April 6, 1932.

To the Stockholders and Directors of the

New York and Honduras Rosario Mining Company.

It is with a great deal of pleasure that I submit to you the fol¬
lowing facts concerning the business of your Company for the year
1931.

The production of silver and gold has been showing a progres¬
sive increase since the year 1927. In 1931 we produced 3,689,790
ounces silver and 15,835 ounces gold. The increase over 1930 in
silver produced was 732,670 ounces, and of gold, 2,337 ounces. It
should be stated that, in view of the low price of silver, it is essen¬
tial to increase our production in order to maintain a satisfactory
dividend position.

Although the price per ounce realized for silver for the last
months of 1931 has shown an appreciable gain over the extremely
low figures of the early part of the year, the average sale value
realized for the entire year was $.29155 as compared with $.3506
for the year 1930, a difference against the year just closed of
$.05905. We were fortunate, however, in the fact that the cost per
ounce of silver produced for the year 1931 was $.02359 less than in
1930.

The profit for the year 1931 carried to Surplus is $399,550.40.
From the earnings of 1931 there have been paid dividends amount¬
ing to $375,000, or, at the rate of $1.87j4 per share of the par value
of $10.00.

Our net profit from operations before the deduction of Federal
Income Taxes, Expansion expenses and Reserves, was $336,286.07;
income derived from investments was $134,805.39; a total of $471,-
091.46, our mining operations thus contributing 71.38%, and in¬
come from investments 28.62%.

In order to provide additional power for mining operations dur¬
ing the dry season, there was installed in the year 1931 a new power
plant at a cost of $56,625. The reasons for the installation of this
plant and the results it was expected to produce were given in the
General Manager's report for the year 1930. The plant was not
put into active operation until the early part of this year, and the
results already secured indicate that it will have a beneficial effect
upon our production.

During the year your Company has investigated a number of
new properties in the Central American countries, and some of
them are still under consideration.

Beginning in June, 1930, your Board of Directors has been ac¬
quiring by purchase in the open market shares of our Company's
stock. Up to December 31, 1931, there had been purchased 8,042
shares. Since that date, there have been bought 1,400 shares, mak¬
ing our entire holdings of the New York & Honduras Rosario
Mining Company stock 9,442 shares.