Independence Lead Mines (ILDS) 10-Q 2008 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

OR

o 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: 001-000316

INDEPENDENCE LEAD MINES COMPANY

(Exact name of registrant as specified in its charter)

Arizona	82-0131980
(State or other jurisdiction	(IRS Employer Identification No.)
of incorporation or organization)

510 Cedar Street

Wallace, Idaho 83873

(Address of principal executive offices)

Issuer’s telephone number, including area code: (208) 753-2525

Check whether the issuer (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings for the past 90 days. Yes þ No ¨

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

Large accelerated filer ¨ Accelerated filer ¨ Smaller reporting companyþ

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

There were 5,780,737 shares of the issuer’s common stock, par value $0.10, outstanding as of May 1, 2008.

Transitional Small Business Disclosure format (check one): Yes ¨No þ

INDEPENDENCE LEAD MINES COMPANY QUARTERLY REPORT

ON FORM 10-Q FOR THE QUARTERLY PERIOD

ENDED MARCH 31, 2008

TABLE OF CONTENTS

			Page
PART I - FINANCIAL INFORMATION
	Item 1:	Financial Statements	3
	Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
	Item 4T:	Controls and Procedures	12
PART II - OTHER INFORMATION
	Item 1:	Legal Proceedings	13
	Item 1A:	Risk Factors	13
	Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	14
	Item 3:	Defaults upon Senior Securities	14
	Item 4:	Submission of Matters to a Vote of Security Holders	14
	Item 5:	Other Information	14
	Item 6:	Exhibits	14
Signatures			15

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

The unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2008 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2008.

For further information refer to the financial statements and footnotes thereto in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2007 incorporated by reference herein.

INDEPENDENCE LEAD MINES COMPANY

INDEX TO FINANCIAL STATEMENTS

	Page
Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007	4
Consolidated Statements of Operations for the three-month periods Ended March 31, 2008 and March 31, 2007	5
Consolidated Statement of Changes in Stockholders’ Equity	6
Consolidated Statements of Cash Flow for the three-month periods Ended March 31, 2008 and March 31, 2007	7
Notes to Consolidated Interim Financial Statements	8

3

INDEPENDENCE LEAD MINES COMPANY

CONSOLIDATED BALANCE SHEETS

March 31, 2008 and December 31, 2007

	March 31			December 31
	2008			2007
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	106,317		$	171,434
Prepaid Expenses		80			5,579
Royalties receivable		1,500			1,500
Marketable securities		2,232			1,870
Total Current Assets		110,129			180,383
TOTAL ASSETS	$	110,129		$	180,383
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable – trade	$	41,541		$	15,372
Accounts payable – related parties		0			1,086
Total Current Liabilities		41,541			16,458
DEFERRED INCOME		468,500			464,000
TOTAL LIABILITIES		510,041			480,458
STOCKHOLDERS' EQUITY
Common stock, $0.10 par value; 10,000,000 shares authorized,
5,780,737 shares issued and outstanding		578,074			578,074
Additional paid-in capital		6,245,776			6,245,776
		6,823,850			6,823,850
Less deficit accumulated		(7,223,762	)		(7,123,925	)
Total Stockholders' Equity (Deficit)		(399,912	)		(300,075	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	110,129		$	180,383

The accompanying notes are an integral part of these financial statements.

4

INDEPENDENCE LEAD MINES COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	March  31,			March 31,
	2008			2007
	(unaudited)			(unaudited)
REVENUE	$	-		$	-
GENERAL AND ADMINISTRATIVE EXPENSES
Consulting		7,100			-
Directors fees		19,200			142,080
Office and administration		905			227
Office services		150			150
Shareholder Relations		6,840			1,214
Transportation		616			870
Accounting		32,190			-
Legal		34,110			1,871
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES		101,111			146,412
LOSS FROM OPERATIONS		(101,111	)		(146,412	)
OTHER INCOME (EXPENSES)
Interest and investment income		912			1,199
Unrealized gain on investments		362			281
TOTAL OTHER INCOME		1,274			1,480
INCOME (LOSS) BEFORE INCOME TAXES		(99,837	)		(144,932	)
INCOME TAXES		-			-
NET LOSS	$	(99,837	)	$	(144,932	)
BASIC AND DILUTED NET LOSS PER
COMMON SHARE	$	(0.017	)	$	(0.029	)
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING		5,780,737			5,020,015

The accompanying notes are an integral part of these financial statements.

5

INDEPENDENCE LEAD MINES COMPANY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock
	Number				Additional
	of				Paid in		Accumulated
	Shares		Amount		Capital		Deficit			Total
December 31, 2007		5,780,737	$	578,074	$	6,245,776	$	(7,123,925	)	$	(300,075	)
Net loss for three months Ended March 31, 2008		-		-		-		( 99,837	)		( 99,837	)
Balances, March 31, 2008		5,780,737	$	578,074	$	6,245,776	$	(7,223,762	)	$	(399,912	)

The accompanying notes are an integral part of these financial statements.

(The balance of this page is intentionally left blank)

6

INDEPENDENCE LEAD MINES COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31,			March 31,
	2008			2007
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(99,837	)	$	(144,932	)
Adjustments to reconcile net loss to net cash used
by operating activities:
Interest accrued on certificates of deposit		-			(572	)
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses		5,499			-
Increase (decrease) in accounts payable		25,083			22,719
Increase (decrease) in deferred income		4,500			4,500
Unrealized (gain) on investments		(362	)		(281	)
Net cash used in operating activities		(65,117	)		(118,566	)
Investing activities:
Purchase of certificate of deposit		-			(31,066	)
Net cash used in investing activities		-			(31,066	)
Financing activities:
Stock subscriptions prepaid		-			195,000
Net cash provided by financing activities		-			195,000
Net increase (decrease) in cash and cash equivalents		(65,117	)		45,368
Cash and cash equivalents, beginning of period		171,434			148,046
Cash and cash equivalents end of period	$	106,317		$	193,414
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid	$	-		$	-
Interest paid	$	-		$	-

The accompanying notes are an integral part of these financial statements.

7

INDEPENDENCE LEAD MINES COMPANY

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Note 1 - Organization and Description of business

Independence Lead Mines Company (“the Company”) is a corporation organized under the laws of the State of Arizona on September 16,1929. The Company is the owner of fifteen patented and thirteen unpatented mining claims. In addition, the Company has ownership by quitclaim deed to all interest in lots 5 and 8, more particularly described as tax parcel numbers 48NO5E-26-3715 and 48NO5E-27-1815, which mineral rights were acquired through a 1997 BLM sliver land exchange, as recorded in the Shoshone County, Idaho, records as Instrument #377033. This claim group (the “property”) is situated Northwest of Hecla Mining Company’s Lucky Friday Mine in the Coeur d’Alene Mining District, Shoshone County Idaho. A portion of the Company’s property is part of the “DIA Area” which is currently being developed and mined by Hecla Mining Company. The Company’s only recurring source of funds has been a monthly advance royalty from Hecla Mining Company of $1,500.

The Company is currently in litigation with Hecla Mining Company over Hecla’s operation of the Lucky Friday Mine under the agreement covering the DIA Project. A nine-day trial was held from March 22nd through April 1^st of 2004, and on July 19, 2004 the court ruled in favor of Hecla Mining Company. Independence appealed the District Court’s ruling to the Idaho Supreme Court, and on April 24, 2006 the court ruled against the Company. On May 26, 2006, the Company requested that the Court grant rehearing of the case, and the court again decided against Independence. The Company then filed a complaint against Hecla Mining Company on December 11, 2006 in the United States District Court for the District of Idaho, and on January 5, 2007 the Company filed a Complaint for Rescission of Contract against Hecla in the First Judicial District of the State of Idaho. A hearing was held on May 9, 2007 and the judge ruled in favor of Hecla. The Company subsequently filed a petition for the appeal to be heard in federal court, which was denied. The Company has now filed an appeal with the Ninth Circuit Court of Appeals in San Francisco.

On February 12, 2008 the Company entered into an agreement with Hecla Mining Company that will allow Hecla to acquire all of Independence Lead’s mining properties and other assets. Upon successful conclusion of the terms of the agreement, there will be a dismissal of the pending litigation and appeals.

The Company’s exploration activities never developed any commercial ore deposits and effectively in 1968 management decided to abandon or sell its mineral properties and rights, and favorably position itself to seek other profitable business opportunities. Accordingly, the Company is not considered to be in the development stage.

In 2007 the Company incorporated Independence Resources, Inc., a wholly-owned subsidiary, which had no activity during 2007 or during the three months ended March 31, 2008.

Note 2 – Basis of Presentation

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-B as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim financial statements should be read in conjunction with the financial statements for the year ended December 31, 2007. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of the Company’s financial position and results of operations.

Certain balances from prior year financial statements have been reclassified to conform with the current year presentation.

Operating results for the three month period ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.

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Note 3 – Recent Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - including an amendment of FASB Statement No. 115” (hereinafter “SFAS No. 159”). This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. This statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007, although earlier adoption is permitted. The Company does not expect the adoption of SFAS No. 159 to have a significant effect on its financial position or results of operation.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (hereinafter “SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. Where applicable, SFAS No. 157 simplifies and codifies related guidance within GAAP and does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier adoption is encouraged. The Company does not expect the adoption of SFAS No. 157 to have a significant effect on its financial position or results of operation.

In June 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (hereinafter “FIN 48”), which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted FIN 48 on January 1, 2007, which did not have an impact on its financial reporting,.

In March 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 156, “Accounting for Servicing of Financial Assets-an Amendment of FASB Statement No. 140.” This statement requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in any of the following situations: a transfer of the servicer’s financial assets that meets the requirements for sale accounting; a transfer of the servicer’s financial assets to a qualifying special-purpose entity in a guaranteed mortgage securitization in which the transferor retains all of the resulting securities and classifies them as either available-for-sale securities or trading securities in accordance with FASB Statement No. 115; or an acquisition or assumption of an obligation to service a financial asset that does not relate to financial assets of the servicer or its consolidated affiliates. The statement also requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable and permits an entity to choose either the amortization or fair value method for subsequent measurement of each class of servicing assets and liabilities. This statement is effective for fiscal years beginning after September 15, 2006 with early adoption permitted as of the beginning of an entity’s fiscal year. The adoption of this statement on January 1, 2007, had no impact on the Company’s financial condition or results of operations.

In February 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial Instruments, an Amendment of FASB Standards No. 133 and 140” (hereafter “SFAS No. 155”). This statement established the accounting for certain derivatives embedded in other instruments. It simplifies accounting for certain hybrid financial instruments by permitting fair value re-measurement for any hybrid instrument that contains an embedded derivative that otherwise would require bifurcation under SFAS No. 133 as well as eliminating a restriction of the passive derivative instruments that a qualifying special-purpose entity (“SFE) may hold under SFAS No. 140. This statement allows a public entity to irrevocably elect to initially and subsequently measure a hybrid instrument that would be required to be separated into a host contract and derivative in its entirety at fair value (with changes in fair value recognized in earnings) so long as that instrument is not designated as a hedging instrument pursuant to the statement. SFAS No. 140 previously6 prohibited a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for fiscal years beginning after September 15, 2006, with early adoption permitted as of the beginning of an entity’s fiscal year. The adoption of this statement on January 1, 2007 had no impact on the Company’s financial condition or results of operations.

9

Note 4 – Marketable Securities

The Company’s investments in equity securities are intended to be held for a short period and are classified as trading securities. These securities are recorded at fair value as current assets on the balance sheet under the caption of marketable securities. The Company’s marketable securities consist of capital stock of other companies in the mining industry.

Note 5 – Mineral Properties

The Company is the owner of fifteen patented and thirteen unpatented mining claims. In addition, the Company has ownership by quitclaim deed to all interest in lots 5 and 8, more particularly described as tax parcel numbers 48NO5-E26-3715 and 48NO5E-27-1815, which mineral rights were acquired through a 1997 BLM sliver land exchange, as recorded in the Shoshone County, Idaho, records as Instrument #377033. This claim group (“the property”) is situated Northwest of Hecla Mining Company’s Lucky Friday Mine in the Coeur d’Alene Mining District, Shoshone County, Idaho. Adjacent are the community of Mullan and U.S. Interstate Highway 90.

Pursuant to the terms of an agreement dated February 8, 1968, among Hecla Mining Company (“Hecla”), Day Mines, Inc. (“Day”), Abot Mining Company (“Abot”), and the Company (the “Unitization Agreement”), the Eastern portion of the Company’s Property (approximately five-eighths of the Property) was unitized with certain adjoining and near-by properties owned by Day and Abot into a unitized area, consisting of 55 claims, (known as the “DIA Area”).

By a second agreement also dated February 8, 1968 (the “Lease Agreement”), Hecla leased the DIA Area for a period of fifty (50) years, subject to a 30-year extension, for the purpose of conducting mineral exploration and development of the DIA Area and mining such commercial ore as may be discovered in the DIA Area by Hecla.

The Lease Agreement provides that all costs and expenses incurred in the exploration, development, and operation of the DIA Area are to be paid by Hecla subject to the right of Hecla to be reimbursed for such costs and expenses, together with all advance royalties paid, out of any future net profits realized from the operation of the DIA Area. After recovery of Hecla’s costs and expenses and amounts paid as advance royalties, and the establishment of a three month working capital reserve, net profit royalties are to be paid to the Company and the other property owners. The Company is currently receiving $1,500 per month in advance royalties.

Note 6 – Capital Stock

Preferred Stock

The Company has no preferred stock authorized.

Common stock:

In September 1997 the capitalization of the Company was increased from 4,000,000 shares to 5,000,000 shares of $1.00 par value common stock. In September 2005 the capitalization of the Company was increased from 5,000,000 shares of $1.00 par value common stock to 10,000,000 shares of $0.10 par value common stock. The common stock and additional paid-in capital accounts have been restated to reflect the change in capitalization.

There were no common stock sales or other issuance of common stock during the three months ended March 31, 2008.

During the year ended December 31, 2007 the Company sold 180,000 shares of common stock in private placement to officers and directors of the Company at a price of $1.50 per share.

Per special notice dated March 28, 2007 the Board of Directors of the Company approved the payment of a forward stock split to all shareholders, of one additional share of common stock for each ten shares of common stock held. There is no record date, and the stock will be payable as original share certificates are received by the Company’s transfer agent. NASD has deemed the action effective July 11, 2007 and 525,514 shares were reserved for payment of the stock split. The forward split was deemed a stock dividend and the fair value of common shares issued ($1,839,299) was charged to accumulated deficit for 2007.

Note 7 – Subsequent Events

In April 2008 the Board of Directors of the Company approved the payment of directors’ fees to four directors, which include the president and secretary-treasurer, for services rendered in 2008 on behalf of the Company. The total fees paid were $19,200.

10

Note 8 – Proposed Sale of Assets

The Company has entered into an agreement with Hecla Mining Company which, if approved, would allow Hecla to acquire all of the Company’s mining properties and other assets, and in return, Hecla would issue 6,936,884 of its common shares to the Company. The Company would then liquidate and distribute the Hecla shares to Independence Lead shareholders at the rate of 1.2 Hecla shares for each share of Independence Lead. The agreement includes a $1.25 million breakup fee payable by the Company to Hecla if the transaction does not close for certain reasons.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and the Company’s future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the Company’s management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of the Company’s future financial performance, the Company’s anticipated growth and potentials in its business, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified elsewhere herein and in the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 under “Risk Factors.” Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements for any reason.

Overview

The Company is the owner of fifteen patented and thirteen unpatented mining claims. In addition, the Company has ownership by quitclaim deed to all interest in lots 5 and 8, more particularly described as tax parcel numbers 48NO5E-26-3715 and 48NO5E-27-1815, which mineral rights were acquired through a 1997 BLM sliver land exchange, as recorded in the Shoshone County, Idaho, records as Instrument #377033. This claim group (“the property”) is situated Northwest of Hecla Mining Company’s Lucky Friday Mine in the Coeur d’Alene Mining District, Shoshone County Idaho. Adjacent is the community of Mullan and U.S. Interstate Highway 90.

Pursuant to the terms of an agreement dated February 8, 1968, among Hecla Mining Company (“Hecla”), Day Mines, Inc. (“Day”), Abot Mining Company (“Abot”), and the Company (the “Unitization Agreement”), the Eastern portion of the Company’s Property (approximately five-eighths of the Property) was unitized with certain adjoining and near-by properties owned by Day and Abot into a unitized area, consisting of 55 claims, (known as the “DIA Area”). Under the terms of the Unitization Agreement, ores and minerals in place are owned by the parties thereto in the following percentages:

Day (now Hecla by merger)	47.70	%
Independence	46.30	%
Abot	6.00	%

By a second agreement also dated February 8, 1968 (the “Lease Agreement”), Hecla leased the DIA Area for a period of fifty (50) years, subject to a 30-year extension, for the purpose of conducting mineral exploration and development of the DIA Area and mining such commercial ore as may be discovered in the DIA Area by Hecla.

The Lease Agreement provides that all costs and expenses incurred in the exploration, development, and operation of  the DIA Area are to be paid by Hecla subject to the right of Hecla to be reimbursed for such costs and expenses, together with all advance royalties paid, out of any future net profits realized from the operation of the DIA Area. After recovery of Hecla’s costs and expenses and amounts paid as advance royalties, and the establishment of a three month working capital reserve, net profit royalties are to be paid to the Company and the other property owners as follows:

Day (now Hecla by merger)	19.08	%
Independence	18.52	%
Abot	2.40	%

11

Under the terms of the Unitization Agreement, one-half of the first net profit royalties received by the Company are to be paid over to Day (now Hecla) until Day recovers the sum of $450,000. The relationship of the parties to the Agreement may, under certain circumstances, be converted to a joint venture at the option of the property owners, where after the property owners would become participating, non-operating working interest owners who would share profits and expenses in connection with the DIA Area in the same ratio as exists pursuant to lease arrangement with Hecla described above.

Until Hecla commences to pay net profit royalties and during such period as the Lease Agreement is in effect, Hecla is obligated to pay an advance royalty to the Company of $750 per month subject to increase to $1,500 if production for the DIA Area exceeds 2,000 tons per month. The Company currently receives an advance royalty of $1,500 per month, which is recorded in the financial statements as deferred income.

Pursuant to the terms of the February 8, 1968, agreements, Hecla will be obligated to pay a royalty of 18.52 percent of defined net profits after Hecla has recouped its costs to explore and develop this property from the new discovery to Independence Lead Mines Company.

On February 13, 2008 the Company announced that on February 12, 2008, it had entered into an agreement with Hecla Mining Company and Hecla Merger Company, its wholly owned subsidiary. The agreement, if approved, will allow Hecla to acquire all of the Company’s mining properties and other assets, and in return, Hecla will issue 6,936,884 of its common shares to the Company. The Company will then liquidate and distribute the Hecla shares to Independence Lead shareholders at the rate of 1.2 Hecla shares for each share of Independence Lead. The agreement includes a $1.25 million breakup fee if the transaction does not close for certain reasons. Management expects the closing of the sale, subject to the approval of the Company’s shareholders and compliance with applicable securities laws, to be completed in the second quarter of 2008.

Results of Operations for the Period Ended March 31, 2008.

Threemonths ended March 31, 2008 compared to the three months ended March 31, 2007:

During the three months ended March 31, 2008 the Company realized no income. General and administrative expenses decreased to $101,111 for the three-month period ended March 31, 2008 as compared to $146,412 for the three-month period ended March 31, 2007. The decrease was primarily due to a reduction of $122,880 in directors’ fees, partially offset by a $32,190 increase in accounting fees and a $32,239 increase in legal fees. For the three months ended March 31, 2008, the Company experienced a loss of $99,837, or $0.017 per share, compared to a loss of $144,932, or $0.029 per share, during the comparable period in the previous year.

Liquidity and Capital Resources.

The Company financed its obligations during the three months ended March 31, 2008 from cash on hand. During this period he Company’s cash position decreased by $65,117. During the three months ended March 31, 2008 the Company used $65,117 in operating activities, principally in connection with the payment of legal fees, accounting fees, and directors’ fees. The Company’s only recurring source of funds has been a monthly advance royalty from Hecla Mining Company of $1,500. The Company has incurred operating losses since inception; these factors indicate doubt as to the ability of the company to continue business as a going concern. The financial statements do not contain any adjustments which might be necessary if the Company is unable to continue as a going concern. In order to maintain operations, the Company will have to raise additional capital through loans or through the sale of securities. If the Company is unable to raise additional capital, it may have to cease operations.

The current officers and directors of the Company are not considered by the Company to be employees.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

There are no financial instruments that are sensitive to changes in interest rates or exposed to foreign currency exchange gains/losses.

Item 4T. Controls and Procedures

Disclosure Controls and Procedures.

The Company’s principal executive officer and principal financial officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-13(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the Company’s principal executive officer and principal financial officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

12

The Company’s disclosure controls and procedures are designed to provide assurance of achieving their objectives, and the Company’s chief executive officer and chief financial officer have concluded that these controls and procedures are effective at the “reasonable assurance” level. The Company believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control Over Financial Reporting.

There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is currently in litigation with Hecla Mining Company over Hecla’s operation of the Lucky Friday Mine under the agreement covering the DIA Project. The Company has retained the Boise law firm of Marcus, Merrick, Christian and Hardee as it’s attorneys. As required by terms of the 1968 Lease Agreement with Hecla Mining Company, our Company gave notice of termination of that agreement in early March 2002. This agreement covered the DIA Project, which is Hecla's principle operation at the Lucky Friday mine near Mullan, Idaho. Both parties agreed to waive the arbitration requirement contained in the lease and agreed to a trial without a jury

A nine-day trial was held from March 22^nd through April 1^st of 2004, and closing written arguments were submitted to the court by April 30, 2004. Further, the court required the parties to submit to the court a written rebuttal to the other party’s closing arguments by May 17, 2004. On July 19, 2004 the court ruled in favor of Hecla Mining Company and on April 24, 2006 the Idaho Supreme Court upheld the First District Court decision. In reaction to that decision Independence requested the Court grant rehearing of this matter on the 26^th of May 2006, which was subsequently denied.

The Company then filed a complaint against Hecla Mining Company on Decdember 11, 2006 in the United States District Court for the District of Idaho. On January 5, 2007 the Company filed a Complaint for Rescission of Contract against Hecla Mining Company in the First Judicial District of the State of Idaho in and for the County of Shoshone. A hearing was held on May 9, 2007 and the judge ruled in favor of Hecla. The Company subsequently filed a petition for the appeal to be heard in federal court, which was denied. The Company has now appealed the case to the Ninth Circuit Court of Appeals in San Francisco. As negotiations progressed with Hecla Mining Company concerning the sale of the Company’s mining claims and an agreement was entered into on February 12, 2008, the Company filed a Motion to Stay with the court, holding the appeal in abeyance pending the outcome of the negotiations. Upon successful conclusion of the terms of the agreement, there will be a dismissal of the pending litigation and appeals.

Item 1A, Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed under “Risk Factors” in Part I, Item 1 in our Annual Report on Form 10-KSB for the year ended December 31, 2007, as filed with the SEC on March 26, 2008, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-KSB are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. The following risk factors as reported in the Company’s Form 10-KSB are revised as follows:

Investment in our stock is subject to wide fluctuations because it is a “Penny Stock”.

Our stock is traded on the “pink sheets” and is most commonly referred to as a “Penny Stock”. The Securities and Exchange Commission (SEC) has adopted regulations that define "penny stock" to include common stock that has a market price of less than $5.00 per share, subject to certain exceptions. Trading in Penny Stocks is often thin and characterized by wide fluctuations in trading prices due to many factors that may have little to do with our operations or business prospects.  This volatility could depress the market price of our common stock for reasons unrelated to operating performance.  

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We may be unable to maintain the quotation of our common stock on the Pink Sheets, since there is no established public trading market for our securities.  In the absence of a trading market, investors may be unable to liquidate their investment

Our common stock is quoted on the “Pink Sheets” maintained by Financial Industry Regulatory Authority (FINRA). We cannot guarantee that it will always be available for “Pink Sheet” quotations. The “Pink Sheets” are not an issuer listing service, market or exchange. The “Pink Sheets” does not have any listing requirements per se, to be eligible for quotation and there is no requirement to remain current in their filings with the SEC. Moreover, the “Pink Sheets” is not a stock exchange, and trading of securities on the “Pink Sheets” is more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like NYSE or Amex.  Accordingly, shareholders may have difficulty reselling any of the shares. There can be no assurance that continual fluctuations in price will not occur.  It may be anticipated that any quoted market for our Common Shares will be subject to market trends generally, notwithstanding our potential success in delineating mineral resources.  

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no sales of Company securities during the three months ended March 31, 2008.

Item 3. Defaults Upon Senior Securities.

None.

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

No matters were submitted to a vote of the registrant’s security holders during the period covered by this report.

Item 5. Other Information.

None.

Item 6. Exhibits

(a)	Documents which are filed as a part of this report:
	1.	Financial Statements: The required financial statements are contained in Pages 3 through 11 of this Form 10-Q.
	2.	Financial Statement Schedules: Financial statement schedules have been omitted as they are not applicable or the information is included in the Financial Statements.
	3.	Exhibits:
		2.1 * Asset Purchase Agreement, dated as of February 12, 2008, by and among Hecla Mining Company, Hecla Merger Company (a wholly-owned subsidiary of Hecla Mining Company) and Independence Lead Mines Company. (incorporated by reference to Exhibit 2.1 to the Registrant’s Report on Form 8-K filed on February 21, 2008)
		31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act. Filed herewith.
		31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act. Filed herewith.
		32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350. Furnished herewith.
		32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350. Furnished herewith.

**As contemplated by SEC Release No. 33-8212, these exhibits are furnished with this quarterly report on Form 10-Q and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of Independence Lead Mines Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, including this quarterly report, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

(b)Reports on Form 8-K

Form 8-K filed April 25, 2007.

(c)All schedules are omitted as the required information is not applicable or the information is presented in the Financial Statements or related notes.

(The balance of this page has been intentionally left blank)

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INDEPENDENCE LEAD MINES COMPANY

SIGNATURES

In accordance with Section 12, 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized

INDEPENDENCE LEAD MINES COMPANY
By:	/s/ Bernard C. Lannen
	Bernard C. Lannen, its
	President
	Date: May 13, 2008
By:	/s/ Wayne L. Schoonmaker
	Wayne L. Schoonmaker, its
	Principal Accounting Officer
	Date: May 13, 2008

EXHIBIT INDEX

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act. Filed herewith.
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act. Filed herewith.
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350. Furnished herewith.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350. Furnished herewith.

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