current conditions of precious metals price appreciation, the
Company developed and employs new mining techniques to reprocess the tailings and recover additional min-
erals, while keeping the economic viability of the business model.

In addition, the Company applies eco-friendly Halogen Leach process that utilizes food grade products; so all
discharges from operations have insignificant or no adverse environmental impact.

Focus on mine remediation and restoration

Mining is an intensive type of land use with environmental impact over a significant area. Tailings remaining
after the mine is abandoned contain quantities of heavy metals found in the host ore, and added chemicals used
in the extraction process, many of them being highly toxic and pollute the surrounding environment.

USMM mine remediation technology is designed to restore to an acceptable state the physical, chemical and bio-
logical quality of air, land and water regimes disturbed by mining activities over the years. There are more than
500,000 old abandoned mines in the United States alone, the biggest part of them requiring remediation. The US
EPA estimated the total costs of remediation to near $1.7 trillion in the next 30 years.

Production scheduled to commence in the second half of 2008

The Company has been successful recovering residual precious metals in the waste rocks from its operations in
Nevada and Idaho and plans to move into its own complete processing and mining plant/facility in Idaho where
it has the assets and ore stockpile to become operational and produce a positive cash flow within 120 days of
full time operation. The site is setup to operate up to 10 tons per day (TPD) of ore concentrate with the ability to
increase production up to 100 TPD on site.

With the operating facilities established, the Company will further focus on providing the needed quantity of ore
stockpiles to ensure rhythmic operations and retrofitting the operating facility to process 200 TPD of ore body,
using existing machinery.

Positive management outlook

With the acquisition of the Idaho facility, USMM plans to start generating significant revenue. The Company
forecast to recover over 20,000 ounces of precious metals during 2008 and report approximately $1.9 million in

U.S. Mine Makers, Inc. (USMM) 2

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

revenues. Going forward, the increasing recovery grades and operating capacity is likely to allow the Company
to report annual revenue of $21.8 million by the year end of 2010. In addition, USMM’s management is expecting
to breakeven in 2009 and to return 100% of initial investment within the first 12 months of operation.

Experienced team of managers and field specialists

The Company has assembled a qualified team of managers, engineers, geologists, hydrologists, geotechnical
specialists, professional biologists and sedimentologists with hundreds of years of experience in mining and
finance. The Company’s CEO- Mr. Bell - has more than 15 years experience with alternative methods of process-
ing and has worked with bromide processing for remediation projects cleaning up watersheds and dump sites
while recovering residual precious metals in the waste rocks, in the North Western regions.

Record prices for precious metals

The rising energy prices, weakening dollar, concerns over inflation and the overall condition of financial markets
have boosted the demand for the precious metal as an alternative investment. Gold prices witnessed the greatest
annual gain in 28 years by increasing 32% in 2007. Spot gold prices reached a record of $983 an ounce in early
March 2008. The market consensuses predict that prices for gold could soar to above the psychological $1,000
an ounce in the very near future, averaging $850 an ounce in 2008. Platinum price increased 75% for the last 12
month and 41% in the first three month of 2008 to more than $2200 an ounce. Some analysts expect the platinum
to reach the $3,000 level by the end of the year.

The strong demand for precious metals

Population growth as well as industrial, technological and economical growth is making worldwide precious
metals demand rise faster than supply. In 2006, the world consumption of gold was led by jewelry. During 2007,
safe haven investors spurred record investments into gold exchange traded funds, helping to push total demand
to a new record level. Investors rather than jewelry buyers are expected to become the dominant force on the
gold market.

The demand for platinum increased

from 5 million ounces in 1997 to more
than 7 million ounces in 2007. The
deficit for platinum was estimated
at 250,000 ounces in 2007 and is ex-
pected to increase to 400,000 ounces in
2008. About 61% of platinum demand
comes from the automobile industry.
Platinum’s presence in the automobile
industry results from a decades-long
environmental push to reduce automo-
bile emissions of nitrogen oxide, and
hydrocarbons.

U.S. Mine Makers, Inc. (USMM) 3

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

Business model
USMM is an “eco-friendly” mining and production company that uses its own modern technology to clean up
toxic mine sites and produce precious metals, while leaving behind super soil for a better place to live.

The Company is pursuing a two-fold business model:

1) “Eco-friendly” mining and processing of precious metals business

The Company utilizes non-proprietary Halogen Leach processes to recover residual precious metals from tail-
ings of old abandoned mines in Idaho, Nevada and Canada. Because these processes utilize food grade prod-
ucts, all discharges from operations have little or no adverse environmental impact.

Tailings are the materials left over after the process of separating the valuable fraction from the worthless frac-
tion of an ore and consist of ground rock and process effluents that are generated in a mine processing plant.
Traditional mechanical and chemical processes used to extract the desired product from the run of the mine ore
are never 100% efficient. In current conditions of precious metals` prices appreciation, the Company developed
new mining techniques to reprocess the tailings to recover additional minerals, while keeping the economic vi-
ability of the business model.

Tailings contain quantities of heavy metals found in the host ore, and added chemicals used in the extraction
process. Common minerals and elements found in tailings are arsenic, barite, calcite, fluorite, mercury, sulfur,
cadmium, and hydrocarbons, many of them being highly toxic byproducts of certain kinds of ore processing that
pollute the surrounding environment. The local, state and federal authorities implement different multi-billion
dollars programs to manage environmental cleanups. Hence, USMM has found necessary to develop its second
business segment.

2) Mine remediation and restoration process

USMM`s projects of mine remediation are designed to restore to an acceptable state the physical, chemical and
biological quality of air, land and water regimes disturbed by mining activities over the years. Mining is an in-
tensive type of land use with environmental impact over a limited area. When a mine is abandoned, it should
address both environmental and safety aspects.

There are 500,000+ old abandoned mines in the United States alone. The physi-
cal impacts of abandoned mine sites include: altered landscape; unused pits and
shafts; land no longer usable due to loss of pH, soil, or slope of land; changes in
groundwater regime; abandoned tailings dumps; subsidence; contaminated soils
and aquatic sediments; and changes in vegetation. These problems have social and
economic impacts due to: loss of productive land; pollution of surface water by
sediments or salts; loss or degradation of groundwater; air pollution from dust or
toxic gases; changes in river regimes; and risk of falls into shafts and pits.

The goal of mine remediation is to prevent or minimize adverse long-term environmental impacts and to create
a self-sustaining ecosystem. USMM mine remediation techniques consist of removing, relocating or demolish-
ing buildings and physical infrastructure; stabilizing underground workings, soils and slopes; closing pits and
shafts; treating tailings and waste water; and land re-vegetating.

U.S. Mine Makers, Inc. (USMM) 4

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

Exhibit 1: Tailing remediation example

Surface to be vegetated

Surface slope (min. 0.5%; max. 33%)

Vegetation
Support 30-70 cm silt or silty clay
Layer
Two-
Layer
Cover
15-30 cm gravel (<2.5)
Capillary or
30-60 cm screened crush (<30)
Break or
100 cm Run-of-guarry (<100 cm)

Possible
non-woven Tailings
geotextile

Source: http://nwt-tno.inac-ainc.gc.ca/giant/pdf/Tailings_remediation_FS.pdf

The tailings are covered with one layer of quarried rock and a second layer of silt like clay soil. The lower layer of
quarried rock act as a capillary break and prevent contaminants from the tailings from moving upward towards
the surface. The rock layer also inhibit the downward penetration of plant roots into tailings and it also serve as
a final protective layer to prevent erosion of tailings. The upper layer of silty clay soil reduces infiltration of wa-
ter to the tailings and enables vegetation to grow. The surfaces of each tailings area are graded, and ditches and
spillways constructed, to limit erosion and to allow water to run off the cover without becoming contaminated.

Strategy
USMM combines financial and human resources with field efforts, to identify target projects sooner, and evalu-
ate resource and economic values with enhanced speed and exactness. The Company plans to establish a well-
capitalized growth platform for assets and cash flow by:
• Providing a deep industry expertise;
• Maintaining a well-financed mining and processing program;
• Utilizing the modern and eco-friendly mining and production technologies;
• Promoting innovation and continuous improvement;
• Reducing exploration risk and increase economic viability.
• Developing and maintaining close professional relationships with regulatory agencies;
• Establishing partnerships with authorities and individuals responsible for reviews and permit approv-
al;
• Developing cost-effective compliance strategies;

U.S. Mine Makers, Inc. (USMM) 5

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

Projects
The Company has been successful recovering residual precious metals in the waste rocks (tailings) from its op-
erations in Nevada and Idaho. USMM plans to move into its own complete processing and mining plant/facility
in Idaho where it has the assets and ore stockpile to become operational and produce a positive cash flow within
120 days of full time operation. Situated on 9 acres, the site is setup to operate up to 10 TPD of ore concentrate
with the ability to increase production up to 100 TPD on site.

On February 28, 2008, USMM announced acquisition of assets consisting of various mining and ore processing
equipment and machinery together with ore stockpiles. The equipment and ore purchase was valued in excess
of $8 million in exchange for 30 million shares of common stock of USMM.

With the operating facilities already established, the Company will be focused to supply the needed quantity of
ore stockpiles to ensure rhythmic operations. The Company is currently assessing the amount of precious metals
in acquired ore stockpiles and the possibility of purchasing new and adjacent claims.

Moreover, USMM scheduled a feasibility study to investigate the possibility of retrofitting the operating facility
to process 200 TPD of ore body, using existing machinery owned by USMM at the site.

Besides its current project in Gooding, Idaho, USMM will continue its abandoned mine remediation and restora-
tion program. USMM has been active in the mine restoration business since 2001 and expects to continue its mis-
sion of mine clean-up throughout the West. Currently, the business of mine reclamation has no single operator.

U.S. Mine Makers, Inc. (USMM) 6

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

Industry outlook
USMM is in the precious metals recovery industry, which is witnessing a strong demand for its byproducts.
Moreover, the precious metals are in the center of spectacular bull market. In 2007, gold prices were up 36.6%,
platinum prices surged 75%, both exceeding their all times records.

Precious metals are used in a varied of ways including jewelry and solid-state circuitry, and for their catalytic
properties for the auto and trucking industries. Precious metals assets are now becoming a safe haven for hedge
funds as well as investors who desire to secure the future of their personal wealth, by diversifying with precious
metals as inflationary hedges.

Gold industry
The process of mining gold is extremely capital and time-intensive. Population growth as well as industrial,
technological and economical growth is making worldwide gold demand rise faster than supply.
Exhibit 2: World Mine Gold Production, metric tons

1995 2000 2001 2002 2003 2004 2005 2006

United States 320 353 335 298 277 258 256 260
Australia 250 296 285 273 282 259 262 260
Canada 80 154 160 149 141 129 119 120
China 145 180 185 190 202 215 225 240
Indonesia n/a 125 130 135 140 93 140 145
Peru n/a 133 138 138 172 173 208 210
Russia 147 126 152 170 170 169 169 162
South Africa 580 431 402 399 373 341 295 270
Other countries 678 735 783 798 830 794 793 840
World Total 2200 2,550 2,570 2,550 2,590 2,430 2,470 2,500
Source: British Geological Survey 2007; US Geological Survey 2007.

In 2006 the world consumption was led by jewelry, which consumed 2,280 tons worldwide or 14% higher than in
2005, followed by identifiable investment of 640 tons for industrial applications and dental consumption of 452
tons. Mine production in 2007 fell by just over 1%, partly through delays to development and expansion projects.
Losses centred on South Africa, Peru and the United States, while gains focused on Indonesia and, in particular,
China whose increase knocked South Africa off the top spot to become the world’s largest producer. Output in
the first half of 2008 is forecast to grow by just over 2%1.

The progressing financial crisis had a direct impact on the global gold market in the last quarters of 2007. Thus,
safe haven investors spurred record investments into gold exchange traded funds, helping to push total demand
to a new record of $20.7 billion for Q3 2007, up 30% on a year earlier2. According to GFMS, the record prices will
cut jewelry demand to 1,031 tons in the first half of 2008, or a decline of 19.8% from the 1,285 tons of the same
period of 20073. Investors rather than jewelry are expected to become the dominant force on the gold market.

1 www.gfms.co.uk/Press%20Releases/UP207_overview.pdf
2 www.gold.org/value/stats/statistics/gold_demand/index.html
3 www.ft.com/cms/s/0/d4cd8f74-c4ed-11dc-811a-0000779fd2ac.html

U.S. Mine Makers, Inc. (USMM) 7

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

On the supply side China took the leadership over South Africa as the world’s largest gold producer, ending a
dominance that has lasted for 100 years. Chinese output raised 12% to 276 tons while South Africa’s production
dropped 8% to 272 tons. In total, global mined gold production fell 1% to 2,444 tons last year.

Gold Prices
Gold average prices ranged $600 per ounce in 2006, registering its 2006 high in May - $725. Strong jeweler de-
mand from emerging markets of India, China and Middle East supported price momentum in 2006 and the first
half of 2007. Since August 2007, gold prices accelerated the growth pace, hitting new and new records driven
by the strong investment demand. The average price for 2007 was slightly less than $700, which represents an
all-time high for average price.

Gold prices are rising during times of inflation, times of uncertainty; easy money and weak dollar. All of these
are currently keeping a strong foundation under the gold price. Gold has gained more than 30% in 2007. Spot
gold prices reached a record $983 an ounce in early March 2008, boosted by investors seeking refugee from a
weakening US dollar, significant increases in world oil prices, associated concerns over inflation, production
disruptions at a number of mining operations in South Africa and worries about the health of Wall Street’ banks.
Upward pressure on the price of gold is also being driven by US interest rate cuts, which make gold more attrac-
tive. Barclays Capital has predicted the gold may reach the $1,0004 per ounce threshold before summer 2008.
Exhibit 3: Gold Price, 1 year

1 Year Gold High 983.50 Low 640.0

1000 1000

950 950

900 900

850 850
USD per ounce

800 800

750 750

700 700

650 650

600 600

550 550
06 Mar

12 Apr

21 May

28 Jun

06 Aug

12 Sep

19 Oct

27 Nov

03 Jan

11 Feb
04 Mar

Source: http://goldprices.com, price in $ per oz

Platinum industry
According to the US Geological Survey, the annual platinum demand just ten years ago was only 5 million
ounces. The demand for platinum was up 37%5 in 2007. The bulk of platinum’s demand is not being driven by
the preciousness of the metal, as jewelry accounts for less than 25% of total demand. Although platinum jewelry
serves as a status of wealth, platinum is not kept as a safe haven and its investment characteristics don’t compare
4 http://capitalgoldgroup.wordpress.com/
5 www.kitco.com/ind/Wright/fab292008.html

U.S. Mine Makers, Inc. (USMM) 8

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

to gold. Platinum’s primary source of demand is actually industry. Of its many industrial applications it is found
in LCDs, hard disks, oil refining, and the exciting development of fuel cell technology. And by far the biggest
single consumer of this metal is the automobile industry. In non-technical terms platinum serves as a catalyst
inside these converters enabling chemical reactions that treat vehicle exhaust emissions. In 2008 demand for the
metal that was once considered an impurity in silver is expected to exceed 7.5 million ounces. The demand in
2008 is expected to be almost double the 2007 deficit of over 250,000 ounces with 51% coming from the auto-
catalyst sector.

Global platinum mine production in 2006 registered a 6% increase year-on-year totaling 7.01 million ounces
(217.9 tonnes). The higher output was chiefly on account of higher production in South Africa. Mine output else-
where was essentially flat year-on-year, though there was a modest rise in the scrap recovery from auto catalysts.
Mine production of platinum is expected to reach 7.3 million ounces in 2007.

Platinum Group Metals prices

Platinum’s price move was dramatic in the last ten years. It rose from nearly $400 an ounce in 1997 to $2000 at the
beginning of 2008. Only in the last 12 month, the price soared 75%. Overall, in 2008, platinum and rhodium lev-
eled off at their new higher levels. Supply concerns from South Africa for platinum group metals have continued
to play center stage in their recent valuation, allowing platinum to exceed $2000, palladium to surpass $500, and
rhodium to reach $9000 per ounce. And as high as platinum is right now, some analysts are now calling for the
metal to hit $3,000 per ounce by the end of the year. For rhodium, annual real gains are significant at 46.5% - last
year rhodium’s average real price was $6,175.62 per ounce.
Exhibit 4: Platinum Price, 1 year

1 Year Platinum High 2231.00 Low 1189.00

2300 2300
2200 2200
2100 2100
2000 2000
1900 1900
1800 1800
USD per ounce

1700 1700
1600 1600
1500 1500
1400 1400
1300 1300
1200 1200
1100 1100
06 Mar

12 Apr

21 May

28 Jun

06 Aug

12 Sep

19 Oct

27 Nov

03 Jan

11 Feb
04 Mar

Source: www.kitco.com/charts/liveplatinum.html

Abandoned mines
The environmental, social and economic problems associated with abandoned mine sites are serious and global.
They affect all former mining countries: Brazil, Canada, France, Philippines, South Africa, the United States,
etc.

U.S. Mine Makers, Inc. (USMM) 9

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

Exhibit 5: Western Abandoned Mines

State Nr. of mines

Alaska 432
Arizona 100,000
California 20,000
Colorado 3,618
Idaho 22,000
Montana 6,000
Nevada 50,000
N. Mexico 20,000
N. Dakota 150
S. Dakota 900
Texas 11,900
Utah 20,000
Wyoming 2,649
Source: www.centerwest.org/publications/pdf/mines.pdf;
www.engr.colostate.edu/hsrc/presentations/CarolRussell_mining101.pdf

The US Bureau of Land Management has estimated that there are between 100,0006 and 500,000+ small and
mid-size abandoned hard rock mines in the west. Of those, 25% relate to health and safety matters and 5% to
environment, primarily issues being water pollution. The US Bureau of Mines estimated7 that 12,000 miles of the
waterways of the Western United States, or about 40%, are contaminated by metals from acid mine drainage,
mostly by abandoned mines, while 180,000 acres of lakes and reservoirs are tainted by abandoned mine runoff.

Over the last century the volumes of tailings being generated has grown significantly as the demand for minerals
and metals has increased and lower grades of ore are being mined. In the 1960’s 10’s of thousand of tonnes8 of
tailings were produced each day and by 2000 this figure has increased to 100’s of thousands.

The US Environmental Protection Agency is managing a so-called “Superfund” – an environmental program

established to address abandoned hazardous waste sites, including abandoned hard rock mines and mineral
processing sites. It is also the name of the fund established by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.

The Superfund cleanup process is complex. It involves the steps taken to assess sites, place them on the National
Priorities List, and establish and implement appropriate cleanup plans. EPA’s Superfund Program attempts to
get interested parties involved as much as possible, as early as possible.

In 1985 report Superfund Strategy9 the cost of future cleanups was estimated at about $300 billion by govern-
ment and industry over about 50 years. In 1990, with new information on how many sites require cleanup, the
costs facing American society over at least 50 years rose to $500 billion. The latest estimates in the US alone, point
that hazardous waste site restoration costs may approach $1.7 trillion dollars over the next 30 years.

6 www.mineralresourcesforum.org/docs/pdfs/abandoned_report.pdf
7 www.centerwest.org/publications/pdf/mines.pdf
8 www.tailings.info/tailings.htm
9 www.princeton.edu/~ota/disk1/1989/8903/8903.PDF

U.S. Mine Makers, Inc. (USMM) 10

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

Outlook and Valuation

Outlook
The Company is planning to commence precious metals recovery from acquired ore stockpiles in the second half
of 2008, after the operating facilities will be prepared for production.

During 2008 and 2009, the USMM plans to capture approximately 3 tons pet day of ore concentrate, with a re-
covery rate of 10 oz/tons for gold and 0.45 oz/tons for platinum. Assuming the current gold and platinum prices
to stand over the long term we project the following revenue stream for the Company:
Exhibit 6: Revenue forecast

Operating capacity Recovery rates, oz/ton Price $/oz

Monthly Annual
Tones of ore Days per Months per Revenue, $ Revenue, $
Gold Platinum Gold Platinum
per day month year
2008 3 14 5 10 0.45 $900 $1800 $386,100 $930,500
2009 3 20 12 10 0.60 $900 $1800 $550,800 $6,609,600
2010 10 20 12 10 1.00 $900 $1800 $1,818,000 $21,816,000
Source: Management guidance, Analyst estimates

In addition, we expect the Company to report a gross margin in the range of 20% and to incur significant operat-
ing expenses in 2008 for site development, engineering and permitting. As a result, we expect the company to
breakeven in 2009 and to start reporting solid revenue streams with the expansion of production capacities.
Exhibit 7: Pro Forma Profit and Loss Statement, $ thousands

2008 2009 2010

Revenue 1,931 6,610 21,816
Cost of revenue 1,544 5,288 17,453
Gross profit 386 1,322 4,363
General and administrative expenses 530 583 641
Sales and Marketing expenses 150 165 182
Site development expenses 2,500 550 605
Operating income (2,794) 24 2,935
Source: Management guidance, Analyst estimates

Given its development-stage status, USMM will require significant financing to engineer and operate ore con-
centrate processing facilities in Idaho, to acquire significant ore stockpiles and obtain the necessary permitting
to start operations. The Company’s ability to implement its business strategy depends on obtaining additional
equity or debt financing. If it is unable to raise additional capital, USMM may be forced to delay or suspend its
business model.

Valuation
The precious metals mining industry is on a rising track, fueled by increased consumption and price momen-
tum. Gold mining companies are generating strong revenue and earnings growth which in turn is driving valua-
tion multiples above the basis materials sector and the S&P 500. Higher mineral prices enable mining companies

U.S. Mine Makers, Inc. (USMM) 11

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

to profitably develop precious metals resources that in a low-prices environment would not be economically
viable.

Stillwater Mining (NYSE:SWC) is the closest company that matches USMM business model. Both companies are
sharing the same business philosophy and same recovery technologies. Therefore we believe USMM should be
valued at comparable to SWC multiples.
Exhibit 8: Industry valuation comparisons

Stillwater Mining Metal Mining Basic Materials

S&P 500
(SWC) Industry Sector
P/E Ratio (TTM) NM 13.45 22.16 17.83
Price to Sales (TTM) 2.55 2.86 2.57 2.43
Price to Cash Flow (TTM) 23.16 10.18 14.85 12.92
Price to Free Cash Flow (TTM) NM 47.30 37.91 27.69

Source: http://stocks.us.reuters.com/stocks/ratios.asp?ct=0&symbol=swc

Applying the SWC’s ttm P/S multiple of 2.55 to the USMM’s revenue estimate of $21.8 million for 2010 we ar-
rive at a market capitalization target of $55.6 million. Discounting this target at a WACC of 15% we obtain the
company’s fair market value at $36.6 million or $0.55 per share of common stock (assuming fully diluted shares
outstanding of 66.7 million).

Considering the solid demand and rising prices for precious metals, as well as the company’s progress towards
production and commercialization we initiate coverage of U.S. Mine Makers Inc. with a Speculative Buy rating
and a $0.55 price target. However, we strongly advise investors to consider the risk factors mentioned below
since the Company faces many challenges in attaining its production targets.

U.S. Mine Makers, Inc. (USMM) 12

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

Risks

Limited operating history

The Company lacks an operating history as mining or processing company. In addition, USMM has not yet
generated any revenue from mining operations. There can be no assurance that the Company can successfully
establish mining operations or profitably recover precious metals. Moreover, there is no assurance that the Com-
pany will benefit from any local, state, federal or individual fund to develop its mine remediation and restora-
tion segment.

Volatility of precious metals prices

USMM profits are depended on global precious metals prices. Gold and other precious metals prices fluctuate
widely and are affected by numerous factors beyond the Company’s control. The future serious price declines
could cause continued exploration of the Company’s properties to be impracticable. In that event, the Company
could be forced to discontinue its operations.

Availability of financing
Since inception, the Company has not generated any revenues from mining or related operations. According to
management, USMM needs more than $2 million of external financing to get the Gooding facility to operate. If
it is unable to raise additional capital, the Company may be forced to delay or suspend its development activi-
ties.

Liquidity risk related to USMM stock

The Company’s shares trade on the Pink Sheets. This market is less efficient than the national exchanges and is
characterized by higher volatility, limited transparency and poor liquidity. The market factors may adversely
affect the price of USMM stock, regardless of the Company’s operating performance.

U.S. Mine Makers, Inc. (USMM) 13

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

Management
Ronald Bell, Since 2001 Mr. Bell has served as President of Desert Minerals Mining Inc. as well as
President and CEO Earth care international LLC, where he spearheaded a precious metals project that re-
ceived the last cyanide mining permit issued in the State of Idaho since 1989. Mr. Bell
has experience with alternative methods of processing and has worked with bromide
processing for remediation projects cleaning up watersheds and dump sites while
recovering residual precious metals in the waste rocks, in the North Western regions.
Prior to entering the Mining and Remediation industry, Mr. Bell traded options and
traded derivatives on Wall Street. He was part of Bell West Investments, a division
of generating capital for Eco friendly mining operations. He has funded mining and
commercial overseas construction projects as well. Mr. Bell earned a degree in eco-
nomics from Eastern Kentucky University.

James Dascalos, Mr. Dascalos currently serves as the President and CEO of Resources Opportunity
Vice President and COO Corporation International, (ROCI). ROCI is a metallurgical company that uses alter-
native methods of processing and analytics for the mining industry. ROCI is also
an Operations company that has developed and utilizes Halogen based processing
methods for its own mining interests. Mr. Dascalos is the Managing General Part-
ner of Portuguese Creek Management LLC., the Management Company of the Por-
tuguese Creek Partnership LLP., which has mine holdings in Idaho. Mr. Dascalos
oversees the Partnerships private placement funding programs that the partnership
has used to develop their mine holdings to date. As a licensed investment broker,
Mr. Dascalos spent 20 years working in investment banks, raising money for compa-
nies’ in the public markets and private sector. Mr. Dascalos has structured, acquired,
owned and operated companies and has assisted in the acquisition and mergers of
many companies throughout his career which include natural resource companies in
the oil, gas and mining sectors.

Jon Scanlon, Mr. Scanlon brings to the Company over 15 years of experience in sales and manage-
VP IT ment for some of Southern California’s largest design/build contractors of fiber optic
and copper network infrastructure cabling. In 1998 he joined one of Cisco’s premier
integrators who specialized in LAN/WAN switching & routing, technical outsourc-
ing, 24/7 network monitoring, network security and VOIP services. Mr. Scanlon holds
several certifications in these related fields which also a CCDA certification (Cisco
Certified Design Associate). For the last 5 years Mr. Scanlon has enjoyed a successful
career in real estate where he has focused mainly on commercial/residential land and
new home construction sales. Currently, he also works for a national brokerage in the
Palm Springs area where he resides full time.

U.S. Mine Makers, Inc. (USMM) 14

 Analyst: Victor Sula, PhD
Initial Report
March 17th, 2008

Disclaimer
Beacon Equity Reserach (otherwise known as BER) is an independent research firm specializing in small and micro capitalization compa-
nies. BER has no investment banking or consultation conflicts thereby minimizing the inherent conflicts of interest between the research
analysts and the companies they cover. BER is not a registered investment advisor or broker dealer. No information in this report should
be construed as an endorsement to either buy or sell any securities mentioned in this report. The analyst(s) who prepared this report rely
on publicly avail¬able information which neither the analyst, nor BER, can guarantee to be error-free or factually accurate. All conclu-
sions in this report are deemed reasonable and appropriate by the author. The Private Securities Litigation Reform Act of 1995 provides
investors a “safe harbor” in regard to forward-looking statements. To fully comply with the requirements of this law, BER cautions all
investors that such forward-looking statements in this report are not guarantees of future performance. Unknown risk, uncertainties,
as well as other uncontrollable or unknown factors may cause actual results to materially differ from the results, performance or ex-
pectations expressed or implied by such forward-look¬ing statements. Investors should exercise good judgment and perform adequate
due-diligence prior to making any investment. BER and its affiliates have been compensated a total of fifty thousand free trading shares
directly from a non-controlling third party for enrollment of USMM in its research program and other services. Ratings and price targets
in this report should not be construed as recommendations or stock price predictors. Readers of this report are urged to use due-diligence
in any purchase of security listed herein. Readers should consult the Company’s SEC filings as well as our initial report on the firm to bet-
ter understand the inherent risks associated with this security. There may be many uncontrollable or unknown factors which may cause
actual results to materially differ from the results, performance or expectations expressed or implied by such forward-looking statements.
Investors should exercise good judgment and perform adequate due-diligence prior to making any investment.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, PhD, the author of this report, certify that the material and views presented herein represent my personal opinion regard-
ing the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compen-
sation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own
and shares or securities in any of the companies featured in this report.

Victor Sula, PhD - Senior Analyst

Victor Sula, PhD has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr.
Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance
and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization
and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his PhD
degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level
III candidate in the CFA program.

U.S. Mine Makers, Inc. (USMM) 15