UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





Form
10-KSB








x  ANNUAL REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
fiscal year ended February 29, 2008





o TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the
transition period from ____ to _____





MEXORO
MINERALS LTD.


(Exact
name of registrant as specified in its charter)





Colorado
            0-23561
            84-1431797(State
      or other jurisdiction of incorporation)
            (Commission
      File Number)
            (IRS
      Employer Identification Number)C.
      General Retana
              #706
      Col. San Felipe
              Chihuahua,
      Chih. Mexico
            31203(Address
      of principal executive offices)
            (Zip
      Code)





Registrant’s
telephone number, including area code: (800) 661-7830





Securities
registered under Section 12(b) of the Act:





Title of
each class


N/A





Securities
registered under Section 12(g) of the Act:





Common
Stock


(Title of
Class)








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





Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. ___





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





State
issuer's revenue for its most recent fiscal year: $nil




State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked price of such stock, as of a specified date within
the past 60 days (See definition of affiliate in Rule 12b-2): $10,028,676 as of
May 1, 2008.




State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: outstanding shares: 26,749,502 as of
May 12, 2008; outstanding warrants: 2,632,500 as of May
12, 2008; outstanding options: 3,725,000 of which 1,862,250 have vested as of
May 12, 2008. Total number of fully diluted shares at May 12, 2008:
33,107,002.








PART I





ITEM
1. DESCRIPTION OF BUSINESS





Background





Mexoro
Minerals Ltd. (formerly known as Sunburst Acquisitions IV, Inc.) (“the Company,”
or “Mexoro”) was incorporated in the State of Colorado on August 27, 1997. We
were formed to seek out and acquire business opportunities. Between 1997 and
2003, we engaged in two business acquisitions and one business opportunity, none
of which generated a significant profit or created a sustainable business for
us.





On May 3,
2004, we completed a “Share Exchange Agreement” with Sierra Minerals and Mining,
Inc. (“Sierra Minerals”), a Nevada corporation, which caused Sierra Minerals to
become our wholly owned subsidiary. At the time of the share exchange
transaction, Sierra Minerals held, through a joint venture with Minera Rio
Tinto, S.A. de C.V. (“MRT”), a company duly incorporated pursuant to the laws of
the United Mexican States, mineral concessions and options to obtain certain
mineral concessions on properties in Chihuahua, Mexico. Because Sierra Minerals
was not a Mexican company, it was prohibited by Mexican law from owning the
mineral concessions directly. The joint venture allowed Sierra Minerals to have
rights to these concessions while maintaining compliance with Mexican law. MRT
was controlled, and continues to be controlled, by Mario Ayub. Concurrently with
the Share Exchange Agreement, Mr. Ayub became a director, and later Chief
Operating Officer, of Mexoro. In August 2005, Mexoro cancelled the joint venture
agreement in order to pursue the mineral exploration opportunity through a new
wholly owned Mexican subsidiary. On January 20, 2006, Sierra Minerals was
dissolved.





In August
2005, we created a wholly owned Mexican subsidiary corporation, Sunburst de
Mexico, S.A. de C.V. (“Sunburst de Mexico”). On August 25, 2005, Sunburst de
Mexico, Mexoro and MRT entered into agreements in which MRT assigned to Sunburst
de Mexico the right to explore and exploit two properties in Mexico. MRT had
previously acquired property rights from the owners, Corporativo Minero, S.A. de
C.V. (“Corporativo Minero”), and Compañía Minera De Namiquipa, S. A. de C. V.
(“Compañía Minera”), respectively. There is no relationship between either
Corporativo Minero or Compañía Minera, their officers, directors and affiliates
and Mexoro’s subsidiaries, officers, directors and affiliates. Concurrent with
assigning to Sunburst de Mexico its rights to these two properties, MRT assigned
to Sunburst de Mexico the option, but not the obligation, to purchase additional
mineral concessions on a separate property, also located in Chihuahua,
Mexico.





Through
Sunburst de Mexico, we are engaged in the exploration of four gold and silver
exploration properties, each made up of several mining concessions, located in
the State of Chihuahua, Mexico. (“Mining Concessions” refers to an area of land
for which the owner of the concession has the right to explore for and develop
mineral deposits. The rights to and ownership of the minerals in the concessions
were granted, in our case, originally by the Mexican Government to the former
concession owners, and then to us from those owners. In Canada and the United
States, the term is commonly referred to as “Mineral Rights” or “Mining
Claims.”)  These properties are generally referred to as the
Cieneguita Property, the Guazapares Property, the Encino Gordo Property and the
Sahauyacan Property. We will own 100% of the Cieneguita Property upon completion
of a payment of $2,000,000 to Corporativo Minero and we have the option to
purchase the Guazapares Property. In August 2005, we purchased two Encino Gordo
mineral concessions for $100, and we have exercised our option to purchase three
additional Encino Gordo mineral concessions from an unrelated third party, all
of which now comprise the Encino Gordo Property.





In
December 2005, Mexoro and Sunburst de Mexico entered into a new agreement with
MRT (the “New Agreement”). In the New Agreement, Sunburst de Mexico exercised
its option to purchase three additional mining concessions in the Encino Gordo
region. The New Agreement required the Company to issue to MRT two million
shares of Mexoro’s common stock within four months of the date of the signing of
the New Agreement. These shares were issued on February 23, 2006. Under the
terms of the New Agreement, MRT had the option to buy all of the outstanding
shares of Sunburst de Mexico for $100 if the Company failed to transfer
$1,500,000 to Sunburst de Mexico by April 30, 2006. However, in April 2006, the
parties amended the New Agreement to delete both the required transfer of
$1,500,000 to Sunburst de Mexico along with MRT’s option to purchase all of the
shares of Sunburst de Mexico. The New Agreement also requires the Company to
issue one million additional shares of common stock to MRT when, if ever,
production of the Cieneguita Property reaches 85% of production
capacity.





On
October 24, 2006, we purchased exclusive exploration rights and an option to
purchase several additional mineral concessions, collectively referred to as the
Sahauyacan Property, in Chihuahua, Mexico, from Minera Emilio, S.A. de
C.V.,(“Minera Emilio”). There is no relationship between Minera Emilio, its
officers, directors and affiliates and Mexoro‘s subsidiaries, officers,
directors and affiliates. In order to maintain the right to explore the
Sahauyacan Property, the Company paid $30,000 upon execution of the agreement
and must pay $252,000 in monthly installments over a five year term. In order to
purchase the Sahauyacan Property, Mexoro must pay $300,000 in cash or $500,000
in shares of the Company within the term of the option. The Company must also
pay a royalty of 3% or 4% of “Net Revenues”. Net Revenue is calculated by
subtracting smelting expenses, added value taxes and all other taxes on
production sales from revenue described in detail below.





On
February 13, 2006, the shareholders of the Company approved a 1:50 reverse split
of its issued and outstanding common stock with one new share issued for each 50
old shares. Prior to the reverse split, the Company had 189,994,324 shares of
common stock issued and outstanding. Immediately following the reverse split,
the Company had 3,799,887 shares issued and outstanding. All figures relating to
shares of common stock or price of shares of common stock herein reflect the
1:50 reverse split unless otherwise indicated.





We
changed our name to Mexoro Minerals Ltd. on February 15, 2006. As of the date of
this report, we are considered to be an exploration stage corporation, as that
term is defined in the U.S. Securities and Exchange Commission’s (“SEC”)
Industry Guide 7, as we are engaged in the search for mineral deposits but not
engaged in the preparation of an established commercially mineable deposit for
extraction or in the exploitation of a mineral deposit.








Prior
Acquisitions





In August
1999, we invested $1,000,000 in Prologic Management Systems, Inc. (“Prologic”),
which was engaged in the business of providing systems integration services,
networking services, software development and applications software for the
commercial market. The investment in Prologic was made in anticipation of a
business combination with that company. As part of that transaction, we acquired
3,459,972 shares of Prologic. However, the agreement to complete a business
combination was terminated prior to its consummation and in March 2000 we
charged off our investment to operations.





In
January 2001, we entered into an agreement with Prologic to recover a portion of
our investment. Pursuant to that agreement, on February 16, 2001, we completed
the sale of 2,859,972 shares of stock in Prologic to Prologic, or its designees,
for a total sales price of $400,000. Of the sale price, $325,000 was paid in
cash at closing and $75,000 through Prologic’s execution of a promissory note.
The promissory note bore interest at the rate of 10% per annum and required
payments of $25,000 principal, plus accrued interest, on each of April 12, 2001,
July 12, 2001 and October 12, 2001, none of which were ever received by us.
Subsequently, Prologic declared bankruptcy and we wrote the promissory note off
as uncollectible.





We
retained ownership of a total of 600,000 shares of Prologic, which we
subsequently sold. Such shares were “restricted securities” as defined in Rule
144 under the Securities Act of 1933. The shares were sold in accordance with
the provisions of Rule 144.








On December 4, 2000, the Company completed an agreement for share
exchange between itself and HollywoodBroadcasting.com, Inc. (“HBC”), a Nevada
corporation. As a result of that closing, HBC became a wholly-owned subsidiary
of the Company.





HBC was a
development stage company formed for the purpose of developing and producing
original entertainment and information programming for various media including
domestic and foreign broadcast, cable and satellite television, home video, DVD
sales and rentals and the Internet. The Company was not able to generate
significant revenues from any of the sources it relied upon in establishing its
business model.





On
September 28, 2001, the Company completed the sale of its wholly-owned
subsidiary HBC for $1,000 in cash.





Prior
Business Activities





On
February 27, 2002, we were assigned a sub-distributorship agreement pursuant to
a contract between 1357784 Ontario Ltd. and Romlight International, Inc.
(“Romlight International”), a company based in Toronto, Ontario, Canada. There
was no affiliation between 1357784 Ontario Ltd. and Romlight International and
Prologic, HBC, Sierra Minerals, Mexoro, their officers, directors or affiliates.
Pursuant to the sub-distributorship agreement, we became the exclusive worldwide
distributor to the hydroponics industry of digital electronic lighting ballasts.
This sub-distributorship agreement was assigned to our wholly owned subsidiary,
Sunburst Digital, Inc. (“Sunburst Digital”), a Canadian corporation. In January
2003, the contract between 1357784 Ontario Ltd. and Romlight International and
our sub-distributorship agreement were cancelled. On April 2, 2003, Sunburst
Digital signed an agreement directly with Romlight International containing
terms and conditions substantially identical to the terms of the
sub-distributorship agreement.


We paid
Romlight International a deposit of $183,454 for the sub-distributorship. Due to
quality control issues, the ballasts were never sold, and we wrote off our
entire deposit and ceased to operate Sunburst Digital. Sunburst Digital was
administratively dissolved on March 31, 2006. We had no operations between the
cessation of these activities and the acquisition of Sierra
Minerals.








Current
Operations





On May 3,
2004, we entered into a Share Exchange Agreement with the shareholders of Sierra
Minerals, which was incorporated in Nevada on March 19, 2004. As a result of
this transaction, Sierra Minerals became our wholly owned subsidiary. Pursuant
to the Share Exchange Agreement, we agreed to loan to MRT, on behalf of Sierra
Minerals, $147,500 to be evidenced by an 8% promissory note signed by MRT. In
addition, and as a result of the closing of this Share Exchange Agreement, we
paid a finders’ fee to two corporate entities whereby we issued an aggregate of
120,000 five year options to purchase shares of our common stock, at a price of
$0.50 per share, as follows: 60,000 were issued to T.R. Winston & Company,
LLC and 60,000 were issued to Liberty Management, LLC. T.R. Winston &
Company, LLC, Liberty Management, LLC, and their officers, directors and
affiliates are not affiliates of Mexoro, Sierra Minerals, MRT or their officers,
directors, and affiliates.





Sierra
Minerals had no operations between its date of incorporation and April 26, 2005.
Sierra Minerals was a party to a joint venture agreement dated April 26, 2004
and amended on June 1, 2004, by and between Sierra Minerals and MRT. MRT had the
right to acquire certain mineral concessions, the Cieneguita Property and
Guazapares Property, as explained below. Under the terms of the joint venture,
MRT and Sierra Minerals planned to form a Mexican corporation, of which Sierra
Minerals would own 60% and MRT would own 40%. Sierra Minerals was required to
invest $1,000,000 in this corporation within 30 days of the signing of the joint
venture agreement and to secure an additional $2,000,000 line of credit for the
new company. In exchange, MRT would transfer its rights in the mineral
concessions to the new corporation. MRT was appointed as the operator of the
Cieneguita Property. Sierra Minerals advanced $167,500 to MRT, pursuant to the
joint venture agreement, to pay for costs associated with the rights. However,
Sierra Minerals did not meet the deadline of investing $1,000,000 into the new
corporation. MRT retained the $167,500 as liquidated damages under the joint
venture agreement; Sierra Minerals was not required to pay any additional
damages.





The board
of directors decided that it wanted to hold these mineral concessions and
options for mineral concessions directly instead of through a joint venture
agreement due to its belief that holding the title directly is a stronger legal
position for the Company. Consequently, the joint venture agreement was
cancelled and a new subsidiary formed. Once the joint venture agreement was
cancelled, Sierra Minerals no longer had any rights to the mineral
concessions.





On August
25, 2005, we entered into a new arrangement with MRT. Instead of a joint
venture, we formed a wholly owned subsidiary, Sunburst de Mexico, which was
incorporated in Mexico. Because Sunburst de Mexico is a Mexican corporation,
this restructuring allowed us to take title to the properties directly in the
name of Sunburst de Mexico rather than holding the interests in a joint venture.
We entered into agreements with MRT, which gave Sunburst de Mexico options to
purchase the mineral concessions of the Cieneguita and Guazapares Properties and
the right of first refusal on two Encino Gordo Properties. The parties also
entered into an operating agreement (which has subsequently been cancelled) that
gave MRT the sole and exclusive right and authority to manage the Cieneguita
Property. (This right had also been granted to MRT under the joint venture
agreement with Sierra Minerals.)





The
material provisions of the Company’s property agreements are as
follows:





(1)
            MRT
      assigned to Sunburst de Mexico, with the permission of Corporativo Minero
      (the “Cieneguita Owner”), all of MRT’s rights and obligations acquired
      under a previous agreement, the “Cieneguita Option Agreement”, including
      the exclusive option to acquire the Cieneguita concessions for a price of
      $2,000,000. The Cieneguita Option Agreement states that the Company is to
      make yearly payments on May 6 of each year in the amount of $120,000 for
      the next 13 years and a final payment of the outstanding balance owed on
      the $2,000,000 in the 14th year to the Cieneguita Owner to keep the option
      in good standing. The Company renegotiated the payment due May 6, 2007, to
      $60,000 payable on November 6, 2007, which was paid and the balance of
      $60,000 was paid on December 20, 2007. Once the full $2,000,000 payment
      has been made, we will own the concessions. Yearly payments will need to
      be made from working capital. We do not have the capital at this time to
      fund the ongoing payments. We will need to raise the funds through the
      sale of debt or equity. We do not have any sources for such capital at
      this time. In the alternative, if Cieneguita is put into production, of
      which there is no guarantee, we must pay the Cieneguita Owner $20 per
      ounce of gold produced, if any, from the Cieneguita concessions up to the
      total $2,000,000 due. In the event that the price of gold is above $400
      per ounce, the property payments payable to the Cieneguita Owners from
      production will be increased by $0.10 for each dollar increment the spot
      price of gold trades over $400 per ounce. The total payment of $2,000,000
      does not change with fluctuations in the price of gold. Non-payment of any
      portion of the $2,000,000 total payment will constitute a default. In such
      case, the Cieneguita Owners will retain ownership of the concessions, but
      we will not incur any additional default penalty. MRT retained no interest
      in the Cieneguita Property.





(2)
            MRT
      assigned Sunburst de Mexico, with the consent of  Compañía
      Minera (the “Guazapares Owner”) MRT’s rights and obligations concerning
      the Guazapares Property, including the exclusive option under the
      “Guazapares Option Agreement”, for a term of four years, to purchase seven
      of the Guazapares concessions upon payment of $910,000. In return,
      Sunburst de Mexico granted MRT a 2.5% Net Smelter Royalty (“NSR”) and the
      right to extract from the Guazapares concessions up to 5,000 tons per
      month of rock material; this right will terminate on exercise of the
      option to purchase the concessions. MRT retained no interest in the
      Guazapares Property.





(3)
            Sunburst
      de Mexico purchased two of the Encino Gordo concessions from MRT for a
      price of 1,000 pesos (approximately US$90), and MRT assigned to Sunburst
      de Mexico a first right of refusal to acquire three additional Encino
      Gordo concessions. The Company has the option to acquire 100% of the
      additional three Encino Gordo concessions subject to a 2.5% NSR and the
      obligation to make the scheduled property payments totaling
      $500,000.





(4)
            MRT
      assigned to Sunburst de Mexico, for a term of 60 months, commencing from
      June 25, 2004 (the “Option Period”), with the consent of Minera Rachasa,
      S.A. de C. V. (the “San Francisco Concessions Owner”), MRT’s rights and
      obligations acquired under the “San Francisco Option Agreement”, including
      the option to purchase the San Francisco concession for a price of
      $250,000 (the “Purchase Price”). MRT and the San Francisco Concessions
      Owner reserved a combined 2.5% NSR. MRT reserved no other rights in the
      San Francisco concessions. To maintain the option, Sunburst de Mexico
      assumed the obligation to pay to the San Francisco Concessions Owner
      cumulative annual payments totaling $90,000; if the option is exercised
      prior to the expiration of the Option Period by payment of the Purchase
      Price, the obligation to pay the annual payments will be
      terminated.





(5)
            MRT
      assigned to Sunburst de Mexico, with the consent of the Rafael Fernando
      Astorga Hernández (“San Antonio Concessions Owner”), MRT’s rights and
      obligations acquired under the San Antonio Option Agreement, including the
      option to purchase the San Antonio concessions for a price of $500,000
      (the “Purchase Price”) commencing from January 15, 2004, the date of
      signing of the “San Antonio Option Agreement” (the “Option Period”). MRT
      and the San Antonio Concessions Owner reserved a combined 2.5% NSR to be
      paid to them. MRT reserved no other rights in the San Antonio concessions.
      To maintain the option, Sunburst de Mexico assumed the obligation to pay
      to the San Antonio Concessions Owner cumulative annual payments totaling
      $150,000; if the option is exercised prior to the expiration of the Option
      Period by payment of the Purchase Price, the obligation to pay the annual
      payments will be terminated. The San Antonio Concessions Owner reserved
      the right to extract from the San Antonio concessions up to 50 tonnes per
      day of rock material; this right will terminate on the date of the
      exercise of the option.








Also on
August 25, 2005, the parties signed an operator’s agreement (which has
subsequently been cancelled, as discussed below) pursuant to which Sunburst de
Mexico engaged MRT as the operator of the Cieneguita Property. MRT was to be
paid an operator’s fee based on the functions performed and an operator’s bonus
equal to 10% of the net proceeds of production if operating cash costs did not
exceed $230 per ounce of gold produced from the Cieneguita Property. The
operator’s fee was to be: (a) with respect to programs: (i) 2% for each
individual contract which expressly includes an overhead charge by the party
contracted; (ii) 5% for each individual contract which exceeds $50,000; (iii)
15% of all other costs not included; (b) with respect to construction: 2 % of
all other such costs; (c) 3.5% of operating costs after the completion of
construction on Cieneguita. MRT’s duties were to (a) comply with the provisions
of all agreements or instruments of title under which the Cieneguita Property or
assets were held; (b) pay all costs properly incurred promptly as and when due;
(c) keep the Cieneguita Property and assets free of all liens and encumbrances
arising out of the mining operations and, in the event of any lien being filed
as aforesaid, proceed with diligence to contest or discharge the same; (d)
perform such assessment work or make payments in lieu thereof and pay such
rentals, taxes or other payments and do all such other things as may be
necessary to maintain the Cieneguita Property in good standing, (e) maintain
books of account in accordance with generally accepted accounting principles
provided that the judgment of the operator, as to matters related to the
accounting, shall govern if the operator’s accounting practices are in
accordance with accounting principles generally accepted in the mining industry
in Canada; (f) perform its duties and obligations in accordance with sound
mining and engineering practices and other practices customary in the Canadian
mining industry, and in substantial compliance with all applicable federal,
state and municipal laws of Mexico; and (g) prepare and deliver
reports.





The
parties also signed a share option agreement pursuant to which Sunburst granted
to MRT the exclusive option to acquire up to 100% of all outstanding shares of
Sunburst de Mexico if Mexoro did not (a) comply with the terms of the underlying
Cieneguita Option Agreement, the San Antonio Option Agreement, the San Francisco
Option Agreement and the Guazapares Option Agreement and (b) loan to Sunburst de
Mexico the amounts of $1,000,000 by December 31, 2005 and $1,000,000 by April
30, 2006. If the option to purchase 100% of the shares of the capital of
Sunburst de Mexico were exercised by MRT, MRT was obligated to return to the
Company for cancellation all of the shares of the capital of Mexoro issued by
the Company to MRT and Mario Ayub. No finder’s fees were paid in these
agreements.





On
December 8, 2005, Mexoro and Sunburst de Mexico entered into a new agreement
with MRT (the “New Agreement’) to exercise their option under the August 18,
2005 “Sale and Purchase of Mining Concessions Agreement” to obtain two mining
concessions in the Encino Gordo region. The New Agreement modified the Company’s
property agreements, as discussed below. The following are additional material
terms of the New Agreement:





(1)
            The
      share option agreement with MRT was
cancelled.





(2)
            The
      Company granted MRT the option to buy all of the outstanding shares of
      Sunburst de Mexico for $100 if the Company failed to transfer $1,500,000
      to Sunburst de Mexico by April 30, 2006. On April 6, 2006, MRT agreed to
      waive its option to purchase the shares of Sunburst de Mexico and also
      waived Mexoro’s obligation to transfer $1,500,000 to Sunburst de
      Mexico.





(3)
            The
      property agreements were modified to change the NSR to a maximum of 2.5%
      for all properties covered by the Agreements. The property agreements
      contained NSRs ranging from 0.5% to
7%.





(4)
            The
      Company agreed to issue 2,000,000 shares of the Company to MRT within four
      months of the date of the signing of the New Agreement. These shares were
      issued to MRT and its assignee, Etson, Inc., on February 23, 2006. This
      issuance fulfilled the Company’s payment obligations under the previous
      property agreements.





(5)
            The
      Company agreed to issue 1,000,000 additional shares of the Company’s
      common stock to MRT when the Cieneguita Property is put into production,
      if ever, and it reaches 85% of production capacity over a 90-day period,
      as defined in the New Agreement.





(6)
            The
      New Agreement gave Sunburst de Mexico the option to obtain three
      additional concessions in the Encino Gordo
  region.





(7)
            The
      operator’s agreement with MRT was
cancelled.





Unless
explicitly superseded or terminated by the New Agreement, as discussed above,
the terms of the Company’s existing property agreements remain in effect. Under
the New Agreement, MRT has assigned to Sunburst de Mexico rights it acquired in
a contract with Corporativo Minero. MRT entered into an agreement with
Corporativo Minero on January 12, 2004 by which it acquired the right to explore
and exploit the Cieneguita Property and purchase it for $2,000,000. MRT paid
$150,000 upon execution of the agreement and two months later paid $200,000.
This agreement gave MRT the exclusive right and option, but not the obligation,
to purchase, during the term of the mining concessions of the property, an
undivided 100% title to the mining concessions and the exclusive right to carry
out mining activities on any portion of the mining concessions. Under our
agreements with MRT, MRT has assigned this agreement and all of its rights and
obligations there under, to us. As of the date of this annual report, $590,000
of the $2,000,000 has been paid to Corporativo Minero by MRT ($350,000 paid) and
Sunburst de Mexico ($120,000 paid in “no production” penalty fees). Sunburst de
Mexico had the obligation of bringing the property to production on or prior to
May 6, 2006. The Cieneguita Property was not in production as of May 6, 2006
and, therefore, Sunburst de Mexico had the obligation to pay $120,000 to
Corporativo Minero on May 6, 2006 to extend the contract. Through discussions
with Mexoro, Corporativo Minero agreed to reduce the obligation to $60,000, of
which $10,000 was paid in April 2006. Sunburst de Mexico was then required to
pay the remaining $50,000 by May 6, 2006. We made this payment to Corporativo
Minero and the contract was extended. The Company renegotiated the payment due
May 6, 2007, to $60,000 payable on November 6, 2007, which was paid and the
balance of $60,000, which was paid on December 20, 2007. Payment of $60,000 on
the $120,000 that was due to the concession holders was made in May 2008 with
the balance of the payment due to be paid in June 2008. We have the obligation
to pay a further $120,000 per year on May 6 of each year, until the total of
$2,000,000 is paid. We are currently not in default on our
payments.





If the
property is put into production, of which there is no assurance, then the
contract calls for the remaining payments to be paid from the sale of gold, up
to a total of $2,000,000. The payments, if the property should go into
production, would be as follows: The remainder of the $2,000,000 payment would
be paid out of production from the Cieneguita Property at a rate of $20 dollars
per ounce of gold sold. However, in the event that the price of gold exceeds
$400, then Sunburst de Mexico would be required to pay an additional $0.10 per
each ounce for every dollar the spot price of gold trades over $400. Once
$2,000,000 is paid, there is no further obligation to Corporativo Minero.
Non-payment of any portion of the $2,000,000 total payment will constitute a
default. In such case, Corporativo Minero would retain ownership of the
concessions, but we will not incur any additional default penalty. Corporativo
Minero has the obligation to pay, from the funds they receive from us, any
royalties that may be outstanding on the properties from prior periods.
Corporativo Minero has informed us that there were royalties of up to 7% NSR
owned by various former owners of the Cieneguita Property. They have informed us
that the corporations holding those royalties have been dissolved and that there
is no further legal requirement to make these royalty payments. We can make no
assurance that we will not ultimately be responsible to pay all or some of the
7% NSR to these former royalty holders if the property was ever put into
production and Corporativo Minero did not make the payments to the royalty
holders. MRT no longer has any ownership interest or payment obligations with
respect to any of the concessions discussed herein.





On May
15, 2006, Sunburst de Mexico entered into an exploration contract with Jose
Maria Rascon Rascon and Sabino Amador Rascon Polanco and with Rene Muro Lugo
(all three representatives constitute the “Concessionaires”) for the Segundo
Santo Nino concession on the Sahauyacan Property. Each concession representative
owns 33.3% of the total Segundo Santo Nino title. The Company must pay the
Concessionaires a total of $255,000 for this concession. The total payments to
acquire 100% of this concession are as follows: all payments up to November 15,
2007 totaling $50,000 have been paid, May 15, 2008 - $15,000, November 15, 2008
- $20,000, May 15, 2009 - $20,000, November 15, 2009 - $30,000 and May 15, 2010
- $120,000.





On June
21, 2006, Sunburst de Mexico entered into an Exploration and Sale Option
Agreement of Mining Concessions (the “Exploration Agreement”) with Minera Emilio
for mineral concessions in Chihuahua, Mexico on the Sahauyacan Property. Minera
Emilio owns 100% of the Sahauyacan Property. There is no affiliation between
Minera Emilio and the Company or its officers, directors or
affiliates.








Under the
Exploration Agreement, Minera Emilio granted the Company the exclusive right to
conduct exploration on the Sahauyacan Property. The Company must pay Minera
Emilio $282,000 in the following manner:  (i) $30,000 payable at the
execution of the Agreement (this amount has been paid); (ii) $2,500 per month as
of August 21, 2006, and so on for each month elapsed for twelve months, on the
21st day of each month  (these amounts have been paid); (iii) $3,500
per month as of the beginning of the second yearly term, that is, as of August
21, 2007, and every month, on the 21st day of each month, for the whole second
yearly term (the first 7 months of these payments have been made and are in good
standing for a total amount of $24,500); and (iv) $5,000 monthly, during the
third, fourth, and fifth yearly term, on the 21st. day of each month. The term
of the Exploration Agreement is five years from the date of execution by Minera
Emilio, which is June 22, 2011. While Minera Emilio signed the agreement on June
22, 2006, further negotiations occurred and the Company signed the agreement on
October 24, 2006. Non-payment of any of the payments owed would constitute a
default under the Exploration Agreement. As of the date of this annual report,
we have not been given notice of any default. In the event we were given notice
and default was not cured in a timely manner, the Company would lose the right
to explore on the Sahauyacan Property and would lose the option to purchase the
mineral concessions.





Minera
Emilio also granted the Company the option to purchase the mineral claim. The
option shall expire on June 22, 2011. The Company must provide Minera Emilio
with 30 days written notice before exercising the option. The purchase price of
the mineral claim is $300,000 or the equivalent of $500,000 in restricted shares
of common stock of Mexoro based upon the market value of such shares during the
30 days preceding notice of the intent to exercise the option. The Company must
complete a feasibility survey within three years from the date the option is
exercised.





After
exercising the option, the Company must pay Minera Emilio royalties on any
mineral ore that is sold from the mineral claim. The rate of the royalties due
varies based on the price of gold on the London Metal Exchange (the “Price”). If
the Price is less than or equal to $600 per ounce, the royalty due is 3% of Net
Revenue. If the Price is higher than $600 per ounce, the royalty due is 4% of
the Net Revenue. Net Revenue is calculated by subtracting smelting expenses,
added value taxes, and all other taxes on production sales from
revenue.





On
January 25 2008, Sunburst de Mexico entered into an exploration and option
agreement with Maria Luisa Wong Madrigal for mineral concessions under the “La
Maravilla” project on the Sahauyacan Property. The Company must pay Maria Luisa
Wong Madrigal $600,000 in the following manner: (i) $33,000 – January 25, 2008
(paid); (ii) $33,000 – July 25, 2008; (iii) $34,000 – January 25, 2009; (iv)
$500,000 – at the option to purchase the concession or in 36 months – January
25, 2010.





The La
Maravilla project concessions are subject to royalties of 2.0% over net
liquidations, which may be acquired by Sunburst de Mexico for $400,000 before
commercial production is initiated. This exploration and option agreement has
yet to be filed before the Mining Public Records Office as of the date of this
report.





In
addition, we intend to identify and obtain options on additional gold and silver
properties within the Chihuahua region, if possible. We will utilize our
management’s contacts in the Mexican mining community in order to find potential
properties that may be available. There can be no assurance that we will be able
to obtain any additional property on acceptable terms or at all.





On
September 19, 2007, Sunburst de Mexico, MRT and Mexoro entered into an Agreement
to Defer Guazapares Property Payments. This agreement modifies the agreement
entered into by MRT and Sunburst de Mexico on August 18, 2005 in regard to the
Guazapares concessions in Mexico.  Under the original agreement
entered into by the parties on August 18, 2005, Sunburst de Mexico was obligated
to pay MRT US$60,000 on August 2, 2006 as part of the payments required for the
purchase of eight mineral concessions in the Guazapares area of Mexico. On July
18, 2006 the parties agreed to extend the due date for ninety days until October
31, 2006. MRT agreed to re-extend the due date for such payment by 120 days
until February 28, 2007 and then again to May 31, 2007. An oral agreement
extended the due date to August 31, 2007.  Pursuant to the same
agreement entered into by the parties on August 18, 2005, Sunburst de Mexico was
obligated to pay MRT a further amount of US$140,000 on August 2, 2007 to
purchase the Guazapares concessions.  MRT is a related party as it is
controlled by Mario Ayub, the President and a Director of Mexoro.





Under the
September 17, 2007 agreement, Sunburst de Mexico, MRT and Mexoro agree
that:





●
            Any
      and all property payments regarding Guazapares, then owing to MRT or which
      would otherwise become due by December 31, 2007, will be deferred until
      such time as Sunburst de Mexico and Mexoro have sufficient funds to make
      the payments, in the opinion of the disinterested directors of Mexoro
      and,





●
            Mexoro
      would issue 250,000 shares to MRT and/or assignees, in consideration for
      the deferral of any and all Guazapares property payments then outstanding
      or those arising on or before December 31,
2007.











Principal
Products





Our
principal product is the exploration for, and, if warranted, the mining and sale
of precious minerals. Because our properties are in the exploration stage, there
is no guarantee that any ore body will be found.





Mario
Ayub, the Company’s chief operating officer, is a past president of the National
Miners Association of Mexico and of the Chihuahua Miners Association, and
through his network, he has been able to discuss and obtain information on
potential mining properties. A potential mining property is identified first by
a visit to the property by a geologist. If the property has potential based upon
the geologist’s findings, another visit is made to gather more information by
taking surface samples and mapping the property. Also, geophysical work (in this
case mineral exploration techniques using electromagnetic instruments to measure
the conductivity of the rocks underground) may be performed before entering into
the negotiation process for a particular property.








Glossary
of Certain Mining Terms





ASSAY --
A chemical test performed on a sample of ores or minerals to determine the
amount of valuable metals contained.





AURIFEROUS
ZONE – An area of gold bearing rock.





BRECCIA
-- A rock in which angular fragments are surrounded by a mass of fine-grained
minerals.





COLUMN
TEST -- The process of putting sample ore in a PVC pipe 500 centimeters in
diameter and 2-3 meters high and applying lime and a cyanide solution. The
purpose of a column leach test is to collect kinetic information on the ore
being evaluated so that scale-up equations can be validated which will allow the
projection of the commercial heap leach operation's performance under different
operating scenarios.





DEVELOPMENT
DRILLING -- Drilling to establish accurate estimates of mineral
reserves.








DILUTION
(mining) -- Rock that is, by necessity, removed along with the mineralized ore
in the mining process, subsequently lowering the grade of the ore.





EPITHERMAL
DEPOSIT -- A mineral deposit consisting of veins and replacement bodies, usually
in volcanic or sedimentary rocks, containing precious metals, or, more rarely,
base metals.





EXPLORATION
-- Work involved in searching for ore, usually by sampling rocks, drilling or
driving a drift.





HEAP
LEACHING -- A process involving the percolation of a cyanide solution through
crushed ore heaped on an impervious pad or base to dissolve minerals or metals
out of the ore.





HIGH
GRADE -- Rich ore. As a verb, it refers to selective mining of the best ore in a
deposit.





HYDROTHERMAL
-- An adjective applied to heated or hot magmatic emanations rich in water, to
the processes in which they are concerned, and to the rocks, ore deposits,
alteration products and springs produced by them.





INDICATED
MINERAL RESOURCE -- An ‘Indicated Mineral Resource’ is that part of a mineral
resource for which quantity, grade or quality, densities, shape and physical
characteristics, can be estimated with a level of confidence sufficient to allow
the appropriate application of technical and economic parameters, to support
mine planning and evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration and testing information
gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that are spaced closely enough for
geological and grade continuity to be reasonably assumed.





INFERRED
MINERAL RESOURCE -- An ‘Inferred Mineral Resource’ is that part of a mineral
resource for which quantity and grade or quality can be estimated on the basis
of geological evidence and limited sampling and reasonably assumed, but not
verified, geological and grade continuity. The estimate is based on limited
information and sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes.





LEACHABILITY
– The ability for cyanide solution in a heap leach operation to leach the
desirable minerals from the host rock and allow for recovery at an economic
level.





MINERAL
-- A naturally occurring homogeneous substance having definite physical
properties and chemical composition and, if formed under favorable conditions, a
definite crystal form.





MINERAL
RESERVE – A mineral reserve is the economically mineable part of a measured or
indicated mineral resource demonstrated by at least a preliminary feasibility
study. This study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the time
of reporting, that economic extraction can be justified. A mineral reserve
includes diluting materials and allowances for losses that may occur when the
material is mined.





MINERAL
RESOURCE – A mineral resource is a concentration or occurrence of diamonds,
natural solid inorganic material, or natural solid fossilized organic material
including base and precious metals, coal, and industrial minerals in or on the
earth’s crust in such form and quantity and of such a grade or quality that it
has reasonable prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a mineral resource are known,
estimated or interpreted from specific geological evidence and
knowledge.





MINERALIZATION
-- The act or process of mineralizing.





MINERALIZED
MATERIAL OR DEPOSIT -- A mineralized body which has been delineated by
appropriate drilling and/or underground sampling to support a sufficient tonnage
and average grade of metal(s). Under SEC standards, such a deposit does not
qualify as a reserve until a comprehensive evaluation, based upon unit cost,
grade, recoveries, and other factors, concludes economic
feasibility.





MINING
CONCESSION -- A term used to describe an area of land for which the owner of the
concession has the right to explore for and develop mineral deposits. The rights
to and ownership of the minerals in the concession are granted, in our case, by
the Mexican Government to the former owners who then either transferred or
optioned them to us. In Canada and the United States, the term is commonly
referred to as a Mineral Right or Mining Claim.





NET
SMELTER RETURN (“NSR”) -- A share of the net revenues generated from the sale of
metal produced by a mine.





ORE --
Mineralized material that can be mined and processed at a positive cash
flow.





OREBODY
-- A natural concentration of valuable material that can be extracted and sold
at a profit.





PRELIMINARY
FEASIBILITY STUDY -- A preliminary feasibility study is a comprehensive study of
the viability of a mineral project that has advanced to a stage where the mining
method, in the case of underground mining, or the pit configuration, in the case
of an open pit, has been established and an effective method of mineral
processing has been determined, and includes a financial analysis based on
reasonable assumptions of technical, engineering, legal, operating, economic,
social, and environmental factors and the evaluation of other relevant factors
which are sufficient for a qualified person, acting reasonably, to determine if
all or part of the mineral resource may be classified as a mineral
reserve.





QUALIFIED
PERSON – An individual who is an engineer or geoscientist with at least five
years of experience in mineral exploration, mine development or operation or
mineral project assessment, or any combination of these; has experience relevant
to the subject matter of the mineral project and the technical report; and is a
member or licensee in good standing of a professional association.





RECLAMATION
-- The restoration of a site after mining or exploration activity is
completed.








ROYALTY
-- An amount of money paid at regular intervals by the lessee or operator of an
exploration or mining property to the owner of the ground. The royalty,
generally, is based on a certain amount per ton or a percentage of the total
production or profits. Also, the fee paid for the right to use a patented
process.





SILVER
PAN AMALGAMATION MILL -- The raw ore is wet crushed with stamps, the crushed ore
is separated from the slurry in a settling tank and then the crushed ore is
charged with mercury (approximately 10% of the weight of the ore) in the
amalgamation pan. The amalgam is separated from the slurry and the silver and
gold is separated from the amalgam with a retort.





STRIKE
LENGTH – The actual or estimated length, generally measured in meters, of a
mineralized structure.





VEIN -- A
mineralized zone having a more or less regular development in length, width and
depth, which clearly separates it from neighboring rock.





Properties





All of
the properties discussed below are located in the State of Chihuahua, Mexico.
The following map illustrates the locations of Chihuahua and of the
properties:





Location
of Cieneguita, Encino Gordo and Guazapares Properties in Chihuahua,
Mexico











Cieneguita
Property




Property
Location







The
Cieneguita Property is located in the Baja Tarahumara in Cieneguita Lluvia De
Oro, an area of canyons in the Municipality of Urique, in southwest Chihuahua,
Mexico. The property is located within one half mile of the small village of
Cieneguita Lluvia de Oro. Access to the property is by an all weather dirt road.
There is available electrical power for the property generated by diesel
generators at Cieneguita Lluvia de Oro.







Claim Status and
Licensing




The
Cieneguita Property is currently owned by Corporativo Minero. Sunburst de Mexico
has the option of purchasing the concessions under the payment plan discussed
below. The concessions of this project cover a total area of 822 hectares
(approximately 2,031 acres). The following table is a summary of the concessions
on the Cieneguita Property:





Lot
      Name
            Title
      Number
            Area
      (Ha)
            Term of Validity(2)
            Royalties
      and PaymentsAurifero
            196356
            492.00
            7/16/1993
      to 7/15/2043
            (1)Aurifero
      Norte
            196153
            60.00
            7/16/1993
      to 7/15/2043
            (1)Aquilon
      Uno
            208339
            222.1077
            9/23/1998
      to 9/22/2048
            (1)La
      Maravilla
            190479
            48.00
            4/29/1991
      to 4/24/2041
            (1)





(1)           The
Cieneguita concessions are all under an option to purchase for $2,000,000 of
which $590,000 has been paid. MRT paid $150,000 upon execution of the agreement
with Corporativo Minero and two months later paid $200,000. Because the
Cieneguita property was not in production by May 6, 2006, Sunburst de Mexico was
required to pay $120,000 to Corporativo Minero to extend the contract. Through
discussions with Mexoro, Corporativo Minero agreed to reduce the obligation to
$60,000, of which $10,000 was paid in April 2006. Sunburst de Mexico was then
required to pay the remaining $50,000 by May 6, 2006. We made this payment to
Corporativo Minero so the contract has been extended. The Company renegotiated
the payment due May 6, 2007, to $60,000 payable on November 6, 2007, which was
paid and the balance of $60,000 was paid on December 20, 2007. We paid $60,000
on May 12, 2008 of the $120,000 due on May 6, 2008, with the balance to be paid
in June 2008. We are not in default on our payments. We have the obligation to
pay a further $120,000 per year for the next 13 years and the balance of
payments in the 14th year, until the total of $2,000,000 is paid. If the
property is put into production, of which there is no assurance, then the
contract calls for the remaining payments to be paid from the sale of gold, to
avoid termination of the agreement.





The
payments, if the property should go into production, would be as follows: The
remainder of the $2,000,000 payment will be paid out of production from the
Cieneguita Property at a rate of $20 dollars per ounce of gold sold. However, in
the event that the price of gold is in excess of $400, then Sunburst de Mexico
is required to accelerate payments by an additional $0.10 per each ounce for
every dollar of gold priced over $400. The total payment we are liable for is
$2,000,000. Once that amount is paid, we have no further obligation to
Corporativo Minero. Corporativo Minero has the obligation to pay, from the funds
they receive from us, any royalties that may be outstanding on the properties
from prior periods. Corporativo Minero has informed us that there were royalties
up to 7% NSR owned by various former owners of the property. They have informed
us that the corporations holding those royalties have been dissolved and that
there is no further legal requirement to make these royalty payments. We can
make no assurances that we will not ultimately be responsible to pay all or some
of the 7% NSR to these former royalty holders if the property were ever put into
production and Corporativo Minero did not make the payments to the royalty
holders. However, we do not see this potential for additional royalty payments
as a material risk to us.





(2)           Amendments
to the Mexican mining laws took effect with the publication on December 21,
2005, including certain amendments to the Ley Federal de Derechos, the act that
sets forth the mining taxes' rates. Effective January 1, 2006, this legislation
has converted all of the former exploration and exploitive concessions in
Mexico, which carried maximum lives of six years, and  25 years,
respectively, into general concessions with a 50 year life from their date of
registration with the Mining Registry. The concessions are automatically
registered as soon as the concession mining rights are paid and no further paper
work is required. Our claims are currently in good standing and held by Sunburst
de Mexico. There will be no special documents sent to us to reflect the
change.





In April
2006, we applied to the Mexican government for a change of use of land permit
for 30 hectares of the La Maravilla concession. La Maravilla is the concession
that contains the mineralized rock that is the main interest of our exploration
on the Cieneguita Property. La Maravilla currently has no activity on it other
than our exploration program. The purpose of the change of use permit is to
allow us, if necessary, to extract the rock from this concession for the
purposes of processing to extract the precious metals that may be contained
therein. We made the application in advance of any known reserves being
discovered on the Cieneguita Property. We cannot assure that we will have
sufficient ore reserves, if any, to commence extraction. This permit required
negotiations with the government and municipality concerning such things as the
removal of timber, building and maintaining roads and reclamation. In January
2007, the government agency issued the change of use permit, and we subsequently
made the required payment of approximately $67,000 (720,000 Mexican
pesos).





In July
2006, we submitted an environmental impact study and a risk analysis study to
the Mexican government for a permit to build a heap leach mining operation on
the Aurifero concession of the Cieneguita Property. The purpose of this permit
is to allow us to construct an ore processing facility through heap leach mining
methods. We do not have any ore reserves on the Cieneguita Property and applied
for permits in advance of any conclusive results to partly limit our financial
exposure searching for precious metals. In January 2007, the necessary permits
to allow for the building and operation of a heap leach operation were granted
to the Company. If we are unable to extract and process our discoveries, if any,
then there is no need to continue exploration.




History







The
Cieneguita mine was in limited production in the 1990s. Over a four-year period,
the Cieneguita mine was operated by Mineral Glamis La Cieneguita S. de R.L. de
C.V. (“Glamis”), a subsidiary of the Canadian company Glamis Gold Ltd. (“Glamis
Gold”). Glamis was recently acquired by Goldcorp Inc. According to Glamis’
records, Glamis mined and processed 198,000 tonnes of ore grading 2.2 g/t gold
on the property in 1995, ceasing production shortly thereafter. At that time,
Corporativo Minero, the operator of the mine for Glamis, acquired the property.
MRT entered into an agreement with Corporativo Minero on January 12, 2004
pursuant to which MRT acquired all of the mineral rights from Corporativo Minero
to explore and exploit the Cieneguita concessions and to purchase them for
$2,000,000. Under our agreements with MRT, MRT has assigned this agreement to
us. As of the date of this annual report, $590,000 of the $2,000,000 has been
paid to Corporativo Minero. MRT paid $150,000 upon execution of this agreement
and two months later paid $200,000. We are obligated to make yearly payments on
these concessions to Corporativo Minero until the $2,000,000 has been paid.
Also, the agreement calls for the balance of the purchase price remaining to be
paid out of production, if any, on Cieneguita at a rate of $20 per ounce of gold
sold. However, in the event that the price of gold were to exceed $400, then
Sunburst de Mexico would be required to pay an additional $0.10 per each ounce
for every dollar gold trades over $400.





If
Cieneguita is never put into production, we are still obligated to pay the
$120,000 per year until the $2,000,000 is paid. Sunburst de Mexico made payments
to the property owners of $10,000 in April 2006 and $50,000 in May 2006 in lieu
of its obligation of bringing the property to production on or prior to May 6,
2006. Sunburst de Mexico has the obligation to pay $120,000 per year for the
years subsequent to May 6, 2006 until the $2,000,000 is paid or the mine is put
into production, if ever, in which case the remaining amount owed would be paid
out of any production of the property, to avoid termination of the agreement.
The Company renegotiated the payment due May 6, 2007, to $60,000 payable on
November 6, 2007, which was paid, and the balance of $60,000 which was paid on
December 20, 2007. The Company paid $60,000 of the $120,000 due on May 6, 2008,
with the balance to be paid in June 2008. We are not in default on our payments.
On termination of the agreement, there would be no further obligations by Mexoro
to any parties other than assuming responsibility for any reclamation work that
may need to be done as a result of exploration or mining activity if any should
occur.







Geology







The
Cieneguita Property is located in the mid-Tertiary domain of the Sierra Madre
Occidental of Chihuahua State, Mexico. This region is dominated by felsic
ignimbrites and reportedly represents the largest field of felsic volcanics in
the world (Jones, 2006).





Based on
the work of Jones (2006), who spent approximately two weeks on the Cieneguita
Property in mid-November of 2006, the Cieneguita Property appears to lie along
the eastern margin of a well-defined but previously unidentified collapse
caldera named the ‘Cieneguita Caldera’. The Cieneguita Caldera appears to be
part of a larger caldera complex which exhibits a rough north-south trend, which
may, at its southern end, include the El Sauzal project (a producing mine). As
suggested by Jones (2006), this north-south trending caldera complex may have
developed along a broad north-south arc related to post-Laramide collapse and
extension which occurred throughout western North America. The identification of
this nested caldera is considered important as the mineralization on the
Cieneguita Property appears to be controlled by volcano-structural features
related to the Cieneguita Caldera and the caldera complex in which it lies
(Jones, 2006).





Field
mapping by Jones (2006) has indicated that the Cieneguita Caldera is
approximately 15 kilometers in width and possibly up to 32 kilometers in length.
This mapping also identified a number of diagnostic features of calderas. These
include:





·
            Significant
      thicknesses of horizontally stratified tuff – interpreted as intracaldera
      deposits.


·
            Morphologic/topographic
      break between ponded and outflow ignimbrites – interpreted as the
      topographic caldera wall.


·
            Ring
      structure (based on satellite
imagery).


·
            Landslide
      deposits of caldera wallrocks that have been engulfed by intra-caldera
      tuffs in the form of megabreccias.





Jones
(2006) has suggested that the Cieneguita deposit lies along the (eastern)
topographic rim of the Cieneguita Caldera. This interpretation is based on an
important litho-structural break between outward (easterly) dipping outflow
tuffs and horizontally stratified intra-caldera tuffs. Furthermore, erosion
appears to have reduced the rim to the level of the ring-fracture zone. This is
based on a number of well-defined north-south striking faults and shears in the
caldera wall (Jones, 2006).




Lithotypes







A number
of lithologies have been identified on the Cieneguita Property and have been
summarized by Jones (2006) below.





The
extra-caldera (caldera wall) lithologies include (from oldest to youngest) a
lower rhyolite tuff, an andesite vitrophyre, an upper rhyolite tuff and basaltic
dykes.





Field
observations indicate that the lower two units and portions of the third were
deposited prior to caldera formation. Landslide blocks of andesite vitrophyre
and portions of the upper rhyolite can be found engulfed by intra-caldera
tuffs.





These
units show relatively conformable dips in sequential beds demonstrating that
they were deposited on the margins of the volcanic edifice and predate caldera
formation.





Lower rhyolite tuff: The
lower rhyolite unit includes at least two welded tuff sequences that are nearly
indistinguishable from the upper rhyolite sequence. The rhyolites contain a low
percentage but consistent amount of lithic fragments. The unit’s thickness is
unknown.





Andesite vitrophyre: This
unit is a basaltic to andesitic flow which is exposed for nearly two kilometers
along the strike of the caldera wall. It is strongly vitric to the north,
moderately vitric in the centre and largely devitrified at the project area and
to the south. The unit contains an even abundance of relatively calcic
plagioclase crystals while the mafic component is predominately hornblende with
minor pyroxene and biotite. This unit acts as the most important marker horizon
in the caldera wall with an estimated thickness of 65-80 meters.





Upper rhyolite tuff: The base
of this unit is defined by locally well graded basal surge deposits that grade
upwards into tuffs with a very high percentage of lithic fragments including
blocks up to several metres in diameter. The unit grades upward into a high
lithic load welded tuff which marks the lowest of at least three welded tuff
packages. The base of this unit occurs as landslide blocks on the Cieneguita
Property indicating that it at least partially predates the Cieneguita Caldera.
The three overlying welded tuff packages may be correlative with the Cieneguita
Caldera itself








Basalt dykes: A single 6
meter wide basaltic dyke has been mapped cutting the upper rhyolite tuff
sequence. This dyke cuts the upper caldera fill facies of the upper rhyolite
sequence and is therefore considered to be post-Cieneguita Caldera
formation.





The intra
caldera lithologies are found within the Cieneguita Caldera and include a
megabreccia sequence and caldera infill sequence.





Megabreccia Sequence: This
unit is characterized by large blocks of caldera wall that collapsed into the
caldera during caldera collapse. At Cieneguita, a portion of the caldera wall,
consisting of both the andesite vitrophyre and the basal units of the upper
rhyolite sequence, slid into the caldera and were engulfed and injected by intra
caldera ash flow deposits. Within one of the larger blocks contained in the
megabreccia, the contact between the andesite vitrophyre unit and the upper
rhyolite tuffs strikes through the center of the formally mined area of Pit 1.
This contact is thought to have had an important control on the emplacement and
localization of the gold mineralization.





Caldera Infill Sequence: This
unit includes rocks that were formed by volcaniclastics that were vented and
deposited during caldera formation. This unit can be subdivided into two groups;
basal surge deposits and lithic rhyolite tuffs.





i)
            Basal
      surge deposits exhibit dune-like forms consisting of moderately to well
      sorted beds of well rounded grains of siliceous volcanic rocks. They are
      thought to be shock deposits formed from the air blast of the initial
      caldera explosion.





ii)
            Lithic
      rhyolite tuffs overlying the basal surge deposits consist of horizontally
      stratified pyroclastics that were deposited into the Cieneguita Caldera.
      The tuffs include a variable, heterogeneous lithic load of pre-existing
      volcanic rocks and megabreccia. The unit varies from grey (when
      unconsolidated) to purple-salmon colored where they are more indurated and
      welded.




Intrusives: The youngest
rocks found at Cieneguita are the intrusives, which cut the caldera infill
sequences. They occur as dykes and sills ranging in width from one to eight
meters. The three types of intrusives that have been identified are felsites,
composite basalt-rhyolite vent breccias, and basalts.





i)
            Felsite
      dykes can be observed along the south ridge of Cieneguita as two dykes
      with an east-northeast strike dipping moderately to steeply to the
      northwest. They clearly crosscut the intra-caldera tuffs and are nowhere
      brecciated, altered or veined. They are characteristically fine grained
      and siliceous with sanidine and bi-pyramidal quartz
      phenocrysts.





ii)
            The
      composite basalt-rhyolite vent breccias/dykes commonly contain a high
      percentage of lithic and pumice clasts, compositional banding and
      spherulites. Quartz veining, specularite and heavy hematite dustings are
      locally quite intense within and adjacent to these intrusions suggesting
      they may be mineralized. They are thought to have formed by the
      commingling of actively erupting basaltic and rhyolitic
    melt.





iii)
            Basalt
      is present as dykes and irregular intrusions exhibiting a chocolate brown
      color and fine-grained homogenous texture. They show no signs of
      deformation or alteration and are thought to be
      post-mineralization.




Structure







The most
important structures in a regional sense are those that controlled the
development of the Cieneguita Caldera. The elongate shape of the Cieneguita
Caldera suggests that it formed along a NNW-SSE trending axis of regional
collapse and extension at the end of the Laramide. Extension continued during
and after caldera formation as evidenced by normal faults that offset both
pre-caldera and intra-caldera rocks down to the west (Jones, 2006).





The
primary structural controls at the mineralized area on the Property trend
WSW-ENE as indicated by extensive sheeted fractures and a few faults. The most
important of these structures identified thus far is a fault which strikes
through the centre of Tajo 1 resulting in the down faulting of the
rhyolite/andesite contact to the north. Intense quartz veining and elevated gold
values are associated with this fault indicating that it also acted as a conduit
for gold-bearing fluids. Notably, this fault is paralleled by two of the felsite
dykes described earlier. Jones (2006) suggests that these are deep-seated
pre-caldera extensional structures which were reactivated during resurgent
magmatism within a nested caldera to the west of the town of Cieneguita and
subsequently exploited by the late felsite dykes.





Jones
(2006) considers NNW to NNE striking high-angle faults to be important from an
economic standpoint. He suggests that mineralization may be well off the main
trend as a result of these structures acting as permeable pathways for migrating
gold-bearing fluids.




Deposit
Types







There are
three main deposit types that are considered relevant to the Cieneguita
Property: epithermal vein, mesothermal vein and porphyry. These are briefly
discussed below.




Epithermal







High
sulphidation epithermal deposits occur as veins, vuggy breccias and sulphide
replacements ranging from pods to massive lenses associated with high-level
hydrothermal systems marked by acid-leached, advanced argillic and siliceous
alteration. Metal associations in these deposits include variable amounts of
precious (Au-Ag) and base (Cu-Pb-Zn) metals and variable gangue mineralogies.
Irregular deposit geometries are the result of host rock permeability and the
orientation of ore-controlling structures. Multiple, crosscutting composite
veins are common.





Recent
research indicates that these deposits form in subaerial volcanic complexes or
composite island arc volcanoes above degassing magma chambers. The deposits
commonly contain multiple stages of mineralization, presumably related to
periodic tectonism associated with increased intrusive activity and magmatic
hydrothermal fluid generation (Panteleyev, 1996). The age of the deposits are
commonly Tertiary to Quaternary, however, some deposits have been dated in
Mesozoic and Paleozoic volcanic belts. The rare preservation of older deposits
reflects rapid rates of erosion before burial of subaerial volcanoes in
tectonically active arcs.





Rock
types associated with epithermal deposits include a subaerial
andesite-dacite-rhyodacite pyroclastics & flows as well as their subvolcanic
intrusive equivalents. It is also thought that permeable intervolcanic
sedimentary rocks can act as sites of mineralization. The country rock
surrounding epithermal veins is commonly extensively altered even though the
vein walls may be sharply defined. It is also not uncommon to find large, highly
coloured supergene gossans covering epithermal ores.







Mesothermal







Mesothermal
gold vein deposits are commonly associated with crustal-scale strike slip faults
and can be hosted in a wide variety of lithologies (Olsen et al., 1994).
Analysis of fluid inclusions from samples of quartz veins yield average
temperatures of more than 250 degrees Celsius. The veins are podiform, sheared,
and concordant with the enclosing brittle to ductily deformed host rock and
range in metamorphic grade from greenschist to amphibolite facies. Mesothermal
gold deposits are found in proximity to major regional crustal-scale fault and
fracture systems and are most often hosted in secondary or tertiary structures
related to the regional scale structures. Gold is deposited via 250-400 C
hydrothermal fluids which originate deep in the earths crust. The fault and
fracture zones act as permeable conduits for the fluids to migrate. Gold is
carried in solution until the fluid reaches a point where there is either a
chemical reaction with the country rock or changes in temperature and/or
pressure causes the gold to precipitate. The gold and various associated metals
precipitate out of solution together with quartz, carbonate and various other
accessory minerals. Structural evidence such as shears, folds in bedding or
pinches, swells, and pods in quartz veins are characteristic of ductile
deformation and can be often found at many Au-bearing mesothermal quartz veins.
Au is often associated with pyrite, chalcopyrite and/or arsenopyrite and can
occur as either free grains, within the pyrite/arsenopyrite structure or as
electrum.




Porphyry







Porphyry
deposits are typically low grade and large tonnage deposits that are both
spatially and genetically to igneous intrusions (McMillan, 1991). The intrusive
rocks that host these deposits are generally found to be felsic to intermediate.
There are two primary processes that are responsible for porphyry-style
mineralization. The first is the fracturing that results from the upwelling of
magmatic derived hydrothermal fluids into the shallow crust where lower pressure
conditions cause it to boil.





The build
up of fluids occurs at the time the intrusion crystallizes, leaving behind an
excess of fluids, some of which are derived from the intrusions contact
metamorphic front. This aqueous fluid can potentially be enriched in gold,
copper, or molybdenum. Further mineralization is achieved as the cooling magma
chamber provides the heat engine to create hydrothermal convection cells. Metal
enriched aqueous fluid circulates thought the stockwork and all fractures adding
to and re-depositing these metals. Mineralization and alteration develop both in
the intrusive and in the country rock. The core of the mineralizing system is
dominated by a potassic alteration zone. Potassic alteration consists of
potassium feldspar, biotite, and quartz. This grades out into the phyllic zone,
in which the alteration is made up of quartz and muscovite (typically fine
grained sericite). This grades out into the argillic zone, where the principal
alteration is quartz and a variety of clay minerals. The propylitic zone rinds
the argillic zone and consists of chlorite, epidote, and carbonate.




Mineralization







The gold
mineralization identified to date at Cieneguita is localized exclusively within
the intra-caldera rocks (megabreccias and infill tuffs). The mineralization is
structurally controlled, occurring at the intersections of east-northeast
structures and north-south extensional faults. Its spatial and temporal
association with the felsic dykes suggest a genetic relationship between
resurgent felsic magmatism (related to a younger nested caldera?) and gold
mineralization.





The three
main gold-related alteration assemblages that have been observed at Cieneguita
include:





-
            Quartz
      +/- biotite +/- orthoclase +/- adularia +/-
  calcite


-
            Quartz-sericite-pyrite


-
            Hematite-goethite




Quartz-biotite-orthoclase-adularia-calcite
(Low Sulphidation)







This
assemblage is a form of potassic alteration and is typically bordered by
sericite-chlorite-epidote-alunite-clay alteration on the margins of quartz
veins. With increased veining, the clay-sericite alteration merges into a more
pervasive style of alteration. Associated sulphides are minimal. This variety of
alteration is best observed in the andesite vitrophyre north of the project
area. The quartz, along with other minerals, are present as veins and sometimes
as vain selvedge alteration which in areas of intense alteration is observed as
being pervasive. This alteration is not known to be associated with significant
sulphide mineralization.




Quartz-sericite-pyrite (High
Sulphidation)







This
alteration style occurs as a pervasive overprinting within and along structural
and lithological breaks. The quartz-sericite-pyrite zones are commonly bordered
by clay alteration.







Hematite-goethite







This
alteration style is found locally along reaction fronts, fractures, and at the
leading edges of silica veins. It locally overprints the first two assemblages.
It occurs as massive red to orange-brown zones that are inferred to represent
the deposition of and conversion of earlier sulphides to, hypogene iron oxides.
Gold mineralization on the Cieneguita Property is most strongly associated with
this alteration assemblage.





As noted
by Jones (2006) the alteration and mineralization styles on the Property differ
with rock type and geological setting. The two principle ore hosts are
intra-caldera megabreccia and intra-caldera rhyolite tuff as discussed
below:




Intra-caldera
megabreccia







The
megabreccia unit is the primary lithological host to mineralization at Tajo
1.


Severe
fracturing, faulting and brecciation during caldera formation were enhanced by
the rheological contrasts between the brittle andesite vitrophyre and upper
rhyolite tuff. These structures were subsequently infilled/injected by the
highly fluid tuff which formed the matrix to the megabreccia. It was these
faulted and tuff-injected zones that became the preferred pathways for
mineralizing fluids.





Mineralization
within the upper rhyolite tuff blocks of the megabreccia is typically
accompanied by a strong quartz-sericite-pyrite alteration assemblage. It is
described as having dark grey, highly siliceous, sulphide-rich, resistant bands
that preserve relict bedding. Iron-oxide alteration crosscuts this alteration
along fractures and is interpreted by Jones (2006) to represent a hypogene
iron-oxide retrograde event. Quartz veins appear to be either paragenetically
early and/or adjacent to the more intensely altered zones. Gold grades within
this litho-alteration assemblage are consistently high (>>1 g/t) in these
area





Mineralization
within the andesite vitrophyre blocks of the megabreccia is found in faulted and
tuff injected fractures. The brittle nature of the andesite resulted in
extensive internal deformation in part related to devitrification. These
structures were easily exploited during landslide collapse giving rise to 3D
forked voids which were immediately injected with tuff and subsequently used as
preferred pathways for mineralizing fluids. These pathways contain strong
quartz-sericite-pyrite alteration bordered by extensive and pervasive argillic
(clay) zones. In contrast to the rhyolite, the quartz-sericite-pyrite zones in
the andesite show only moderate elevations in gold (0.5-0.7 g/t).





The
leading edges of the stronger quartz-sericite-pyrite zones in the andesite are
marked with intense iron-oxide fronts of heavy dark red to orange brown
goethite-hematite. These iron-oxide fronts consistently carry higher (>2g/t)
gold grades whilst adjacent quartz-sericite-pyrite zones are only weakly
mineralized.




Intra-caldera rhyolite
tuff







In
comparison to the megabreccia unit the rhyolite tuffs are only weakly to
moderately consolidated. The repercussions of this are that there is little
brittle deformation such that would allow for focused fluid flow. Instead, the
highly permeable tuffs exhibit broad and diffuse zones of alteration and
mineralization.





Mineralization
& alteration zones in the intra-caldera rhyolite tuffs are primarily
controlled by east-northeast striking structures and, to a lesser degree,
north-south structures. These zones are typically characterized by Iron oxide
concentrations along and bordering the associated structure. Mineralization and
quartz-sericite-pyrite alteration can also be found bordering felsite dykes.
Trenching at Tajo 2 has suggested a gold-copper association based on the
presence of chrysocolla. Distal to the quartz-sericite-pyrite zones, the
rhyolite tuff takes on a chalky white appearance related to pervasive but
diffuse clay alteration.


Glamis
Gold performed a test pilot heap leach operation on the property in the mid
1990s. Exploration on the property is still in its early stages and significant
work needs to be completed before any type of ore reserve calculations, if any,
could be made. We have done some initial sampling and drilling on the La
Maravilla concessions as described below.





A total
of 51 diamond drill holes (6,700 meters) drilled by Cominco defined an
auriferous zone approximately 1,000 meters long by 200 meters wide. Within the
zone, two mineralized structures were drilled during an exploration program in
1981 and 1982. Later, two drilling programs were performed by Glamis: 135 holes
were drilled during 1994 and 62 holes were drilled during 1997. Both programs
confirmed the delineation of the two mineralized ore bodies. We have posted
these reports from Cominco and Glamis on our website at www.mexoro.com. The
continuing exploration conducted by the Company will focus on further
delineating the oxide and mixed ore structures.








Select
intersections from historic drilling at the Cieneguita Property





Hole
      ID
            From
            To
            Interval
      (m)
            Au
      (g/ton)
            Ag
      (g/ton)C-6
            46
            48
            2
            5.1
            107C-7
            17.25
            18.75
            1.5
            4.9
            86.1C-8
            16
            18
            2
            5.3
            1C-12
            7.45
            10.5
            3.05
            7.8
            6.2C-12
            10.5
            12
            1.5
            4.9
            3.2C-12
            160.25
            162
            1.75
            101
            31.8C-14
            42
            45
            3
            18
            7.8C-16
            2.8
            4.2
            1.4
            6.5
            6.5C-19
            87
            88.7
            1.7
            8.5
            -C-19
            88.7
            90.55
            1.85
            13.3
            105C-29
            42
            45
            3
            4.7
            69.88
            1
            4
            3
            4.6
            8513
            0
            1
            1
            11
            1713
            1
            4
            3
            10.2
            1513
            4
            7
            3
            5.7
            3714
            0
            1
            1
            5.6
            3414
            1
            4
            3
            5.3
            2414
            7
            8.9
            1.9
            4.3
            2619
            13
            16
            3
            4.6
            1822
            2.6
            5.6
            3
            7.4
            1541
            0
            1
            1
            7.5
            1960
            10.4
            12.7
            2.3
            4.7
            1361
            11.9
            14.4
            2.5
            4.7
            363
            2.1
            3.8
            1.7
            5.8
            863
            3.8
            6.8
            3
            10.1
            1664
            0
            1
            1
            4
            488
            7
            10
            3
            5.2
            69106
            1
            4
            3
            39
            38106
            4
            7
            3
            5.5
            16106
            7
            10
            3
            5
            10106
            10
            13
            3
            4.9
            9115
            0
            1
            1
            6.5
            130137
            0
            2.55
            2.55
            4.1
            30





We used
the original data from Cominco and Glamis to delineate the mineralized zone and
to plan our present trenching and sampling programs. In April 2006, we completed
a sampling of the property that included more than 500 meters of deep trenches
from which we took comprehensive channel sampling. Each of the eight trenches
was approximately 200 meters long and two to 10 meters deep spaced equally along
the 1,000 meters strike length of the property. From the walls of these
trenches, we took approximately 550 rock samples. One half of these samples were
sent to ALS Chemex’s laboratory in Chihuahua for assaying. The sampling protocol
followed the best mining practices. The purpose of the sampling was to further
define the ore grade and potential of the property. Sampling of the main
mineralized zones in the Pit 1 area (as described below) returned values from
1.29 to 6.40 g/t Au, while sampling in the Pit 2 area (as described below)
yielded values varying from 1.5 to 3.60 g/t Au.





Our VP of
Exploration believes that the mineralized material at Cieneguita is structurally
controlled and hosted by breccias and tuffs varying from rhyolitic to dacitic in
composition. The main mineralization and alteration zones have been developed in
the intersection of WNW, NW and NE structures to the northwest (Pit 1 area) and
to the southeast (Pit 2 area). These mineralized zones consist mainly of
acid-sulphate alteration, including quartz-alunite and small and localized areas
exhibiting residual or vuggy silica alteration zones and are interpreted to
represent a high-sulphidation gold (±silver) system.





Phase 2
of exploration was designed to identify new veins and/or mineralized zones. The
geological mapping and sampling activities carried out within phase 2 at
Cieneguita has resulted in the discovery of high grade gold zones in three
different locations along Cieneguita’s mineralized body. The three new high
grade gold locations have been identified just on the outlined limit of the
known mineralized body opening the potential to the southeast in the Pit 1 South
area, to the north in the Central area and to the north in the Pit 2 area,
respectively.





Gold
mineralization in the Pit 1 South area is mainly controlled by N35°E structures
exhibiting quartz-sericite-pyrite alteration and small and localized areas with
high clay content, where exposures allowed continuous chip sampling along
roadcuts. The assay results included a 22 meter exposure showing individual
values ranging from 2.60 to 6.03 g/t Au.





The new
Central and Pit 2 North areas indicate that the mineralized material is
primarily controlled by E-W and N30°W structures also exhibiting
quartz-sericite-pyrite where pyrite has been completely oxidized. Small and
localized areas of high clay content are also common. Sampling on the two
mineralized zones has returned values varying from 1.57 to 4.0 g/t Au and from
1.22 to 3.27 g/t Au in the Pit 2 North and the Central area,
respectively.





From the
samples taken at the Cieneguita Property we used 22 tonnes of the material to
complete column tests to determine the leachability of the precious metals from
the rock. In this test, the ore was placed in PVC tubes and different mixtures
of a cyanide solution were dripped over the top of the columns at different flow
rates. The results from these tests will help us to determine the most effective
solution to use on the heap leach pads on the property. The tests, conducted by
qualified geologists employed by MRT, were undertaken to determine if the
metallurgy of the minerals would allow for economic recovery of the precious
metals using a cyanide heap leach process. The tests were scientifically
conducted and monitored for quality control and efficacy. The results of the
column test indicate that up to 98% of the gold contained in the ore samples we
took could be recovered from the ore if the ore is leached for a sufficient
period of time. Under actual mining production conditions in the field, we would
anticipate economic recovery levels from the ore to be approximately 70% to 75%
recovery. The cost of the cyanide needed to recover gold above the 85% level
would outweigh the value of gold recovered. We cannot guarantee that we will be
able to reach this level of recovery. This is not an estimate of reserves on the
property. Additional tests will be needed to determine the most effective crush
size for the ore, the most cost effective flow rates of the cyanide and the most
economical period of time for leaching.





According
to our VP of Exploration, the results from the last mapping and sampling
campaign provided evidence that the potential for the discovery of new areas
with gold grades still remains open as shown by the discovery of the Pit 1
South, Central and Pit 2 North areas. This exploration program, consisting of
detailed mapping and sampling on these three discovered zones, was completed in
August 2007.





Concurrently
with the surface exploration, a 4,000 meter diamond drilling program is being
carried out in order to test the potential of those three new mineralized areas,
to increase known mineralization and to characterize the gold mineralization
contained within the sulphide zone. A total of 18 diamond core holes have been
drilled (CI-01 to CI-18) for 3,606.91 core meters since drilling began at
Cieneguita in early December 2007. All drill holes from this first phase
drilling program have been focused on extending zones of high-grade gold
mineralization identified by previous drilling programs (Glamis drilling
program, 1994-1996). Drill hole CI-04 and CI-11 failed to intersect any
economical mineralization.








Significant
gold grades in the drilling were intersected by drillholes CI-02, CI-05, CI-06
CI-08, CI-09, and CI-10 as follows:





·
            Drillhole
      CI-02


o
            5
      meters (m) with 6.13 g/t Au from 97.50 to 102.50 meters
  (m)





·
            Drillhole
      CI-05


o
            4.10
      m with 2.75 g/t Au from 40.90 to 45.0
m


o
            4.60
      m with 2.89 g/t Au from 62.90 to 67.50
m


o
            6.00
      m with 1.16 g/t Au, 56.1 g/t Ag, 0.44% Pb and 0.76% Zn from 118 to 124
      m


o
            4.50
      m with 0.69 g/t Au, 183.56 g/t Ag, 0.39% Pb and 1.23% Zn from 147.50 to
      152 m


o
            6.00
      m with 0.62 g/t Au, 81.35 g/t Ag, 1.92% Pb and 3.55% Zn from 156.50 to
      162.50 m





·
            Drillhole
      CI-06


o
            11.70
      m with 2.58 g/t Au





·
            Drill
      hole CI-08


o
            From
      96.50 to 122.00 m (25.50 m) with 0.31 g/t Au, 48.49 g/t Ag, 0.82% Pb &
      1.22%Zn


o
            From
      130.75 to 141.24 m (10.50 m) with 0.96 g/t Au, 90.34 g/t Ag, 0.52% Pb
      & 0.91 % Zn


§
            Including:
      6 meters with 1.47 g/t Au, 140.95 g/t Ag, 0.44% Pb and 0.61%
      Zn





·
            Drill
      hole CI-09


o
            From
      8.40 to 12.20 m (3.80 m) with 1.39 g/t Au and 149.9 g/t
  Ag


o
            From
      52.70 to 60.20 m (7.50 m) with 0.43 g/t Au, 105.58 g/t Ag, 0.40%Pb and
      0.64% Zn


§
            Including:
      1.50 meters with 0.54 g/t Au, 171 g/t Ag, 0.72% Pb and 1.49%
      Zn





·
            Drill
      hole CI-10


o
            From
      0.0 to 6.00 m (6.0 m) with 1.19 g/t Au and 27.7 g/t
  Ag


o
            From
      74.50 to 94.0 m (19.50 m) with 0.73 g/t Au, 57.56 g/t Ag, 0.73% Pb &
      1.03% Zn


§
            Including:
      3 meters with 0.81 g/t Au, 96.55 g/t Ag, 1.28% Pb and 2.47%
    Zn


o
            From
      95.50 to 100.0 m (4.50 m) with 1.34 g/t Au, 140.90 g/t Ag, 0.09% Pb and
      0.13% Zn


o
            From
      109.0 to 118.0 m (9.0 m) with 0.26 g/t Au, 277.88 g/t Ag, 0.26% Pb and
      0.42% Zn


§
            Including:
      1.50 meters with 0.28 g/t Au, 976 g/t Ag, 0.20% Pb and 0.19%
      Zn





Drilling
results have demonstrated the extension of the Cieneguita mineralized system at
depth down at least to 250 meters where mineralization is mainly hosted by
sulphides. The mineralization zone is still open to the south and to depth.
Drilling program continues and a second stage drilling program has been proposed
to define the complete mineralization system and provide Canadian National
Instrument NI 43-101 compliant resource estimation report.





Despite
these results, the Cieneguita Property has no known or estimated
reserves.





Based on
the recent results, management has decided to postpone putting the Cieneguita
Property back into production. Management wants to complete drilling on the
property and assess the new areas to ensure that the current mine design and the
strategy of putting the property into production will provide the most value for
the company.




Infrastructure







The town,
near the former mine, has the following services: diesel generated electrical
power, cellular phone service, radio communication (CB), a health center and a
school. Because the property was previously in production, it has existing
infrastructure that includes power, water, railroad transportation (within 20
kilometers), and a public, all weather road with access year round. The haul
roads to the heap leach pads from the open pit area are in good condition and
have been maintained by third parties since Glamis halted production, and the
heap leach pads used in previous mining operations are still in place. It is our
intention to use the existing pads and tailings site to reduce our costs to
re-open the mine. Because of this existing infrastructure, we believe that the
investment needed to put the mine into production would be less than the
investment that would be required for a mine that was never in production. There
are no additional equipment or facilities available to us on the property.
Further study is required to review the feasibility and suggested extent of our
use of the existing infrastructure of the old mine.




Budget







To date,
we have incurred expenses of $1,544,000 due to exploration of the Cieneguita
Property. Under the direction of our VP of Exploration, we commenced phase 2 of
our exploration program in April 2008, which will be completed in July 2008. We
budgeted $1,000,000 for the phase 2 exploration; including $50,000 for an
additional geochemical sampling program and $50,000 for general administrative
expenses. We have spent a total of $252,000 on this phase of exploration. We
budgeted $1,835,000 for the cost of a 9,500 meter drilling program, including
assaying and supervision. The drilling program at Cieneguita commenced on
December 18, 2007 and we anticipate it to continue until the end of December
2008. See “Plan of Operations” in the “Management’s Discussion and Analysis”
section for further information.





Guazapares
Property




Property
Location







The
Guazapares Property is located in the Barranca section of Chihuahua State in
Mexico, and according to data published by the Government of Mexico, it is at
the interphase between the two main volcanic groups that form the bulk of the
Sierra Madre Occidental. The location is 220 kilometers to the southwest of
Chihuahua City. An all weather dirt road traverses the property. The property is
accessible year round by air, rail (within 20 kilometers) and road. The area has
available diesel generated power and water.





The
Guazapares Property, covering 1,980 hectares (approximately 4,893 acres), is in
a mining district with a history of large ore deposits. A large ore deposit
would be defined as a property capable of producing in excess of 50,000 ounces
of gold equivalent per year.







Claim Status &
Licensing







Sunburst
de Mexico owns or has an option to purchase 100% of the Guazapares concessions,
as indicated below. If our exploration is successful on the optioned
concessions, then Sunburst de Mexico intends to exercise its option to acquire
them. There is no penalty for not exercising our options. The concessions not
owned by Sunburst de Mexico are owned by Compañía Minera. There is no
relationship between Compañía Minera and Mexoro, its officers, directors and
affiliates. The following table sets forth those concessions in the Guazapares
area that Sunburst de Mexico owns or has the option to purchase:





GUAZAPARES
      CONCESSIONS OWNED BY SUNBURST DE MEXICO
              (Property
      Payments Still Due and Owing)Name
            Title
      Number
            Area
      (Ha)
            Term
      of Validity (1)
            Royalties
      and PaymentsGuazapares
            209497
            30.91
            3/8/1999
      to 2/8/2049
            NSR
      of 2.5% (2)Guazapares
      1
            212890
            451.97
            2/13/2001
      to 1/12/2051
            NSR
      of 2.5% (2)Guazapares
      2
            226217
            404.00
            12/2/2005
      to 12/1/2055
            NSR
      of 2.5% (2)Guazapares
      3
            211040
            250.00
            3/24/2000
      to 3/23/2050
            NSR
      of 2.5% (2)Guazapares
      4
            223664
            63.97
            2/2/2005
      to 1/2/2055
            NSR
      of 2.5% (2)Guazapares
      5
            213572
            88.87
            5/18/2001
      to 5/17/2051
            NSR
      of 2.5% (2)El
      Cantilito
            220788
            37.04
            7/10/2003
      to 6/10/2053
            NSR
      of 2.5% (2)Vinorama
            226884
            474.22
            3/17/2006
      to 3/16/2056
            NSR
      of 2.5% (2)GUAZAPARES
      CONCESSIONS UNDER OPTION AGREEMENTSName
            Title
      Number
            Area
      (Ha)
            Term
      of Validity (1)
            Royalties
      and PaymentsSan
      Antonio
            222869
            105.11
            9/14/2004
      to 9/13/2054
            NSR
      of 2.5% (3)San
      Antonio
            204385
            14.89
            2/13/1997
      to 2/12/2047
            NSR
      of 2.5% (3)Ampliacion
      San Antonio
            196127
            20.92
            9/23/1992
      to 9/22/2042
            NSR
      of 2.5% (3)San
      Francisco
            191486
            38.16
            12/19/1991
      to 12/18/2041
            NSR
      of 2.5% (4)





(1)           Amendments
to the Mexican mining laws took effect with the publication on December 21,
2005, of certain amendments to the Ley Federal de Derechos, the act that sets
forth the mining taxes' rates. Effective January 1, 2006, this Mexican
Government legislation has converted all of the former exploration concessions
in Mexico, which carried a maximum six year life, and exploitive concessions,
which had a 25 year life, into general concessions with a 50 year life from the
date they were registered with the Mining Registry. The concessions are
automatically registered as soon as the concession mining rights are paid and no
further paper work is required. These claims are currently in good standing and
held by Sunburst de Mexico. There will be no special documents sent to us to
reflect this change.





(2)           These
concessions have been transferred to the Company. However, we must continue to
make payments on these concessions in order to retain ownership. The total
payments for us to acquire and retain 100% ownership of all eight concessions
are as follows: November 30, 2005 - $100,000 (this payment date has been
extended – see below), October 31, 2006 - $60,000 (this payment date was
extended to February 28, 2007 and then to May 31, 2007 and then to August 31,
2007- see below 5), August 2, 2007 - $140,000 (see below 5), August 2, 2008 -
$110,000 and August 2, 2009 - $500,000. These scheduled payments must be made to
keep our agreement in good standing. Failure to make the payments would cancel
our agreements to acquire these concessions.





(3)           These
concessions are currently under option agreements. Title to the concessions has
not yet been transferred to the Company. The total payments for us to acquire
100% ownership of all three concessions are as follows: January 15, 2006 -
$20,000 (paid), January 15, 2007 - $40,000 (this payment was deferred until
April 15, 2007 and payment was made on March 26, 2007), January 15, 2008 -
$50,000 (this payment was deferred to January 31, 2008 and was paid in April
2008), January 15, 2009 - $50,000 and January 15, 2010 - $500,000. These
scheduled payments must be made to keep our option to acquire these concessions
in good standing. Failure to make the payments would cancel our options to
acquire these concessions.





(4)           This
concession is currently under an option agreement. Title to the concession has
not been transferred to the Company. The total payments for us to acquire 100%
ownership of this concession are as follows:  June 25, 2006 - $20,000
(this amount has been paid), June 25, 2007 - $30,000 (this amount has been
paid), June 25, 2008 - $40,000 and June 25, 2009 - $250,000. These payments must
be made to keep our option to acquire these concessions in good standing.
Failure to make the payments would cancel our options to acquire these
concessions.





(5)           On
September 19, 2007, Sunburst de Mexico, Mexoro and MRT entered into an agreement
to defer any and all property payments regarding Guazapares, currently owing to
MRT and which would otherwise become due by December 31, 2007, until such time
as Sunburst de Mexico and Mexoro have sufficient funds to make the payments, in
the opinion of the disinterested directors of Mexoro.




History







Old
mining records in the public domain indicate that mining operations commenced on
this site in the 17th
century. Most of the production on this site came from high-grade vein deposits
mined by crude underground methods. These records indicate that the main
Guazapares breccia veins were discovered in or around 1830. The major period of
production was from 1870 to 1900, when there were four silver pan amalgamation
mills in operation. Although the deposits contain both gold and silver, the
early mills could not recover the gold as it is very fine and occurs along
cleavage planes in the pyrite. The mills at the time could only process the
oxidized portions of the veins, and the unoxidized, sulfide-bearing material was
usually left in the mines as pillars. The principal mine owner died in 1890,
after which the mines of Guazapares slowly sank into disrepair and closed by
1900. In 1905, a U.S. company consolidated most of the properties and reopened
some of the mine workings. The company ran into financial difficulties during
1907 and work halted. Ramon Valenzuela then acquired the Guazapares Property and
operated a mill until 1912. Noranda Exploration, Inc. briefly optioned
concessions in the area in the early 1990s. Kennecott Utah Copper Corp. optioned
the core concessions in 1993-94 and drilled a few holes at one of the
concessions. On Guazapares 4, and on a property adjacent to it, War Eagle Mining
Company, Inc. drilled a total of 5,552 meters in 50 holes on three mineralized
zones between November 1991 and August 2002.







Geology







There are
two main deposit types that are considered relevant to the Guazapares Property:
epithermal vein and mesothermal vein. These are briefly discussed
below.





In an
epithermal gold deposit, the gold is deposited within one to two kilometers of
the surface and is deposited from hot fluids. The fluids of epithermal systems
range between 50 and 200 degrees Celsius with moderate pressures (Panteleyev,
1991-4). These deposits are typically related to volcanism in continental arc
settings. Epithermal type mineralized veins are often spatially and genetically
related to porphyry systems (Panteleyev, 1991-4). Epithermal gold deposits are
formed by two chemically distinct fluids. The first is low sulphidation fluid, a
mixture of meteoric water and magmatic fluid that is of nearly neutral pH. Gold
is carried in solution in low sulphidation waters and is deposited when the
water rises to shallow low pressure levels in the crust and boils. The second
fluid, high sulphidation fluid, which is almost totally derived from a magmatic
source is deposited when the fluid cools or is mixed with meteoric water. Gold
and other metals can originate either from the magma or be leeched from the host
rock as the fluids travel though fractures. Low sulphidation fluids typically
form mineralized cavity filling quartz veins. High sulphidation fluids often
form mineralization that is penetrative into the host rock often observed as
disseminated texture. Low sulphidation systems are known for containing economic
quantities of silver with some copper, lead, and zinc. Other minerals associated
with low sulphidation systems are chalcedony, carbonate, pyrite, sphalerite, and
galena. High sulphidation systems often contain economic quantities of gold and
copper. Other minerals associated with high sulphidation systems are quartz,
alunite, pyrite, and other copper minerals (Panteleyev, 1991-4). Geochemical
exploration for these types of deposits results in different chemical anomalies
depending on the type of mineralization present. Low sulphidation deposits are
higher in zinc and lead, lower in copper, and have a higher ratio of silver to
gold. High sulphidation deposits are higher in arsenic and copper and have lower
silver to gold ratio.





Mesothermal
gold deposits can be hosted in a wide variety of lithologies. These deposit
often show relationships with regional scale strike slip faults (Olsen et al.,
1994). Analysis of fluid inclusions from samples of quartz veins give average
temperatures of more than 250 degrees Celsius. These veins are podiform,
sheared, and concordant with enclosing schists of a transitional
greenschist-amphibolite grade. Gold mineralization is best associated with
faults that show evidence of deformation that is transitional between ductile to
brittle and associated with greenschist to amphibolite facies metamorphism
(Olsen et al., 1994). Mesothermal gold deposits are found in the proximity of
major regional fault and fracture systems and most often hosted in secondary or
tertiary structures related to the regional scale structures. The gold is
deposited from hydrothermal fluids which originated deep in the earths crust
with temperatures of 250 to 400 degrees Celsius. The fault and fracture zones
act as permeable conduits for the fluids to migrate. Gold is carried in solution
until the fluid reaches a point where either there is a chemical reaction with
the country rock or changes in temperature and/or pressure cause the gold to
precipitate. The gold and associated metals precipitates out of solution along
with quartz vein material. Mesothermal type deposits can be recognized by the
fact that the host rocks show the affects of the fault/fracture origins.
Structural evidence such as folds in bedding or pinches, swells, and pods in
quartz veins is characteristic of ductile deformation and can be often found in
at mineralized mesothermal quartz veins. Mesothermal quartz carbonate veins
typically include pyrite and arsenopyrite with the gold. Gold can be pure, and
be found as free grains or grains intergrown with sulphide minerals. The gold
can also occur within the crystal lattice of arsenopyrite or as electrum, a gold
mineral containing between 20 to 80 percent silver. Mineralized mesothermal
quartz carbonate veins are characterized by iron rich hydrothermal carbonate
alteration assemblages which are pervasive with respect to the host
rock.




Mineralization







The style
of mineralization at the Guazapares Property is characterized by gold and silver
bearing veins and vein breccias occurring within and/or at the intersection of
numerous north – northwest structures (San Francisco and San Antonio Fault
Systems) and west – northwest structures (San Antonio and El Cantilito Fault
Systems). These are multi-phase deposits which produced several generations of
cross-cutting veins, veinlets, breccias and related hydrothermal alteration.
Alteration ranges from peripheral propylitization to argillic alteration to
strong to intense silicification, often with adularia development. This
mineralization is physically expressed as quartz vein stockworks, silicified
hydrothermal breccias, and vuggy, quartz-filled expansion breccias. At many such
deposits, such as those nearby at Palmarejo (Gustin, 2004), there are at least
two stages of gold-silver mineralization. The first is characterized by pyrite,
sphalerite, galena and argentite in structurally controlled quartz vein
breccias. There is often a later fine-grained higher-grade gold-silver, base
metal-deficient phase cross-cutting the first (Durgin, 2007).





Numerous
polymetallic vein showings have been the subject of much of the exploration work
at the Guazapares Property.





The San
Francisco Area was found to contain mineralized quartz veins, vein breccias, and
quartz vein stockwork zones comprising and area of approximately 500 by 700
meters. The mineralized zone trends predominately northwest, with the highest
grade mineralization occurring at intersections with the west, northwest, and
northeast trending faults. The San Francisco area is characterized by stockwork
type mineralization, with silicification being the major
alteration.





The San
Antonio Area consists of two main mineralized veins trending northwest and
west-northwest. The mineralization covers an area of 500 by 300 metres and is
observed as quartz veins and quartz stockworked veins. These exhibit textures of
multiple phases of hydrothermal activity.





The El
Cantilito Area is a mineralized zone found related to west and northeast
trending structures where high concentrations of gold and silver have been
found. The mineralization style is quartz veins, quartz stockwork, and
silicification observed to cover a 500 by 350 meter area within the felsic
volcanic rocks.





The
Montana de Oro Area lies to the north of the Guazapares Property. This showing
is characterized by mineralized structures trending north-northeast, where
development of ore shoots was found to contain high gold
concentrations.







Mineral
Deposits







Geological
mapping and sampling over an area of four square kilometers has outlined
numerous mineralized areas within the project area.





According
to our VP of Exploration, the Guazapares property consists of a series of
sub-vertical, brecciated, quartz-rich zones that outcrop within an area of
approximately four square kilometers and have a strike length of over two
kilometers. The mineralized areas and identified drilling targets include four
main zones: San Antonio, San Francisco, El Cantilito and Montaña de Oro. The
mineralization is characterized by silver-gold low-sulphidation veins, locally
overprinted by high-level high-grade gold-silver quartz veins. The mineralized
areas and veins are structurally-controlled by north-northwest striking faults
and west-northwest trending faults that have favored the development of
high-grade ore shoots.





Mineralization
at Guazapares is characterized by gold-silver veins and vein-breccias occurring
within and/or at the intersection of numerous north-northwest structures (San
Francisco and San Antonio fault systems) and west-northwest structures (San
Antonio and El Cantilito fault systems).





On the
basis the field evidence, all four mineralized areas have been considered to be
prospective in which three of them San Francisco, San Antonio and El Cantilito
have been followed up with initial geological mapping, sampling and
drilling.





The San
Francisco area is characterized by mineralized quartz veins, vein/breccias and
quartz veins stockworked zones covering an area of approximately 500 x 700
meters. The mineralized zone trends predominantly northwest developing
high-grade mineral concentration within the intersection of the west, northwest
and northeast trending faults. The San Francisco area includes mainly stockwork
mineralization and silicification, exhibiting small and localized areas of vuggy
quartz within the volcanic rocks. Detailed rock chip sampling along these
mineralized zones has returned high silver values ranging from trace to 2,160
g/t Ag, where gold values vary from 1.17 to 2.28 g/t Au.





Early
mining, by previous owners, was focused mainly on the San Antonio vein domain
where high-grade gold mineralization sampling has returned values of 42.6 g/t Au
and 1,100 g/t Ag present in underground workings. Two main mineralized veins
domain trending northwest and west-northwest have been identified within this
targets area. Mineralization comprises an area of 500 x 300 meters and consists
of quartz veins and quartz stockworked veins exhibiting multiple pulses of
hydrothermal activity. Assay results from rock chip samples have returned gold
values registering from trace to 8.76 g/t Au.





The El
Cantilito area is a mineralized zone mainly along west and northeast trending
structures where high concentrations of gold are common, varying from 1.86 to
8.39 g/t Au and exhibiting silver values from trace to 656 g/t Ag. El Cantilito
is characterized by quartz veins, quartz stockwork mineralization and
silicification developed in an area of approximately 500 x 350 meters within the
hosting volcanic rocks.





The
Montaña de Oro area is a newly identified target to the north of the Guazapares
project. Montaña de Oro is characterized by mineralized structures trending
north-northeast, where development of ore-shoots containing frequent high gold
values (5.39, 7.22, 1.75, 19.7 and 2.5 g/t Au).





Most of
Mexoro’s exploration efforts have been concentrated on the San Antonio and San
Francisco vein domains although the vein and breccias textures, structures,
alteration and metal association suggest that mineralization areas at Guazapares
are of low-sulphidation style. According to our VP of Exploration, these
structural and mineralized systems are open towards both the north and south.
Detailed field work will continue in all identified targets in conjunction with
building road access and drilling platform on selected drilling
locations.








The
Guazapares property is without known reserves. Our proposed exploration programs
are exploratory in nature.




Infrastructure







Guazapares
has the infrastructure in place to support a mining operation. It has diesel
generated electrical power, water, railroad transportation within 20 kilometers
and an all weather road access all year round. There is trained labor for mining
available in the area.




Budget







We have
estimated that the exploration program on the Guazapares Property, including the
recently completed drill program and an amount for a subsequent drilling
program, will cost approximately $2.87 million. Of this amount, we spent
approximately $672,000 from July 2007 through to the end of December 2007 for
phase 1 of exploration. We have budgeted approximately $1.48 million from the
total $2.87 million for additional drill program expenditures. See “Plan of
Operations” in the “Management’s Discussion and Analysis” section for further
information.





Encino
Gordo Property




Location







The
Encino Gordo project is located in the Barranca section of Chihuahua State in
Mexico, and according to data publicly published by the Mexican Government, it
is at the interphase between the two main volcanic groups that form the bulk of
the Sierra Madre Occidental. The Encino Gordo Property is 3.2 miles west of the
Guazapares Property. The location is 220 kilometers to the southwest of
Chihuahua City. The property is accessible by an all weather dirt road along the
southwest side of the property.




Claim
Status







Sunburst
de Mexico owns two concessions (Title 220149 and 220148) and has the option to
acquire 100% of the three other properties listed below, subject to a 2.5% NSR
and making the scheduled property payments.





The
concessions not owned by Sunburst de Mexico are owned by MRT. The following
table is a summary of the concessions on the Encino Gordo property:





Lot
      Name
            Title
      Number
            Area
      (Ha)
            Term
      of Validity (1)
            Royalties
      and PaymentsEncino
      Gordo
            225277
            450
            8/12/2005
      to 8/11/2055
            None
      (2)Encino
      Gordo
            227125
            382
            5/17/2006
      to 5/16/2056
            None
      (2)La
      Paloma
            220148
            100
            6/17/2003
      to 6/16/2053
            NSR
      of 2.5% (3)El
      Camuchin
            220149
            100
            6/17/2003
      to 6/16/2053
            NSR
      of 2.5% (3)Encino
      Gordo 2
            225276
            50
            8/12/2005
      to 8/11/2055
            NSR
      of 2.5% (3)





1)           Amendments
to the Mexican mining laws took effect with the publication on December 21,
2005, of certain amendments to the Ley Federal de Derechos, the act that sets
forth the mining taxes' rates. Effective January 1, 2006, this Mexican
Government legislation has converted all of the former exploration concessions
in Mexico, which carried a maximum six year life, and exploitive concessions,
which had a 25 year life, into general concessions with a 50 year life from the
date they were registered with the Mining Registry. The concessions are
automatically registered as soon as the concession mining rights are paid and no
further paper work is required. These claims are currently in good standing and
held by Sunburst de Mexico. There will be no special documents sent to us to
reflect this change.





(2)           Concessions
are 100% owned by Sunburst de Mexico with no further payments to be
made.





(3)           The
total payments for us to acquire 100% of these concessions from the concession
owners are as follows: June 30, 2006 - $10,000 (this amount has been paid),
December 31, 2006 - $25,000 (this payment was deferred until March 31, 2007 and
payment was made on March 26, 2007), December 31, 2007 - $50,000 ($20,000 of
this payment was made on January 3, 2008 and balance was paid on February 29,
2008), December 31, 2008 - $75,000, December 31, 2009 - $125,000 and December
31, 2010 - $200,000. These scheduled payments need to be made to keep our
agreement in good standing. Failure to make the payments would cancel our
agreements to acquire these concessions.







History







The
Encino Gordo Property, covering 1,042 hectares (approximately 2,575 acres), is
situated near an old mining district with a lengthy production history,
according to public records. Old mining records indicate that mining operations
commenced three kilometers east of this site in the 17th
century. Most of the production from those mines came from high-grade vein
deposits mined by crude underground methods. To the east of Encino Gordo, the
main Guazapares breccia veins were discovered in or around 1830. The major
period of production was from 1870 to 1900 when there were four silver pan
amalgamation mills in operation. Although those deposits contain both gold and
silver, the early mills could not recover the gold as it is very fine and occurs
along cleavage planes in the pyrite. The mills of the time could only process
the oxidized portions of the veins, and the unoxidized, sulfide-bearing material
was usually left in the mines as pillars. The principal mine owner of the
properties east of Encino Gordo died in 1890, after which the mines of
Guazapares slowly sank into disrepair and closed by 1900. In 1905, a U.S.
company consolidated most of the properties to the east of Encino Gordo and
reopened some of the mine workings. That company ran into financial difficulties
during 1907 and work halted. Ramon Valenzuela then acquired the properties to
the east of Encino Gordo and operated a five stamp mill until 1912. Noranda
Exploration, Inc. briefly optioned concessions in the area in the early 1990’s.
Kennecott optioned the core concessions east of Encino Gordo in 1993-94 and
drilled a few holes in one of the concessions to the east of Encino Gordo. The
Encino Gordo property has never been in production.




Mineral
Deposits







Blackstone
Resources Inc. hired Reliance Geological Services of Vancouver, Canada in 1996
to evaluate the results of a geological and geochemical exploration program on
the Encino Gordo Property. The subsequent work revealed results that were judged
worthy of a second phase of exploration. Our surface sampling has indicated the
presence of mineralized structures, including gold and silver anomalies on the
property. Several gold and copper anomalous areas were also identified. The
property is at the very early stages of exploration, though, and much more work
is needed before any decisions can be made as to the viability of the
property.




Structure
Empalme







The
Empalme vein outcrops northwest of the Elyca structure, inside the Encino Gordo
Property and has been mapped for approximately 150 meters. Workings on the
breccia-vein consist of two old shafts now filled with water. The host rocks
consist of a sequence of volcaniclastic sediments overlain by tuffaceous dacites
with moderate silicification and supergene argillic alteration.




Cienega
Vein







Our
exploration shows that the Cienega vein outcrops at one location along a stream
bed within the Encino Gordo Property. It consists of brecciated quartz and
contains 2% to 3% disseminated pyrite hosted by brown
volcaniclastics.




Arroyo
Los Laureles Vein







The vein
outcrops in the southeast limit of the San Miguel claim in Arryo Los Laurels.
The host rocks consist of intensely fractured volcaniclastic arenites, tuffs and
dacites.





The
Encino Gordo Property is without known reserves. Our proposed exploration
programs are exploratory in nature.




Infrastructure







The
Encino Gordo Property is accessible year round by all weather roads. There is no
local electricity or water currently available. We will need to supply our own
diesel generated electrical power.




Budget







We
estimate that the total geochemical and geophysical exploration program on the
Encino Gordo Property will cost approximately $138,000, through December 2008,
and will have the goal of identifying drill targets for a subsequent drilling
program. We budgeted $50,000 for mapping and sampling, which was completed in
February 2007. We spent $50,000, as budgeted, through the end of February 2007.
The balance of the budgeted funds will be spent as directed by our VP of
Exploration once he has reviewed all of the initial material on the property and
the results of the exploration completed in February 2007. From November 2006 to
April 2008 we spent $64,000 on surface exploration. At this time we do not have
the necessary working capital to proceed. The geochemical sampling and mapping
is preliminary work which will allow the VP of Exploration to have sufficient
information available to him to plan an exploration strategy and budget for this
property. We have not conducted any exploration on this property other than
preliminary sampling and mapping. See “Plan of Operations” in the “Management‘s
Discussion and Analysis” section for further information.











Sahauyacan
Property




Location







The
Sahauyacan Property is located near the Chihuahua-Sonora State border
approximately 275 kilometers east-southeast of the city of Chihuahua and 50
kilometers south-southwest of the town of Mycoba in the state of Chihuahua,
Mexico. The property is accessible by all weather dirt roads running through the
center of the property.




Claim
Status







The
Company has recently optioned 14 mineral concessions totaling 649 hectares,
which old mining records indicate cover an epithermal quartz vein system. The
concessions are owned by Minera Emilio and optioned by Sunburst de Mexico. The
following table is a summary of the concessions on the Sahauyacan
Property:





Concession
      Name
            Title
      #
            Surface
      (Ha)
            Term of Validity(1)
            Royalties
      and PaymentsVeronica
      Segunda
            171083
            8.0000
            9/8/1982
      – 8/8/2032
            (2)Esperanza
      Segunda
            171000
            4.0000
            5/8/1982
      – 4/8/2032
            (2)Maria
      Luisa
            170673
            9.6000
            11/6/1982
      – 10/6/2032
            (2)Carmela
            176856
            4.0000
            12/17/1985
      – 12/16/2035
            (2)Silvia
            217673
            212.7549
            6/8/2002
      – 5/8/2052
            (2)La
      Chonca
            218432
            228.1808
            5/11/2002
      – 4/11/2052
            (2)La
      Cumbre
            216091
            67.0314
            9/4/2002
      – 8/4/2052
            (2)La
      Cumbre II
            220349
            5.2498
            7/18/2003
      – 7/17/2053
            (2)La
      Cumbre II Fracc. A
            220350
            1.1925
            7/18/2003
      – 7/17/2053
            (2)Santo
      Nino 3
            220150
            19.9500
            6/17/2003
      – 6/16/2053
            (2)Fortunato
      2
            214274
            7.1686
            6/9/2001
      – 5/9/2051
            (2)Segunda
      Santa Theresa
            219233
            12.0000
            2/20/2003
      – 2/19/2053
            (2)Santo
      Nino
            191810
            4.0000
            12/9/1991
      – 12/18/2041
            (3)Segundo
      Santo Nino
            191086
            65.8730
            4/29/1991
      – 4/28/2041
            (4)La
      Estrella
            169365
            9.0000
            12/11/1981
      – 11/11/2031
            (5)Sultana
      Menor
            169362
            4.0000
            12/11/1981
      – 11/11/2031
            (5)





(1)           Amendments
to the Mexican mining laws took effect with the publication on December 21,
2005, of certain amendments to the Ley Federal de Derechos, the act that sets
forth the mining taxes' rates. Effective January 1, 2006, this Mexican
Government legislation has converted all of the former exploration concessions
in Mexico, which carried a maximum six year life, and exploitive concessions,
which had a 25 year life, into general concessions with a 50 year life from the
date they were registered with the Mining Registry. The concessions are
automatically registered as soon as the concession mining rights are paid and no
further paper work is required. These claims are currently in good standing and
held by Sunburst de Mexico. There will be no special documents sent to us to
reflect this change.





(2)           The
Company must pay Minera Emilio a total of $282,000 for these concessions. Of
this, $10,000 was paid on December 2005 and $20,000 was paid on October 25,
2006. The December 2005 payment was made as “good faith payment” as we
negotiated to acquire the properties. That payment has been applied to the total
purchase price. The Company must pay $2,500 per month for twelve months on the
21st day of each month beginning on August 21, 2006. The monthly payments of
$2,500 have all been paid for a total $30,000. Beginning on August 21, 2007, the
Company must pay $3,500 per month on the 21st of each month for twelve months.
The monthly payments of $3,500 have all been paid to February 2008 for a total
of 7months and $24,500. We are in default for March 2008 and April 2008
payments. We expect to make these payments in May 2008.  Beginning on
August 21, 2008, the Company must pay $5,000 per month on the 21st of each month
until the balance of $282,000 is paid (36 months).





(3)           This
concession was originally included in the “Promise to Contract an Option
Agreement” between Minera Emilio and Jose Emilio Touche Creel on December 5,
2005, whereby Sunburst de Mexico set forth an offer to enter into and execute an
exploration and option to purchase an undivided 100% title in and to the mining
concessions located in the Sahauyacan Property. This concession was not included
in the Exploration and Sale Option Agreement of Mining Concession contract dated
June 21, 2006. At the present time, Mexican public records show that this
concession has been cancelled; however, there is an official letter issued by
the Mexican Mining Director General at that time which notifies that
cancellation was revoked. Minera Emilio has the option to reinstate this
concession.








(4)           The
Company must pay the following concession representatives a total of $255,000
for this concession: Leopoldo Rascon Lopez, Sabino Amador Rascon Polanco and
Rene Muro Lugo. Each concession representative owns 33.3% of the total Segundo
Santo Nino title. The total payments to acquire 100% of this concession are as
follows: all payments up to the date of this annual report totaling $55,000 have
been paid, May 15, 2008 - $10,000, November 15, 2009 - $20,000, May 15, 2009 -
$20,000 and November 15, 2010 - $30,000 and May 15, 2010 -
$120,000.





(5)           The
Company must pay the following payments to Maria Luisa Wong Madrigal to acquire
100% ownership of these concessions:  January 25, 2008 - $33,000
(paid), July 25, 2008 - $33,000, January 25, 2009 - $34,000 and July 25, 2010 -
$500,000. These scheduled payments must be made to keep our option to acquire
these concessions in good standing. Failure to make the payments would cancel
our options to acquire these concessions




History







The main
vein in the area, the Santo Nino vein was the focus of a small scale underground
gold mining operation in the late 1800’s and early 1900’s, with at least three
main underground mine access drifts supplying feed to a centrally located mill,
which is still present. The mine was closed at the time of the Mexican
revolution. The Santo Nino vein system has not been evaluated using modern
techniques or explored by drilling.




Geology







Our
initial exploration work on the property, as part of due diligence before
acquiring the property, indicates that the geology exposed in the project area
reveals a complex geologic history. We believe that the basement in the area is
composed of dark gray-green massive, fractured and folded phyllitic
metasedimentary and metavolcanic rocks in contact with Lower to Middle
Cretaceous banded shale and fine grained arenite. Our exploration suggests that
these phyllitic rocks are in contact with a Tertiary volcaniclastic sequence
that occurs as intercalated fine to coarse grained tuffaceous sediments,
volcanic breccias and flows which range in composition from andesite to
rhyolite. Our exploration suggests that the entire sequence has been locally
crosscut by at least two intrusive units of diorite to rhyolite composition
possibly represent synvolcanic hypabyssal intrusions. The Tertiary volcanic
sequence is the main host to the gold/silver quartz vein system present in the
project area.




Mineral
Deposit







A surface
geological mapping and sampling crew evaluated the property from September 2006
through December 2006. Mapping on the property was completed at a scale of
1:5,000 with individual veins being mapped at a scale of 1:1,000. To date, a
total of 300 samples have been taken from the property, including 101 rock chip
and channel samples, 41 stream sediment samples and 158 soil samples. The
underground workings were evaluated for safe entry and the mine has been deemed
unsafe to open. A limited part of the mine was opened and bulk samples were
taken. The Sahauyacan Property is without known reserves. Our proposed
exploration program is exploratory in nature.




Santo
Nino Vein







Our
initial mapping indicates the Santo Nino vein consists of milky quartz and
crackle breccia accompanied by iron oxides and veinletts of crustiform, banded
and chalcedonic quartz which is suggestive of an epithermal origin. Our sampling
of the rocks shows that mineralization presently recognized within the vein
consists of chalcopyrite, malachite, azurite, pyrite and abundant iron oxides
with manganese oxides. The predominant alteration adjacent to the vein is
moderate to strong argillic alteration with local quartz and sericite which
forms a halo to the vein which is locally up to 50 meters wide. Further from the
vein this moderate to strong argillic zone is transitional to a zone of weak
argillic alteration accompanied by supergene oxidation, and propylitic
alteration. This weak argillic alteration zone is more than 200 meters wide. Our
initial exploration has shown that the vein is locally offset along at least one
left lateral fault (in the Mina Cobriza area).





Our
initial exploration shows that a second quartz vein parallel to and west of the
Santo Nino vein has been mapped (“Santo Nino Segundo” vein). The northern
termination of the Santo Nino vein appears to represent a fault offset (left
lateral fault) possibly offsetting the mineralizing system 200 meters to the
west. Here the wide weak argillic alteration zone (hangingwall to the vein
system) is present and continues to the north-northwest for more than 500 meters
to Sahuayacancito.








La
Cumbre:





The La
Cumbre area covers the local hill top located approximately 500 meters east of
the Santo Nino vein. Cominco (now Teck Cominco Limited), drilled at least three
holes in this area in the mid 1990s. Drill results have not been obtained from
this work.





Our
initial work in the area shows that the stratigraphy in the La Cumbre area
consists of tertiary volcanics composed of porphyritic andesitic flows
intercalated with fine to coarse volcaniclastic sediments overlain by rhyolite
tuffs and flows. Tectonic breccias and stockwork zones are accompanied by veins
and veinletts of chalcedonic quartz with iron oxides (hematite), manganese and
very fine pyrite. Four brecciated structures have been identified to date in our
preliminary exploration. Alteration consists of pervasive silicification with
weak to moderate massive chalcedonic quartz in the matrix of the breccias,
accompanied by a weak argillic alteration of the wall rock. Numerous old surface
trenches are present in this area and will be the subject of future sampling and
mapping.




Drilling
program







Reconnaissance
and detailed mapping (1:1,000) programs in the Sahuayacan project have
identified four significant drilling targets: Santo Niño, La Cumbre, Cerro Cacho
and Santa Teresa.





To date a
total of approximately 2,000 meters have been drilled in 13 diamond drillholes.
Eight holes were drilled in the Santo Niño vein-structure (SDH-1, through SDH-4
and SDH-7 through SDH-10), two diamond drillholes (SDH-5 and SDH-6) were drilled
in La Cumbre mineralized area and two holes (SDH-11 and SDH-12) on the Santa
Theresa vein.





SDH-1
through SDH-4 and SDH-7 through SDH-10 were collared along the Santo Niño
mineralized vein. Drillhole SDH-1 intersected two zones of gold mineralization
over the 165.05 meters drilled in this hole, including 7.50 meters with 2.56 g/t
Au and 11.00 meters with 2.24 g/t Au including 8.00 meters with 2.98 g/t
Au.





The
remaining holes did not return encouraging assay results. The results from
drillholes SDH-3 and SDH-4 showed gold anomalies varying from 0.01 to 0.02 g/t.
Geological and structural mapping survey along the Santo Niño vein has
identified a north-east structure that is displacing the mineralized zone.
Current field investigations are aimed to define in more detail the structural
setting on this part of the mineralized vein-structure.





Drillholes
SDH-5 and SDH-6 were collared in the La Cumbre zone. The two holes intersected
mineralization from surface to 175 metres. Only the SDH-5 intersected several
two meters wide intercepts with gold mineralization ranging from 1.03 to 1.905
g/t. Other gold values ran between 0.2 to 0.5 grams/tonne. Our VP Exploration
believes that the gold in these zones is free gold and is contained in the
fractures in the oxides. As the drilling consumes massive quantities of water,
we believe the free gold has been washed away from the core. As a result, we
plan to re-drill the La Cumbre zone using reverse circulation drilling to ensure
all the particles are captured while drilling. No assurance, though, may be
given that any gold values will be found when it is redrilled using reverse
circulation drilling.





The final
area tested at Sahauyacan was the Santa Theresa target, where two drillholes
(SDH-11 and SDH-12) were completed. SDH-12 has intersected a high grade
mineralized zone, consisting of 7.5 meters with 56.01 g/t Au and 283.22 g/t
Ag.





Despite
these results, the Sahauyacan Property has no known or estimated resources or
reserves. A summary of the assay results of the mineralized zones intersected is
provided in “Plan of Operations” in the “Management‘s Discussion and Analysis”
section.




Infrastructure







The
Sahauyacan Property is accessible year round by all weather roads. There is no
local electricity or water currently available. We will need to supply our own
diesel generated electrical power.




Budget







We spent
$557,000 from January 2007 to February 2008, on an initial geochemical and
geophysical exploration program on the Sahauyacan Property.





The goal
of the exploration was to identify drill targets for a subsequent drilling
program. We have one geologist doing preliminary sampling and mapping of this
property based on the recommendation of our VP of Exploration. We have finished
our 13 hole drill program on the property, which cost approximately $365,000 and
$92,000 for the sample analysis and lab. See “Plan of Operations” in the
“Management‘s Discussion and Analysis” section for further
information.





Employees





The
Company currently has 28 persons working for Sunburst de Mexico in Mexico,
including four geologists, field staff and administrative personnel. All of
these persons are provided to Sunburst de Mexico under third party contract,
either directly or via a personnel service agency. Our VP of Exploration began
work on March 1, 2007. The VP of Exploration is a full time position with a
salary of $110,000 per year plus incentive stock options, stock awards, living
allowance and benefits. The job entails spending time in the field directing the
exploration projects on our four properties. Other than the VP of Exploration,
all mineral exploration and operations are contracted out to third parties. In
the event that our exploration projects are successful and warrant putting any
of our properties into production, all such operations would be contracted out
to third parties. Also, we rely on members of management to handle all matters
related to business development and business operations.








ITEM
2. DESCRIPTION OF PROPERTY





We currently maintain an office at C. General Retana
#706, Col. San Felipe, Chihuahua, Chih, Mexico, CP 31203. The lease for this
office is for two years, which commenced on September 15, 2006, and we pay $900
per month for it. Previously, we leased an office and office services from MRT,
a company controlled by Mario Ayub, an officer and director of the Company. We
paid $950 per month for office rent and $5,000 per month for office services on
a month to month basis.





As
described above, we have interests in the Cieneguita, Guazapares, Encino Gordo
and Sahauyacan properties.





ITEM
3. LEGAL PROCEEDINGS





Other than as disclosed herein, neither Mexoro nor its
properties are the subject of any pending legal proceedings and no such
proceeding is known to be contemplated by any governmental authority. We are not
aware of any legal proceedings in which any director, officer or affiliate of
Mexoro, any owner of record or beneficially of more than 5% of any class of our
voting securities, or any associate of any such director, officer, affiliate or
security holder of Mexoro, is a party adverse to Mexoro or any of its
subsidiaries or has a material interest adverse to Mexoro or any of its
subsidiaries.





In
November 2007, the British Columbia Securities Commission (“BCSC”) placed a
cease trade order (“CTO”) on the Company in the Province of British Columbia,
Canada affecting residents of British Columbia. This CTO was rescinded on
February 20, 2008 as the Company filed the required documents in British
Columbia. On February 20, 2008, the BCSC issued a second CTO requiring the
Company to file a technical report in British Columbia on its Mexican
properties. The Company is cooperating with the BCSC to have the CTO removed so
that residents of British Columbia can trade in the shares of the
Company.





ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





PART
II





ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





The
Company's common stock is currently traded on the Over the Counter Bulletin
Board (“OTCBB”) under the symbol “MXOM.OB”. The following table sets forth the
Company's high and low closing prices for the Company's common stock as reported
on the OTCBB for the periods indicated.








Fiscal
      Year Ending February 28, 2009
            
            High
            
            
            LowFirst
      Quarter
            
            $
            0.79
            
            
            $
            0.38





Fiscal
      Year Ending February 29, 2008
            
            High
            
            
            LowFirst
      Quarter
            
            $
            1.50
            
            
            $
            1.00Second
      Quarter
            
            $
            1.50
            
            
            $
            0.72Third
      Quarter
            
            $
            1.85
            
            
            $
            0.96Fourth
      Quarter
            
            $
            1.08
            
            
            $
            0.73





Fiscal
      Year Ending February 28, 2007
            
            High
            
            
            LowFirst
      Quarter
            
            $
            1.80
            
            
            $
            1.10Second
      Quarter
            
            $
            1.48
            
            
            $
            0.88Third
      Quarter
            
            $
            1.70
            
            
            $
            0.85Fourth
      Quarter
            
            $
            1.50
            
            
            $
            0.99











The prices presented are bid
prices which represent prices between broker-dealers and do not include retail
mark-ups and mark-downs or any commission to the dealer. The prices may not
reflect actual transactions.





As of
February 29, 2008, there were approximately 260 stockholders of record of the
Company's common stock.





There
have been no cash dividends declared or paid on the shares of common stock, and
management does not anticipate payment of dividends in the foreseeable
future.





EQUITY
COMPENSATION PLAN


WeightedNumber of
              average
              Number of
      securitiessecurities to
      be
              exercise
              remaining available
      forissued upon
              price of
              future issuances
      underexercise of
              outstanding
              equity
      compensationoutstanding
              options,
              plans
      (excludingoptions,
              warrants
and
              securities reflected
      inwarrants
and
              rights
              column
  (a))rights (a)
              (b)
              (c)Equity compensation plans approved
      bysecurity
      holders
              6,961,100
              $1.06
              3,525,000Equity compensation plans not
      approvedby security
      holders
              -0-
              $0.00
              -0-Total6,961,100
              $1.06
              -0-







ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





Special
Note of Caution Regarding Forward Looking Statements





Certain
statements in this Form 10-KSB, including statements in the following discussion
which are not statements of historical fact, are what are known as "forward
looking statements", which are basically statements about the future. For that
reason, these statements involve risk and uncertainty since no one can
accurately predict the future. Words such as "plans," "intends," "will,"
"hopes," "seeks," "anticipates," "expects "and the like often identify such
forward looking statements, but are not the only indication that a statement is
a forward looking statement. Such forward looking statements include statements
concerning our plans and objectives with respect to the present and future
operations of the Company, and statements which express or imply that such
present and future operations will or may produce revenues, income or profits.
Numerous factors and future events could cause the Company to change such plans
and objectives or fail to successfully implement such plans or achieve such
objectives, or cause such present and future operations to fail to produce
revenues, income or profits. Therefore, the reader is advised that the following
discussion should be considered in light of the discussion of risks and other
factors contained in this report on Form 10-KSB and in the Company's other
filings with the SEC. No statements contained in the following discussion should
be construed as a guarantee or assurance of future performance or future
results.





Overview





We are a
start-up exploration stage company and have not yet generated or realized any
revenues from our exploration projects, which commenced on May 1, 2004. As of
February 29, 2008 we had $12,947 in our bank account and do not have sufficient
cash to maintain our operations after June 2008. Currently, officers of the
company are providing the necessary working capital to maintain our current
operations. The funds coming from the officers are interest free loans with no
terms of repayment and are unsecured. The officers are committed to providing
the necessary working capital for the company to keep its operations going until
June 2008 but they are not contractually obligated to do so. It is unlikely that
the officers of the Company can contribute additional working capital after June
2008. If no additional capital is raised prior to the end of June 2008, we will
most likely have to cease operations. Furthermore, if our exploration is
successful, we will need to raise additional funds to meet our needs for
additional exploration and/or production.





Our
continued existence and plans for future growth depend on our ability to obtain
the additional capital necessary to operate either through the generation of
revenue or the issuance of additional debt or equity. While we believe that we
have raised sufficient funds in our recent private placement offering and loans
from our officers to allow us to continue in business until July 2008, we may
not be able to continue in business beyond that date unless we obtain additional
capital. We have not generated any revenues, and no revenues are anticipated
unless and until mineralized material is discovered on the properties in which
we have an interest.





On May 5,
2008, we signed a letter of intent (‘LOI’) to enter into a strategic alliance
with Paramount Gold and Silver Corp. (‘Paramount’). The agreement calls for
Paramount to invest a minimum of $4 million and maximum of $6 million into the
Company, fixed at a price of $0.50 per unit by June 23, 2008. The LOI
contemplates that Paramount will provide an immediate cash infusion into Mexoro
in the amount of $500,000 in the form of a secured convertible debenture bearing
interest at a rate of 8% per annum for a term of one
year.   On May 9, 2008, we issued
a secured convertible debenture (the “Debenture”) with a one-year
term.  The Debenture is in a principal amount of $500,000 and carries
a per annum interest rate of 8%.  In connection with the issuance of
the Debenture, we entered into a Security Agreement with the Debenture holder
that secured our assets until there has been full compliance with the terms of
the Debenture.





The
Debenture holder may convert all or a portion of the principal amount of the
Debenture into units consisting of one share of our common stock and half a
warrant to purchase one share of our common stock.  Subject to certain
adjustments upon the occurrence of various capital reorganizations and other
events, the units are convertible at $0.50 per unit for a total of up to
1,000,000 shares of common stock and up to 500,000 warrants to purchase shares
of common stock (the “Warrants”).  The Warrants have a term of four
years from the date that the Debenture holder converts the Debenture or the
portion of the Debenture covering those warrants.  A holder of the
Warrants may exercise those Warrants at $0.75 (subject to adjustments upon the
occurrence of certain events like stock splits).





For the
12 month period from May 2008 to April 2009, we may need to raise additional
capital to maintain operations. We will need a minimum of $550,000 for taxes and
property payments and an additional $1,400,000 for general and administrative
costs. This does not include any capital to execute our exploration programs as
detailed below. The following table shows our contractual property payments that
are due until April 2009:








Name
            Date
            Payment
      Type
            USDEncino
      Gordo Property
            December
      31, 2008
            Property
      payment
            $75,000San
      Francisco
            June
      2008
            Property
      payment
            $40,000Sahauyacan
      Property
            July
      2008
            Property
      payment
            $33,000Sahauyacan
      Property
            August
      2008
            Property
      payments
            $180,000Guazapares
      Property1
            August
      31, 2008
            Property
      payment
            $110,000Cieneguita
      Property
            May
      2008
            Property
      payment
            $120,000San
      Antonio
            January
      2009
            Property
      payment
            $50,000





1All Guazapares payments due by December
31, 2007 have been deferred, until in the opinion of the directors of Mexoro,
Sunburst de Mexico and Mexoro have sufficient funds to make the payments. This
includes deferred payments of $60,000 in August 2006 and $140,000 in August
2007.





Additionally,
if our exploration during that time period is successful, we may need to raise
additional capital to fund those exploration programs. At this time, we cannot
assess with any accuracy our total capital needs to fund an expanded exploration
program beyond our basic program. As part of our agreement with Paramount Gold
and Silver we are expecting a capital infusion between $4 and $6 million prior
to June 23, 2008.  No assurance can be given, though, that these funds
will be received by us. We do not have any additional sources of additional
capital to fund our operations beyond June 2008 if the funds from Paramount are
not received. We also believe that we will not generate any revenues that would
allow us to continue operations. If we are unable to raise additional capital
through debt or equity beyond June 2008, it is most likely that we would need to
cease operations and forfeit our properties as we would be unable to make the
necessary property payments.





Plan
of Operations




Summary







Our
business plan is to proceed with the exploration of our Mexican mineral
properties to determine whether they contain commercially exploitable reserves
of gold, silver or other metals. Currently, we do not have sufficient capital to
fund our current exploration plans and meet our monthly general and
administrative costs. Our officers have committed to lend additional capital to
Mexoro pursuant to a non-interest bearing unsecured loan with no terms of
repayment. The officers are under no contractual obligation to provide these
funds. The funds should be sufficient to enable the Company to operate until the
end of June 2008. After that time, we will neither have sufficient funds to
continue our exploration plans nor funds for general administrative expenses. As
a minimum, we will need to raise additional working capital to maintain basic
operations. We would plan to raise those funds through the sale of equity or
debt. At this time we do not have any sources to raise additional capital for
the company and no assurance may be given that we will be able to find sources
to raise additional capital. Failure to raise any additional capital would most
likely require us to cease operations and abandon all of our exploration
properties.





In the
event that our exploration program finds exploration targets that warrant
additional exploration work, including exploration by drilling, we will not have
enough cash available to fund an expanded exploration program. If we decide to
expand our exploration program, we would need to raise additional capital to
meet these needs. We currently do not have any sources of additional capital
available to us and we may not have any in the future. The failure to raise
additional capital would severely curtail our ability to conduct any additional
exploration work that might be warranted because of the results of our current
exploration program.








We are
not involved in any research and development on our exploration properties. We
have no known reserves on the Cieneguita Property, but in anticipation of
favorable results, we had planned to put the property into production, subject
to the availability of funding and some additional exploration currently being
completed. In anticipation of putting the property into production, we purchased
approximately $250,000 worth of new and used mining equipment to be used for
heap leach production. We had contemplated putting the Cieneguita Property in
production during 2008 but recent positive exploration results have put the
production schedule on hold. Management wants to ensure, based on the new
results, that the mine design contemplated will be suitable. We also anticipate
building a processing plant in the city of Chihuahua and we have the necessary
permits in place to construct such a plant.





As we
have purchased milling equipment and if we do not find sufficient ore reserves
on the Cieneguita Property, we may lose all of our capital investment. In that
event, we would try to re-sell the equipment we purchase, but no assurances can
be given that we would be able to sell the equipment at a price to recover close
to our original investment, or at all.





In the
event that we did discover a mineral deposit on one of our properties other than
the Cieneguita Property, of which there is no guarantee, we would need to expend
substantial amounts of capital to put any of our properties into production, if
so warranted. The amount of such expenditures is indeterminable at this time as
our exploration program has not advanced far enough to provide us with results
to determine this information.





Such
expenditures are dependent upon the size of the ore body, the grade of the ore
and the type of mining that is required to extract any minerals that may be
found. Regardless, we do not have enough capital available to us to make any
such expenditure that would be required to put any mineral property into
production, and we therefore would have to raise the additional capital or, if
possible, enter into a joint venture for the production phase. If we were to
form a joint venture, we cannot assess what our final position in the project
would be. We do not have any sources of capital available to us at this time to
fund such a project if one should be discovered.





We hired
our VP of Exploration on March 1, 2007. We also hired an office administrator
for our office in Chihuahua. We hired one geologist at the end of August 2006,
another geologist in January 2007 and two more geologists in August 2007 to work
on our exploration programs. We do not expect any significant change in
additional contractors to conduct exploration over the next 12 months. Other
than the VP of Exploration and our geologists, all of the employees we hire are
contracted from third parties specializing in providing employees for Mexican
companies. In using third party contractors, we minimize our exposure to Mexican
employment law, and all liabilities are undertaken by the third party
contractors providing the services. We pay a flat rate to the third parties for
their services.





In the
event that we should find a mineable reserve, it is management’s intention to
contract the mining and milling of any ore reserves out to third parties. If we
put the Cieneguita Property into production, we anticipate hiring one mine
manager to oversee the work done by the third party contractors. We do not have
any known reserves at this time.





Exploration
Projects – Current Status




Sahuayacan







Mexoro
has completed a diamond drilling program of 13 holes comprising 2,027.35 meters.
Nine of the 13 holes were directed to test the Santo Niño vein, two drillholes
were collared on the La Cumbre target and two more were drilled on the south of
the property to test the Santa Teresa target. Of the 13 drillholes only three
have intersected economically attractive mineralization. The mineralized
intercepts are as follows:





·
            Drillhole SDH-01collared on the Santo Niño vein intersected 7.50 m with 2.56 g/t Au
      (from 65.00 to 72.50 meters) and 8.0 m with 2.98 g/t Au (from 96.50 to
      104.5 meters).





·
            Drillhole SDH-12drilled
      to test the Santa Teresa vein has intersected a high grade mineralized
      zone, from 74.50 to 82.00 for a total of 7.5 meters @ 56.01 g/t Au and
      283.22 g/t Ag.





·
            Drillhole SDH-05collared on La Cumbre target intersected intense altered zone
      dominated by abundant limonites, exhibiting 4.5 m @ 1.77 g/t Au from 0 to
      4.5 meters in depth.





A
detailed report with the most recent drilling results has been completed. All
data and field information collected is being evaluated and a second phase
exploration and drilling campaign is being planned on selected targets. A second
phase drilling program will be aimed to define the potential volume and grade of
the mineralized system at Sahuayacan, primarily focusing on the Santa Teresa and
La Cumbre targets which may represent a mineralization system developed along a
caldera margin. Additional targets have been identified along the circular
feature that seems control the emplacement of alteration and mineralization
zones on the Sahuayacan Project.







Guazapares







The first
drilling program in the Guazapares project has been completed with 19 drill
holes totaling 2,670 meters. The most recent drilling results are from 13
completed holes drilled at the San Francisco Este, San Francisco Centro and El
Cantilito, three of the main targets identified in the project. All drill holes
in the San Francisco Centro and El Cantilito intersected long intervals of gold
and silver mineralization. Intersections are shown in true width.





The
drilling commenced on the San Antonio area, where three diamond holes (GU-01,
GU-02, and GU-03) have been drilled for 452.85 meters. All three holes
intersected mineralization at a depth of approximately 100 meters. Surface and
underground sampling from San Antonio indicates the mineralization extends from
surface to a depth of at lease 135 meters with a width varying from 1.2 meters
to 12 meters in thickness. The mineralized structure has a strike length of 800
meters and is open to the northwest and southeast as well as to
depth.





The
GU-01, GU-02 and GU-03 holes have been focused on extending zones of high-grade
mineralization encountered in the San Antonio adit where a new high grade gold
zone in the underground samples returned grades of 37 g/t gold and 1,000 g/t
silver over two meters. The highest grades occurred within vein-breccias, quartz
veins and quartz stockworked veins exhibiting multiple pulses of hydrothermal
activity. Analysis of the mineralization and alteration assemblages, structural
setting and geochemistry of the San Antonio target area indicates that the high
gold values tend to cluster in two main mineralization styles:





1.
            Ore-shoots
      developed along the extensive San Antonio vein
  system.


2.
            Large
      and structurally controlled breccia bodies or structural zones developed
      in the intersections of mainly NW and NE trending faults and
      structures.




San
Francisco Este Target







The San
Francisco Este target is characterized by mineralized veins/breccias, quartz
veins stockworked zones. The mineralized and altered zone on this target trends
predominantly northwest. Drillholes GU-04 to GU-07 and GU-17 to GU-18 were
designed to test the silver (± gold) mineralization identified on surface. GU-04
intersected 9.55 meters with 2.17 g/t Au Eq from surface down to 10 meters
depth. Drillhole GU-08 encountered a mineralized interval of 5.20 meters with
1.68 g/t Au Eq. These intervals complement previous results for the surface
sampling where we reported silver values up to 2,160 g/t Ag. Drillholes GU-05,
GU-06 and GU-07 reported only gold and silver anomalies and did not intersect
economic mineralization. Assay results from GU-17 to GU-19 are still pending.
Results from the mineral zone at San Francisco Este are summarized
below:




Drillhole
GU-04







Sample
            From
            To
            Width
            True
            Au
            Ag
            Au
      Eq
            Mineralized
      InterceptID
            (m)
            (m)
            (m)
            Width
            (g/t)
            (g/t)
            (g/t)
            m @
      g/t Au Eq25498
            0
            1.5
            1.5
            1.0575
            0.023
            104
            1.9725499
            1.5
            2.5
            1
            0.705
            0.029
            29.9
            0.59
            9. 55 meters @
      2.1725500
            2.5
            3.65
            1.15
            0.81075
            0.046
            128
            2.44
            Including:25501
            3.65
            4.95
            1.3
            0.9165
            0.156
            79.1
            1.64
            2.78 meters @
      2.3425502
            4.95
            6.45
            1.5
            1.0575
            0.39
            137
            2.96
            2.12 meters @
      4.7825503
            6.45
            7.95
            1.5
            1.0575
            0.093
            61.3
            1.2425504
            7.95
            9.45
            1.5
            1.0575
            0.049
            15.9
            0.3525505
            9.45
            10.55
            1.1
            0.7755
            0.056
            47.2
            0.9425506
            10.55
            12.05
            1.5
            1.0575
            0.148
            387
            7.4025507
            12.05
            13.55
            1.5
            1.0575
            0.23
            103
            2.1625529
            35.5
            36.7
            1.2
            0.85
            0.026
            65.5
            1.25
            0.85 meters @
      1.25









San
Francisco Centro Target




The San
Francisco Centro target is characterized by quartz veins, veins/breccias and
quartz veins stockworked areas exhibiting multiple pulses of hydrothermal
activity. Mineralization in San Francisco Este tends to cluster in ore-shoots
developed primarily in the intersection of main structures. Drillholes GU-08 to
GU-13 were planned to test the east-west mineralized structure identified during
the mapping and sampling process in the central part of the concessions. All
drillholes intersected mineralization from surface down to 100 meters depth.
Drillhole GU-10 intersected 13.75 meters with 2.75 g/t AU Eq. and 22.98 meters
with 2.80 g/t Au Eq. from 8.15 meters down to 85 meters depth. Drillhole GU-13
intercepted 9.0 meters with 3.63 g/t Au Eq. and 4.50 meters with 1.56 g/t Au
Eq.







Drillhole
GU-08







Sample
            From
            To
            Width
            True
            Au
            Ag
            Au
      Eq
            Mineralized
      InterceptID
            (m)
            (m)
            (m)
            Width
            (g/t)
            (g/t)
            (g/t)
            m @
      g/t Au Eq66.5
            68
            26003
            1.5
            1.0575
            0.105
            52.8
            1.0968
            69.1
            26004
            1.1
            0.7755
            0.087
            93.6
            1.84
            5.78 meters @
      1.6869.1
            70.2
            26005
            1.1
            0.7755
            0.076
            62.1
            1.2470.2
            71.7
            26006
            1.5
            1.0575
            0.104
            105
            2.0771.7
            73.2
            26007
            1.5
            1.0575
            0.093
            70.9
            1.4273.2
            74.7
            26008
            1.5
            1.0575
            0.307
            112
            2.41122.25
            123.75
            26042
            1.5
            1.0575
            0.099
            51
            1.05
            1.05 meters @
      1.05




Drillhole
GU-10







Sample
            From
            To
            Width
            True
            Au
            Ag
            Au
      Eq
            Mineralized
      InterceptID
            (m)
            (m)
            (m)
            Width
            (g/t)
            (g/t)
            (g/t)
            m @
      g/t Au Eq26129
            9.65
            11.15
            1.50
            1.15
            0.173
            124
            2.50
            1.15 meters @
      2.5026140
            24.55
            26.05
            1.50
            1.15
            0.103
            42.7
            0.90
            13.75 meters @
      2.7526141
            26.05
            27.55
            1.50
            1.15
            0.313
            49.1
            1.2326142
            27.55
            28.90
            1.35
            1.03
            0.049
            24.7
            0.51
            Including:26143
            28.90
            30.40
            1.50
            1.15
            0.106
            26.7
            0.60
            5.82 meters @
      5.4626144
            30.40
            31.90
            1.50
            1.15
            0.137
            34.9
            0.7926145
            31.90
            33.40
            1.50
            1.15
            0.079
            35.4
            0.7426146
            33.40
            35.00
            1.60
            1.23
            0.37
            184
            3.8226147
            35.00
            36.50
            1.50
            1.15
            0.205
            311
            6.0426148
            36.50
            38.00
            1.50
            1.15
            0.347
            311
            6.1826149
            38.00
            39.50
            1.50
            1.15
            0.223
            276
            5.4026151
            39.50
            41.00
            1.50
            1.15
            0.296
            297
            5.8626152
            41.00
            42.50
            1.50
            1.15
            0.035
            49.1
            0.9526161
            54.50
            56.00
            1.50
            1.15
            0.125
            90
            1.8126163
            56.00
            57.50
            1.50
            1.15
            0.884
            604
            12.21
            22.98 meters @
      2.8026164
            57.50
            59.00
            1.50
            1.15
            0.315
            319
            6.2926165
            59.00
            60.50
            1.50
            1.15
            0.206
            133
            2.70
            Including:26166
            60.50
            62.00
            1.50
            1.15
            0.044
            25.6
            0.52
            4.60 meters @
      5.7526167
            62.00
            63.50
            1.50
            1.15
            2.07
            810
            17.26
            2.30 meters @
      9.7126168
            63.50
            65.00
            1.50
            1.15
            0.063
            112
            2.1626169
            65.00
            66.50
            1.50
            1.15
            0.04
            31.7
            0.6326170
            66.50
            68.00
            1.50
            1.15
            0.032
            35.7
            0.7026171
            68.00
            69.50
            1.50
            1.15
            0.052
            45.2
            0.9026172
            69.50
            71.00
            1.50
            1.15
            0.093
            67.9
            1.3626173
            71.00
            72.50
            1.50
            1.15
            0.025
            39.7
            0.7726174
            72.50
            74.00
            1.50
            1.15
            0.027
            15
            0.3126176
            74.00
            75.50
            1.50
            1.15
            0.079
            55.3
            1.1126177
            75.50
            77.00
            1.50
            1.15
            0.02
            23.3
            0.4526178
            77.00
            78.50
            1.50
            1.15
            0.026
            55.9
            1.0726179
            78.50
            80.00
            1.50
            1.15
            0.07
            46.5
            0.9426180
            80.00
            81.50
            1.50
            1.15
            0.101
            53.9
            1.1126181
            81.50
            83.00
            1.50
            1.15
            0.085
            40.3
            0.8426182
            83.00
            84.50
            1.50
            1.15
            0.133
            145
            2.85







Drillhole
GU-11







Sample
            From
            To
            Width
            True
            Au
            Ag
            Au
      Eq
            Mineralized
      InterceptID
            (m)
            (m)
            (m)
            Width
            (g/t)
            (g/t)
            (g/t)
            m @
      g/t Au Eq26241
            12.25
            13.75
            1.5
            1.227
            0.18
            139
            2.7826242
            13.75
            15.25
            1.5
            1.227
            0.152
            112
            2.25
            17.87 meters @
      2.5826243
            15.25
            16.75
            1.5
            1.227
            0.112
            89.1
            1.7826244
            16.75
            18.25
            1.5
            1.227
            0.257
            91.5
            1.97
            Including:26245
            18.25
            19.75
            1.5
            1.227
            0.158
            311
            5.99
            4.91 meters @
      4.7226246
            19.75
            21.25
            1.5
            1.227
            0.067
            211
            4.0226247
            21.25
            22.75
            1.5
            1.227
            0.097
            280
            5.3526248
            22.75
            24.25
            1.5
            1.227
            0.034
            186
            3.5226249
            24.25
            25.75
            1.5
            1.227
            0.043
            93
            1.7826251
            25.75
            27.25
            1.5
            1.227
            0.15
            109
            2.1926252
            27.25
            28.1
            0.85
            0.69
            0.027
            50.6
            0.9726253
            28.1
            29.6
            1.5
            1.227
            0.112
            98.7
            1.9626254
            29.6
            31.1
            1.5
            1.227
            0.037
            93
            1.7826255
            31.1
            32.6
            1.5
            1.227
            0.016
            61.2
            1.1626256
            32.6
            34.1
            1.5
            1.227
            0.063
            62.2
            1.2326267
            47.6
            49.1
            1.5
            1.227
            0.039
            46.2
            0.9026268
            49.1
            50.6
            1.5
            1.227
            0.018
            58.8
            1.12
            4.91 meters @
      0.9326269
            50.6
            52.1
            1.5
            1.227
            0.021
            25.6
            0.5026270
            52.1
            53.6
            1.5
            1.227
            0.023
            62.5
            1.19




Drillhole
GU-12







Sample
            From
            To
            Width
            True
            Au
            Ag
            Au
      Eq
            Mineralized
      InterceptID
            (m)
            (m)
            (m)
            Width
            (g/t)
            (g/t)
            (g/t)
            m @
      g/t Au Eq26363
            30.7
            32.2
            1.5
            1.149
            0.026
            70.2
            1.34
            1.149 meters @
      1.3426378
            51.7
            53.2
            1.5
            1.149
            0.056
            33.1
            0.67
            2.30 meters @
      0.6826379
            53.2
            54.7
            1.5
            1.149
            0.104
            30.8
            0.6826389
            66.7
            68.2
            1.5
            1.149
            0.618
            4
            0.6926390
            68.2
            69.7
            1.5
            1.149
            0.452
            99
            2.31
            4.60 meters @
      1.2026391
            69.7
            71.2
            1.5
            1.149
            0.228
            7.2
            0.3626392
            71.2
            72.7
            1.5
            1.149
            0.857
            31.7
            1.4526413
            99.7
            101.2
            1.5
            1.149
            0.19
            23.8
            0.63
            2.30 meters @
      0.7426414
            101.2
            102.7
            1.5
            1.149
            0.443
            21.3
            0.84







Drillhole
GU-13







Sample
            From
            To
            Width
            True
            Au
            Ag
            Au
      Eq
            Mineralized
      InterceptID
            (m)
            (m)
            (m)
            Width
            (g/t)
            (g/t)
            (g/t)
            m @ g/t Au
    Eq26421
            0
            2
            2
            1
            0.112
            38.2
            0.8326422
            2
            4
            2
            1
            0.237
            211
            4.19
            9 meters @
    3.6326423
            4
            6
            2
            1
            0.065
            258
            4.9026424
            6
            7.5
            1.5
            0.75
            0.055
            782
            14.72
            Including:26426
            7.5
            9
            1.5
            0.75
            0.11
            53.4
            1.11
            2.75 meters @
      7.9326427
            9
            10.5
            1.5
            0.75
            1.18
            54.7
            2.2026428
            10.5
            12
            1.5
            0.75
            0.74
            165
            3.8326429
            12
            13.5
            1.5
            0.75
            0.151
            86.5
            1.7726430
            13.5
            15
            1.5
            0.75
            0.237
            156
            3.1626431
            15
            16.5
            1.5
            0.75
            0.116
            52.2
            1.0926432
            16.5
            18
            1.5
            0.75
            0.198
            106
            2.1826444
            33
            34.5
            1.5
            0.75
            0.125
            47.9
            1.0226445
            34.5
            36
            1.5
            0.75
            0.376
            22
            0.79
            4.50 meters @
      1.5626446
            36
            37.5
            1.5
            0.75
            1.915
            40.9
            2.6826447
            37.5
            39
            1.5
            0.75
            0.12
            121
            2.39
            Including:26448
            39
            40.5
            1.5
            0.75
            0.263
            55.9
            1.31
            1.50 meters @
      2.5326449
            40.5
            42
            1.5
            0.75
            0.15
            56.6
            1.21







El
Cantilito Target







El
Cantilito is a mineralized zone produced mainly along northeast vein-structures
where mineralization tends to cluster in ore-shoots and mineralized stockworks
developed in structural jogs and/ore intersection of main structures. Drillholes
GU-14 to GU-16 and GU-19 were designed to test the outcropping mineralized
structures. Drillholes GU-15 and GU-16 were collared in the west margin of the
known limit of the mineralized structure and have opened up the exploration
further west along El Cantilito structures. Drillhole GU-15 was stopped at 168
meters depth still in mineralization intersected 17.06 meters with 1.26 g/t Au
Eq. including 1.30 meters with 6.10 g/t Au Eq. Drillhole GU-16 intercepted 18.92
meters with 4.33 g/t Au Eq. including 7.74 meters with 9.10 g/t Au Eq. The assay
results from GU-19 are still pending.




Drillhole
GU-14







Sample
            From
            To
            Width
            True
            Au
            Ag
            Au
      Eq
            Mineralized
      InterceptID
            (m)
            (m)
            (m)
            Width
            (g/t)
            (g/t)
            (g/t)
            m @ g/t Au
    Eq26501
            17
            18.5
            1.5
            1.059
            0.136
            116
            2.3126502
            18.5
            20
            1.5
            1.059
            0.091
            92
            1.81
            19.86 meters @
      1.2926503
            20
            21.5
            1.5
            1.059
            0.107
            8.9
            0.2726504
            21.5
            23
            1.5
            1.059
            0.013
            51.4
            0.97
            Including:26505
            23
            24.5
            1.5
            1.059
            0.036
            48.8
            0.95
            2.12 meters @
      2.0626506
            24.5
            26
            1.5
            1.059
            0.031
            45.3
            0.88
            2.89 meters @
      3.4426507
            26
            27.5
            1.5
            1.059
            0.039
            10.1
            0.2326508
            27.5
            29
            1.5
            1.059
            0.078
            43.5
            0.8926509
            29
            30.5
            1.5
            1.059
            0.051
            10.4
            0.2426510
            30.5
            32
            1.5
            1.059
            0.039
            33.5
            0.6726511
            32
            33.5
            1.5
            1.059
            0.196
            89.8
            1.8826513
            33.5
            35
            1.5
            1.059
            0.094
            28.1
            0.6226514
            35
            36.5
            1.5
            1.059
            0.095
            8.6
            0.2526515
            36.5
            38
            1.5
            1.059
            0.21
            17.5
            0.5426516
            38
            39.5
            1.5
            1.059
            0.159
            35.3
            0.8226517
            39.5
            41
            1.5
            1.059
            0.465
            23.3
            0.9026518
            41
            42.5
            1.5
            1.059
            0.193
            46.3
            1.0626519
            42.5
            43.65
            1.15
            0.8119
            1.475
            339
            7.8326520
            43.65
            45.1
            1.45
            1.0237
            0.216
            65.2
            1.4426536
            71.6
            73.6
            2
            1.412
            3.12
            19.7
            3.49
            1.41 meters @
      3.49














Drillhole
GU-15







Sample
            From
            To
            Width
            True
            Au
            Ag
            Au
      Eq
            Mineralized
      InterceptID
            (m)
            (m)
            (m)
            Width
            (g/t)
            (g/t)
            (g/t)
            m @ g/t Au
    Eq26581
            52
            53
            1
            0.866
            0.568
            7
            0.70
            2.22 meters @
      0.8126582
            53
            54.9
            1.9
            1.6454
            0.741
            9.9
            0.9226938
            148.3
            149.8
            1.5
            1.299
            4.86
            66.4
            6.1026939
            149.8
            151.3
            1.5
            1.299
            0.467
            20.3
            0.85
            17.06 meters @
      1.2626940
            151.3
            152.8
            1.5
            1.299
            0.141
            2.6
            0.1926941
            152.8
            154.3
            1.5
            1.299
            0.601
            25.5
            1.08
            Including:26942
            154.3
            155.8
            1.5
            1.299
            0.582
            22.1
            0.99
            1.30 meters @
      6.1026943
            155.8
            157.2
            1.4
            1.2124
            0.891
            35.4
            1.5526944
            157.2
            158.45
            1.25
            1.0825
            0.368
            9.7
            0.55
            Total depth of
      drillhole26945
            158.45
            160
            1.55
            1.3423
            0.282
            10.2
            0.47
            Is 168
    meters26946
            160
            161.5
            1.5
            1.299
            0.341
            17.2
            0.6626947
            161.5
            163
            1.5
            1.299
            0.693
            22.7
            1.1226948
            163
            164.5
            1.5
            1.299
            0.296
            9.5
            0.4726949
            164.5
            166
            1.5
            1.299
            0.317
            17.7
            0.6526951
            166
            168
            2
            1.732
            1.47
            11.4
            1.68







Drillhole
GU-16







Sample
            From
            To
            Width
            True
            Au
            Ag
            Au
      Eq
            Mineralized
      InterceptID
            (m)
            (m)
            (m)
            Width
            (g/t)
            (g/t)
            (g/t)
            m @ g/t Au
    Eq26960
            12.00
            13.50
            1.50
            0.86
            1.115
            86.1
            2.7326961
            13.50
            15.00
            1.50
            0.86
            0.534
            84.2
            2.11
            18.92 meters @
      4.3326962
            15.00
            16.50
            1.50
            0.86
            0.71
            76.4
            2.1426964
            16.50
            18.00
            1.50
            0.86
            44.9
            660
            57.27
            Including:26965
            18.00
            19.50
            1.50
            0.86
            1.55
            113
            3.67
            7.74 meters
      @  9.1026966
            19.50
            21.00
            1.50
            0.86
            0.428
            152
            3.2826967
            21.00
            22.50
            1.50
            0.86
            0.455
            72.3
            1.8126968
            22.50
            24.00
            1.50
            0.86
            1.33
            119
            3.5626969
            24.00
            25.50
            1.50
            0.86
            2.2
            171
            5.4026970
            25.50
            27.00
            1.50
            0.86
            0.005
            12.3
            0.2326971
            27.00
            28.50
            1.50
            0.86
            0.183
            13.1
            0.4326972
            28.50
            30.00
            1.50
            0.86
            0.243
            79.8
            1.7426973
            30.00
            31.50
            1.50
            0.86
            0.243
            59.4
            1.3526974
            31.50
            33.00
            1.50
            0.86
            0.425
            59.2
            1.5326976
            33.00
            34.50
            1.50
            0.86
            0.185
            46.5
            1.05726977
            34.50
            36.00
            1.50
            0.86
            0.247
            23.9
            0.6926978
            36.00
            37.50
            1.50
            0.86
            0.274
            31.1
            0.8626979
            37.50
            39.00
            1.50
            0.86
            0.235
            34.3
            0.8826980
            39.00
            40.50
            1.50
            0.86
            1.2
            23.2
            1.6326981
            40.50
            42.00
            1.50
            0.86
            0.56
            38
            1.2726982
            42.00
            43.50
            1.50
            0.86
            0.256
            21.7
            0.6626983
            43.50
            45.00
            1.50
            0.86
            0.348
            34.8
            1.0027013
            96.00
            98.00
            2.00
            1.15
            0.331
            69.7
            1.64
            2.53 meters @
      1.4927014
            98.00
            100.00
            2.00
            1.15
            0.521
            68.8
            1.81





Mineralized Drill Intercept








Highlights
of the mineralized drill intercepts are presented below:





·
            Drillhole GU-01
      intersected 3.87 meters with 2.072 g/t Au and 22.66 g/t Ag; Including 1.00
      meters with 4.83 g/t Au





·
            Drillhole GU-02
      intersected 1.35 meters with 2.54 g/t
Au





·
            Drillhole GU-03
      intersected 1.50 meters with 3.17 g/t Au and 42.6 g/t
  Au





·
            Drillhole GU-04
      intersected 9.55 meters grading 2.17 g/t Au Eq; including 2.12 meters @
      4.78 g/t Au Eq.





·
            Drillhole GU-08
      intersected 5.68 meters with 1.68 g/t Au
Eq.





·
            Drillhole GU-10
      intersected 13.75 meters with 2.75 g/t Au Eq. & 22.98 meters with 2.8o
      g/t Au Eq; including 4.60 meters at 5.75 g/t Au Eq & 2.30 meters @
      9.71 g/t Au Eq.





·
            Drillhole GU-11
      intersected 17.89 meters with 2.58 g/t Au Eq; including 4.91 meters with
      4.72 g/t Au Eq.





·
            Drillhole GU-13
      intersected 9 meters with 3.63 g/t Au Eq and 4.50 meters with 1.56 g/t Au
      Eq; including 2.75 meters with 7.93 g/t Au
Eq.





·
            Drillhole GU-14
      intersected 19.86 meters with 1.29 g/t Au Eq; including 2.12 meters with
      2.06 g/t Au Eq and 2.89 meters with 3.44 g/t Au
  Eq.





·
            Drillhole GU-15
      intercepted 17.06 meters with 1.26 g/t Au Eq; including 1.30 meters with
      6.10 g/t Au Eq.





·
            Drillhole GU-16
      intersected 18.92 meters with 4.33 g/t Au Eq; including 7.74 meters with
      9.10 g/t Au Eq.


As of May
2008, we have moved a drill rig onto the Guazapares property to commence the
second round of drilling.




Cieneguita







The phase
I exploration program at Cieneguita carried out from November 2006 to February
2007 was initially focused on a systematic geological mapping (1:1,000) and
sampling of roadcut and outcrop exposures on the property. This program outlined
the main mineralization zone which has been traced in outcrops approximately 800
meters along strike. In addition three new high-grade gold areas were identified
beyond the known limits of mineralization.





According
to our VP of Exploration, the results from the mapping and sampling campaign
provided evidence that the potential for the discovery of new areas with gold
grades still remains open as shown by the discovery of the Pit 1 South, Central
and Pit 2 North areas.





The
results from the mapping and sampling campaign outlined two main high-grade gold
mineralization areas which are providing additional evidence to increase the
known mineralized zone of the Cieneguita system to the NE. Analysis of the
alteration, structural setting and geochemistry of the northeast part of the Pit
1 area indicates that there is potential for a structurally controlled body to
the northeast of the known PIT 1 area. Assay results have been received for
samples from roadcuts and outcrop exposures on the Cieneguita Property. The
values ranged from trace to 31.6 g/t Au taken from several two meter channel
sample located 75 meters to the NE of the known PIT 1 area. This high-grade gold
sample is part of the NE PIT1 area, a 20 meters exposure averaging 5.43 g/t Au.
The high-grade gold mineralization encountered at the NE PIT 1 area is part of
the same structural trend identified in the PIT 1 area where gold values ranged
from trace to 29 g/t Au.





High-grade
gold mineralization was also found at the S PIT 2 area, 100 meters to the south
of the known PIT 2 area. Sampling on the mineralized area has returned values
varying from 1.18 to 3.2 g/t Au. Assay results from the current mapping and
sampling program are provided below.





Sample
            Au
            Ag
            Sample
            Au
            AgID
            (g/t)
            (g/t)
            ID
            (g/t)
            (g/t)26775
            4.29
            22.8
            26803
            0.911
            0.426776
            1.05
            11.5
            26814
            0.68
            15.926778
            0.89
            3.5
            26815
            4.22
            20.426779
            4.83
            94.5
            26816
            1.03
            13.626780
            1.80
            42
            26819
            2.57
            6.426781
            2.33
            49.1
            26820
            1.03
            2.726782
            3.2
            63.4
            26821
            0.92
            3.926783
            1.67
            76.6
            26822
            1.13
            3.826784
            0.58
            63.5
            26830
            0.70
            20.426785
            1.18
            8.6
            26831
            1.04
            18.626786
            0.59
            21.3
            26832
            0.75
            44.326790
            0.61
            2.5
            26833
            0.52
            1626791
            2.86
            13.5
            26834
            0.45
            11.226793
            0.73
            6.2
            26836
            1.38
            17.626796
            1.10
            341
            26837
            0.85
            10.826799
            0.71
            39.5
            26838
            31.6
            926800
            0.56
            30.3
            26839
            2.03
            4.826801
            0.57
            44.1
            26840
            7.34
            2.926802
            0.52
            13.9








Concurrently
with the surface exploration a 4,000 meters diamond drilling program is being
carried out in order to test the potential of those three new mineralized areas,
increase known mineralization and to characterize the gold mineralization
contained within the sulphide zone. A total of 18 diamond core holes have been
drilled (CI-01 to CI-18) for 3,606.91 core meters since drilling began at
Cieneguita early December 2007. All drill holes from this first phase drilling
program have been focused on extending zones of high-grade gold mineralization
identified by previous drilling programs (Glamis drilling program, 1994-1996).
Drill hole CI-4 and CI-11 failed to intersect any economical
mineralization.





Significant
gold grades in the drilling were intersected by drillholes CI-02, CI-05, CI-06
CI-08, CI-09, and CI-10 as follows:





·
            Drill
      hole CI-02


o
            5
      meters (m) with 6.13 g/t Au from 97.50 to 102.50 meters
  (m)





·
            Drill
      hole CI-05


o
            4.10
      m with 2.75 g/t Au from 40.90 to 45.0
m


o
            4.60
      m with 2.89 g/t Au from 62.90 to 67.50
m


o
            6.00
      m with 1.16 g/t Au, 56.1 g/t Ag, 0.44% Pb and 0.76% Zn from 118 to 124
      m


o
            4.50
      m with 0.69 g/t Au, 183.56 g/t Ag, 0.39% Pb and 1.23% Zn from 147.50 to
      152 m


o
            6.00
      m with 0.62 g/t Au, 81.35 g/t Ag, 1.92% Pb and 3.55% Zn from 156.50 to
      162.50 m





·
            Drill
      hole CI-06


o
            11.70
      m with 2.58 g/t Au from 12.3 to 24m





·
            Drill
      hole CI-08


o
            From
      96.50 to 122.00 m (25.50 m) with 0.31 g/t Au, 48.49 g/t Ag, 0.82% Pb &
      1.22%Zn


o
            From
      130.75 to 141.24 m (10.50 m) with 0.96 g/t Au, 90.34 g/t Ag, 0.52% Pb
      & 0.91 % Zn


§
            Including:
      6 meters with 1.47 g/t Au, 140.95 g/t Ag, 0.44% Pb and 0.61%
      Zn





·
            Drill
      hole CI-09


o
            From
      8.40 to 12.20 m (3.80 m) with 1.39 g/t Au and 149.9 g/t
  Ag


o
            From
      52.70 to 60.20 m (7.50 m) with 0.43 g/t Au, 105.58 g/t Ag, 0.40%Pb and
      0.64% Zn


§
            Including:
      1.50 meters with 0.54 g/t Au, 171 g/t Ag, 0.72% Pb and 1.49%
      Zn





·
            Drill
      hole CI-10


o
            From
      0.0 to 6.00 m (6.0 m) with 1.19 g/t Au and 27.7 g/t
  Ag


o
            From
      74.50 to 94.0 m (19.50 m) with 0.73 g/t Au, 57.56 g/t Ag, 0.73% Pb &
      1.03% Zn


§
            Including:
      3 meters with 0.81 g/t Au, 96.55 g/t Ag, 1.28% Pb and 2.47%
    Zn


o
            From
      95.50 to 100.0 m (4.50 m) with 1.34 g/t Au, 140.90 g/t Ag, 0.09% Pb and
      0.13% Zn


o
            From
      109.0 to 118.0 m (9.0 m) with 0.26 g/t Au, 277.88 g/t Ag, 0.26% Pb and
      0.42% Zn


§
            Including:
      1.50 meters with 0.28 g/t Au, 976 g/t Ag, 0.20% Pb and 0.19%
      Zn








Summary
of the drilling results are reported below:





Hole
            From
            To
            Interval
      (M
            Au
            Ag
            Pb
      (%)
            Zn
      (%)ID
            (m)
            (m)
            (m)
            (g/t)
            (g/t)CI-01
            4.60
            6.40
            1.80
            1.487.85
            16.45
            8.60
            1.0521.50
            30.00
            8.50
            1.35CI-02
            73.50
            78.00
            4.50
            1.2194.10
            102.50
            8.40
            2.83110.15
            113.00
            2.85
            2.33192.00
            195.00
            3.00
            1.60CI-03
            48.85
            74.50
            25.65
            1.40
            24.4682.00
            95.50
            13.50
            2.01
            21.34CI-05
            33.50
            52.50
            19.00
            1.7762.90
            82.50
            19.60
            1.69118.00
            125.00
            7.00
            1.16
            49.16
            0.36
            0.34147.50
            162.50
            15.00
            0.74
            106.53
            0.93
            1.79CI-06
            12.30
            24.00
            11.70
            2.58CI-07
            0.0
            11.50
            11.50
            0.7874.60
            78.50
            3.90
            0.5
            114.26
            0.15
            0.41102.50
            104.00
            1.5
            1.32111.50
            113.00
            1.50
            1.95CI-08
            3.50
            5.00
            1.50
            1.0896.50
            122.00
            25.50
            0.31
            48.49
            0.82
            1.21130.75
            141.25
            10.50
            0.96
            90.34
            0.52
            0.91166.75
            170.70
            3.95
            
            
            1.02
            1.18198.25
            201.40
            3.15
            
            
            0.09
            1.34CI-09
            8.40
            12.20
            3.80
            1.39
            149.9052.70
            60.20
            7.50
            0.44
            105.58
            0.40
            0.66102.20
            109.70
            7.50
            0.25
            39.08
            0.47
            1.31CI-10
            0.00
            6.00
            6.00
            1.19
            22.7012.50
            15.25
            3.25
            1.14
            22.1074.50
            94.00
            19.50
            0.73
            57.56
            0.73
            1.0395.50
            100.00
            4.50
            1.39
            140.90
            0.09
            0.131.09
            118.00
            9.00
            0.26
            277.88
            0.26
            0.42CI-12
            54.00
            55.50
            1.50
            1.7287.00
            88.50
            1.50
            1.07139.50
            159.00
            19.50
            0.76





Field
evidence and drilling results have confirmed that Cieneguita is a system
composed by an oxide-mixed ore varying in thickness from five to 20 meters and a
sulfide zone exhibiting mineralization at 250 meters depth. Gold mineralization
at Cieneguita occurs mainly as disseminated and minor proportion
structurally-controlled. Mineralization is hosted by breccias and tuffs varying
in composition from rhyolite to dacite. The main mineralized and altered zones
have been developed to the northwest (PIT-1 area) and southeast (PIT-2 area).
These mineralized zones consist mainly of acid-sulphate alteration, including
quartz-alunite assemblages exhibiting small and localized areas with residual or
vuggy silica. Cieneguita is interpreted to represent a high-sulphidation
gold-silver system.





Drilling
results have demonstrated the extension of the Cieneguita mineralized system at
depth down at least to 250 meters where mineralization is mainly hosted by
sulphides. The mineralization zone is still open to the south and to depth.
Drilling program continues and a second stage drilling program has been proposed
to define the complete mineralization system and provide a NI 43-101 resource
estimation.







Encino
Gordo







During
this year reconnaissance program we carried out a detailed and property scale
mapping and sampling program outlining numerous gold, silver and gold-copper
coincident geochemical anomalies. The stage I of the exploration program was
undertaken in an effort to define the style and characteristics of the
mineralization areas indicated by the geochemical anomalies. Within this stage
several gold and sulphide mineralization areas including pyrite and chalcopyrite
have been identified within an over 500 meters stockwork area and fault-veins
structure.





All
information and field evidence gathered during the mapping and sampling process
are suggesting the presence of “porphyry” style alteration and mineralization
characterized by the presence a concentric alteration patterns (potassic
alteration grading outward to quartz-sericite and propylitic alteration),
coincident Cu, Au and Mo geochemical anomalies and a multiple-event of veining.
No assurance can be given, though, that we will find such a deposit, if at
all.





The stage
II of the exploration program aimed to detail and characterize all identified
alteration and mineralization areas and define and prioritize drilling sites is
underway and is expected to be completed by May 2008.





Exploration
Projects – Potential and Next Exploration Stage





Our
exploration team will aggressively pursue as a high priority the
following:





1.
            Advance
      all projects to the next exploration
stage


2.
            Exploring
      and try to increment the known resources at the Cieneguita advanced
      project


3.
            Design,
      implement and manage a strong new targets generation and identification of
      advanced projects program aimed to expand our
  portfolio.





The
following exploration program has been planned for each of the
projects:




Sahuayacan







Surface
mapping and drilling results are suggesting that the high gold values tend to
cluster at certain areas along the Santo Niño and the Santa Teresa vein
structures with intervening areas of low gold grades. A more disseminated
deposit it seems to be present at the La Cumbre area. The cluster of high gold
values indicate the development of oreshoots within the extensive Sahuayacan
system as evidenced by the intercepts from the SDH-1 in the Santo Niño vein and
the SDH-12 along the Santa Teresa vein.





All
evidence is suggesting that the mineralization is controlled by a circular
feature that may represent a caldera margin running from the Santa Teresa target
up to north to the La Cumbre target. This evidence is open up the potential to
further extend the mineralization found at Santa Teresa and La Cumbre targets
further north.





Next
exploration stage will include mapping and sampling along the circular feature
trying to define additional mineralization areas and drilling
targets.





The
figure below shows the different geological elements encountered in the
Sahuayacan system and is also exhibiting the relationship between the Santo
Niño, La Cumbre and Santa Teresa target areas.





























The above
figure illustrates the La Cumbre target and the circular features controlling
development of alteration and mineralization at the Sahuayacan Project. La
Cumbre and Santa Teresa are both spatially associated with the circular features
that may represent the emplacement of a caldera-related Au-Ag hydrothermal
system.





If
management decides to continue drilling, we will need to raise additional
funding through the sale of debt or equity because we do not have sufficient
capital to continue such an exploration program. Additional drilling would cost
a significant amount of money and there is no assurance that we would be able to
raise such additional amounts of money. We have not identified any additional
sources of funding to implement such a program





Total
budgeted costs for exploration on the Sahuaycan Property for 2008 is
$763,000





The
Sahuayacan Property is without known reserves. Our proposed programs are
exploratory in nature.
















Guazapares







The
mineralization systems encountered in the Guazapares project are essentially of
two types: a silver-dominated system at San Francisco Este, San Francisco
Centro, and El Cantilito which exhibits localized areas of high-grade gold
mineralization; whereas at San Antonio the system is dominated by gold
mineralization. Surface mapping and drilling results are suggesting that the
high-grade mineralization tends to cluster at certain areas along the
mineralized veins with intervening areas of low-grade mineralization. The
cluster of high-grade mineralization is suggesting the development of ore-shoots
as evidenced by the intercepts from drillholes GU-04 and from GU-08 to
GU-16.





The
present drilling results are providing the evidence to highlight the great
potential of several areas in the Guazapares project. Main potential targets are
shown in the figure below.





1.
            Drilling
      results on the San Francisco Este target are opening the potential to
      explore further northwest along the same
  structure.


2.
            Drillholes
      GU-12 and GU-13 at are suggesting the development of high-grade ore-shoots
      along structure’s inflections and have opened up the exploration potential
      to the west and northwest.


3.
            Drilling
      results at El Cantilito (GU-16) have opened up the exploration potential
      to the west of the system which is a covered terrain. Drillhole GU-15 is
      also opening potential to the west along the El Cantilito mineralized
      system and since GU-15 was stopped in mineralization at 169 meters depth
      the exploration potential is still open at
  depth.


4.
            All
      mineralized system and targets are suggesting the potential to explore
      where all system intersects each other creating the right setting to
      develop attractive mineralization
zones.











Diamond
drilling of the Guazapares Project encountered mineralization in most of the
drillholes. The highest grades occurred within vein-breccias, quartz veins and
quartz stockworked veins exhibiting multiple pulses of hydrothermal
activity.





Analysis
of the mineralization and alteration assemblages, structural setting and
geochemistry of the project area indicates that the high gold values are
spatially associated to a rhyolite-dacite dome and tend to cluster in two main
mineralization styles:





·
            Ore-shoots
      developed along the extensive San Antonio vein
  system.


·
            Large
      and structurally controlled breccia bodies or structural zones developed
      in the intersections of mainly NW and NE trending faults and
      structures.





Diagramatic X Section W-E Guazapares Project





The
ore-shoots still remain open in all directions highlighting the potential for
high grade gold mineralization beneath covered areas on project area, though no
assurance may be given.








Drilling
continues to explore newly identified altered and mineralized areas and
extending the mineralized trends and ore-shoots remaining with open potential in
Guazapares.





If
management decides to continue drilling, we will need to raise additional
funding through the sale of debt or equity because we do not have sufficient
capital to continue such an exploration program. Additional drilling would cost
a significant amount of money and there is no assurance that we would be able to
raise such additional amounts of money. We have not identified any additional
sources of funding to implement such a program.





Total
funds budget for exploration of the Guazapares project is
$1,820,000.





The
Guazapares Property is without known reserves. Our proposed programs are
exploratory in nature.




Cieneguita







The
recent exploration activities in Cieneguita have provided with results to
highlight the potential of this project. Mapping and sampling process around
Cieneguita has identified two new areas of mineralization 500 meters to south of
the current known mineralized zones. These two areas are exhibiting same size,
characteristics, and intensity of alteration-mineralization that the one
encountered on Cieneguita. Detailing mapping and sampling is currently
underway.





Leaching
tests on oxide and mixed ore has returned a recovery above 90%, whereas the
recovery in the sulphide ores is showing recoveries varying from 70% to 75 % in
a leaching process lasting 25 to 30 days. Leaching tests combined with the assay
results from drilling and the new areas found 500 meters away from Cieneguita
are providing the possibility to increase known zones and to make of the
Cieneguita deposit an attractive property in the region. No assurance, though,
may be given that we will be able to identify an economic ore body at this
property. Considering latest results and findings the proposed work program for
Cieneguita will include:





·
            Current
      drilling program will be extended from 4,000 meters to 6,000
      meters


·
            Leaching
      test to the sulfide encountered at depth by current drilling
      program


·
            Detailed
      mapping and sampling of the two new areas identified within our property
      500 meters away from Cieneguita.





If
management decides to continue drilling, we will need to raise additional
funding through the sale of debt or equity because we do not have sufficient
capital to continue such an exploration program. Additional drilling would cost
a significant amount of money and there is no assurance that we would be able to
raise such additional amounts of money. We have not identified any additional
sources of funding to implement such a program. If we can not obtain additional
financing, we could seek a joint venture partner if the drilling results
warranted it. We do not have any joint venture partners at this time and can
give no assurance that we will be able to find one if the Cieneguita Property
warranted such a joint venture.





The total
budget for exploration on the Cieneguita Property is $2,050,000.





The
Cieneguita Property is without known reserves. Our proposed programs are
exploratory in nature.







Encino
Gordo







We
carried out a detailed and property scale mapping and sampling program on the
Encino Gordo project outlining a porphyry-style mineralization exhibiting
numerous gold, silver and gold-copper coincident geochemical anomalies. We have
identified two drilling targets in the project area; however in order to define
the system better, we have planned a geophysical survey (IP and magnetics) to
know the potential of the near-mesothermal (porphyry-style) system present at
the Encino Gordo property before the drilling program.











The above
figure illustrates coincident Cu and Au geochemical anomalies on the Encino
Gordo Property which are spatially associated to a potassic alteration core
resembling the classical geochemical-alteration signature of the porphyry
systems.








Management
and our VP of Exploration will review the information provided by phase 1 of the
exploration plan and determine whether a drill program is recommended. If a
drill program is recommended, and we have received our permits that have been
applied for in advance, we do not have sufficient information at this time to
estimate what the drill program would entail. We need extensive information to
determine the number of drill holes to drill, where they would be located and to
what depth they would be drilled. This information will be provided by phase 1
of the exploration plan.





Total
exploration budget for the Encino Gordo property is $740,000.





The
Encino Gordo Property is without known reserves. Our proposed programs are
exploratory in nature.





Target
Generation and Growth Strategy





A
fundamental component of our strategy is to advance to the drilling stage all of
our properties and implement a strong generative and property acquisition
program through a well establish financial process and a proper funding
consistency.





The
proposed generative program will be contemplating four main
directions:





1.
            A
      new targets generation program that will create a pipeline of quality
      properties providing a steady stream of new prospect and/or projects for
      the company to explore, farm-out and/or joint venture
  out.


2.
            A
      property acquisition program aimed to identify and acquire at low cost
      (whenever possible) early- to mid-stage properties on selected locations
      along the main gold-silver belts in
Mexico.


3.
            Focus
      on small- to medium-size gold-silver deposits (minimum deposits containing
      250,000 oz of Au Eq.)


4.
            The
      new targets generation and property acquisition program will be initially
      focused on the Sierra Madre belt and Central Mexico. It will be extended
      further south in Mexico and other countries if conditions and project’s
      potential warranted.





The
proposed exploration program is to be undertaken by the Mexoro’s exploration
team using in-house knowledge in combination for support and guidance of
high-quality consultant with expertise in the region. The new targets generation
program is aimed to feed our project pipeline at two drill and/or
near-to-drill-stage projects per year.




Phase I - Target
Generation






Objectives







·
            Identify
      two to four target areas (approx. 20 x 30 kilometers) which have potential
      to host small- to medium-size gold and/or gold-silver
      deposits.


·
            Identify
      one or two specific opportunities with close to drill ready targets. For
      example, identify old workings or existing mines with good upside
      potential.


·
            Time
      frame: six months.




Key
Steps and Exploration Tools







After
initial trip to evaluate gold and gold-silver deposits potential it has become
more evident that the acquisition and evaluation of more detailed geological
maps and geochemistry with field follow-up is critically important to identify
new areas of potential. Careful and selective use of such data may be the most
immediate and cost-effective way to focus exploration efforts toward prospective
gold-silver areas.





Key steps
will include mainly the following activities, among other
considerations:





·
            Acquire
      geological maps 1:250,000 and 1:50,000 (from
  SGM)


·
            Generate
      geological and mineral occurrences base
maps.


·
            Identify
      key host rocks.


·
            Complete
      structural interpretation from known geology, TM imagery, and geophysical
      data (if available).


·
            Integrate
      mineral occurrences, alteration, lithology and
  structures.


·
            Complete
      initial targeting using the above
compilation.


·
            Select
      and prioritize targets.











Results
of Operations





Year
ended February 29, 2008 compared to the year ended February 28,
2007.





In this
discussion of Mexoro’s results of operations and financial condition, amounts,
other than per-share amounts, have been rounded to the nearest thousand
dollars.




Critical Accounting
Estimates







The
preparation of the Company’s financial statements requires management to make
various judgments with respect to estimates and assumptions. On an ongoing
basis, management regularly reevaluates its estimates and assumptions; however
actual amounts could differ from those based on such estimates and
assumptions.





The
Company has made certain accounting estimates that have a material bearing on
the financial statements. The principal of such estimates are:




Income
Tax Valuation Allowance







The
Company has a potential $4,305,400 deferred income tax asset based on the
difference in timing of certain deductions for income tax and accounting
purposes. The ability of the Company to ultimately derive a benefit from the
deferred tax asset depends on the existence of sufficient taxable income of the
appropriate character within the carry forward period available under the tax
law.





References in the discussion below to2008are to our current fiscal year ended
February 29, 2008, while references to 2007 are to our fiscal year ended
February 28, 2007.




Revenues







We did
not earn revenues during 2008 or 2007 because we did not have commercial
production of any of our properties. We do not anticipate earning revenues until
such time as we have entered into commercial production of our mineral
properties, if ever. We are presently in the exploration stage of our business.
We can provide no assurance that we will discover commercially exploitable
levels of mineral resources on our properties or, if such resources are
discovered, that we will enter into commercial production of our mineral
properties. Interest income is recorded under Other Income in the Statement of
Operations in the financial statements.




Operating
Costs







We did not incur any operating costs
during the years ended 2008and 2007due to the fact that we did not achieve
production from exploration activities during either year.




Expenses




Our
expenses increased to $8,040,328 for the year ended February 29, 2008 compared
to $5,106,389 for the year ended February 28, 2007, representing an increase of
$2,934,000.





In 2008,
we incurred higher general and administrative expenses, exploration expenses and
write off of property costs, which resulted in increase of
expenses.





The
increase in 2008 is attributable to $816,000 spent on investor relation
activities compared with $111,000 in 2007 to raise additional funds for
exploration activities and higher advertising and promotion costs of $159,000 in
2008 compared to $nil in 2007.





Our
exploration expenses increased to $2,680,680 in 2008 compared with $1,089,498 in
2007 as a result of the increased activity of the Company as it advanced its
business plan.





Impairment
of mineral property costs in 2008 increased to $580,000 compared to $259,000 for
2007. If we are able to raise additional funds to continue with our business
plan, we anticipate that exploration expenditures will increase in fiscal 2008
as a result of exploration activities on our Mexican mineral
properties.




Loss





Our net
loss increased to $8,096,604 for 2008 compared to $7,393,034 for 2007,
representing an increase of $704,570. This change in our loss was primarily
attributable to higher investor relations expenses, exploration expense and
impairment of property costs in 2008. The non-cash components of stock-based
compensation and impairment of mineral property costs were $2,454,000 and
$580,000 respectively, for a total of $3,034,000 compared to the net loss for
the year of $8,096,604. In 2007, the non-cash components of stock-based
compensation and impairment of mineral property costs were $2,445,000 and
$259,000 respectively, for a total of $2,704,000 compared to the net loss for
the year of $7,393,034.





We
anticipate that we will continue to incur a loss until such time as we can
commence the development stage of our operations and achieve significant
revenues from sales of gold recovered from our Mexican mineral properties, if
ever. There is no assurance that we will commence the development stage of our
operations at any our Mexican mineral properties or achieve
revenues.








Liquidity
and Capital Resources





Since
inception, we have undergone two unsuccessful business combinations, which have
caused us to incur significant liabilities and have resulted in the accumulation
of a substantial deficit during the exploration stage. As of February 29, 2008,
we had total assets of $858,000, total liabilities of $2,235,000, and a deficit
of $33,828,000 accumulated during the exploration stage.




Cash and Working
Capital







We had
cash of $12,947 as of February 29, 2008, compared to cash of $13,148 as of
February 28, 2007. We had working capital deficiency of $1,810,905 as of
February 29, 2008, compared to a working capital deficiency of $44,980 as of
February 28, 2007.





We will
require additional financing during the current fiscal year according to our
planned exploration activities. We plan to spend approximately $7,111,000 from
March 2008 to December 2008 to carry out exploration and administration
activities on our Mexican mineral properties, and in the event that our
exploration is successful on our Cieneguita Property, we anticipate spending a
further $2,200,000 on milling equipment and building a plant to put that
property into production. We anticipate spending approximately $1,400,000 during
the next 12 months on general and administrative costs. We presently do not have
sufficient financing to enable us to complete these plans and will require
additional financing to perform future exploration work on our Mexican mineral
properties. Our actual expenditures on these activities will depend on the
amount of funds we have available as a result of our financing efforts. There is
no assurance that we will be able to raise the necessary financing.





The
amount of working capital could be adversely affected further in the event
claims are made against us alleging that certain shares we previously issued
pursuant to Form S-8 registration statements constituted an illegal public
offering because the company was a “shell company” at the time and, as a result,
was not eligible to use Form S-8 for registration of shares under the Securities
Act of 1933. In August and October of 2005, the Company issued shares of common
stock to an officer of the Company, as compensation for consulting services. The
two share issuances were for a combined total of 30,000 shares and each of the
share issuances was made pursuant to a registration statement on Form S-8 under
the Securities Act of 1933. Although the Company believes these shares were
properly issued, a claim could be made that issuance of the shares constituted
an illegal public offering because the Company was a “shell company” at the
time. Shell companies  (i.e. companies which have no or nominal
operations and either (i) no or nominal assets; (ii) assets consisting solely of
cash and cash equivalents; or (iii) assets consisting of any amount of cash and
cash equivalents and nominal other assets) are not eligible to use Form S-8 for
registration under the Securities Act of 1933. If either of these transactions
did violate federal securities laws, subsequent purchasers of the shares may
have claims against us for damages or for rescission of their purchase
transaction and recovery of the full subscription price paid, together with
interest. As of the date of this annual report, no one has made or threatened
any claim against us alleging violation of the federal securities laws. In the
event such claims were successfully asserted there is no assurance that we would
have sufficient funds available to pay and it is likely that we would be
required to use funds currently designated as working capital for that purpose.
That would substantially reduce the amount of working capital available for
other purposes and, in that event, we could be forced to cease or discontinue
certain operations and to liquidate certain assets to pay our liabilities,
including, but not limited to, rescission claims.




Cash Used in Operating
Activities







Cash used
in operating activities increased to $3,837,069 for the fiscal year ended
February 29, 2008 compared to $2,646,000 for the fiscal year ended February 28,
2007. The cash used in operating activities came primarily from exercise of
warrants into shares of common stock. It was primarily used for general and
administrative costs and for the exploration programs on the
properties.




Cash Used in Investing
Activities







Cash used
in investing activities decreased to $172,036 for the fiscal year ended February
29, 2008 compared to $375,384 for the fiscal year ended February 28, 2007 for
the purchase of equipment.







Financing
Activities







Cash
provided by financing activities increased to $4,027,811for the fiscal year
ended February 29, 2008 compared to $2,557,736 for the fiscal year ended
February 28, 2007. All cash provided by financing activities in 2007 was
provided by convertible debt, exercise of warrants and share issuances. Cash
provided by financing activities was used to fund our operating and investing
activities.





We
anticipate continuing to rely on equity sales of our common stock or issuance of
debt in order to continue to fund our business operations. Issuances of
additional shares will result in dilution to our existing
shareholders.





In
January 2006, the Company began issuing convertible debentures, with principal
and accrued interest at 7% per year, convertible into units at the option of the
holder. Each unit consists of a warrant to purchase 25,000 of the Company’s
shares of common stock at $1.00 per share and $25,000 of debt, which may be
converted to shares of common stock at $0.50 per share and is exercisable until
April 30, 2008. As of February 28, 2006, the Company had issued convertible
debentures in the amount of $652,000. In addition, the warrants are redeemable
by the Company, at $0.01 per share, in the event the Company’s common stock
closes with a bid price, on average, over $3.00 per share for a consecutive
20-day period and settled on a physical basis.





In order
to get assistance with financing activities, on January 30, 2006, the Company
entered into a Consulting Agreement with G.M. Capital Partners, Ltd., a British
Virgin Islands company (“GM Capital”). Under the agreement, GM Capital will
provide the Company with a variety of services including financial public
relations, strategic planning, acquisition consulting and assistance in securing
equity or debt financing. Specifically, GM Capital agreed to provide financial
public relations counsel services including (i) being a liaison between the
Company and its stockholders; (ii) advising the Company with respect to existing
and potential market makers, broker-dealers, underwriters and investors as well
as being the liaison for the Company with respect to communications and
information (e.g., interviews, press releases, stockholder reports, etc.) as
well as planning, designing, developing, organizing, writing and distribution
such communications and information; (iii) assisting the Company in establishing
an investor relations program and advising the Company with respect to
stockholder meetings, interviews of Company officers by the financial media, and
interviews of Company officers by analysts, market markers, broker-dealers and
other members of the financial community; and (iv) assisting in making the
Company, its management, products and services, and financial situation and
prospects, known to the financial press and publications, broker-dealers, mutual
funds, institutional investors, market makers, analysts, investment advisors and
other members of the financial community. GM Capital also agreed to provide
strategic planning services, which included (i) consulting with the Company as
to, the management, marketing, consulting, strategic planning, corporate
organization and structure, financial matters in connection with the operation
of the business of the Company, expansion of projects; (ii) reviewing and
advising the Company regarding its overall progress, needs and condition; (iii)
assisting the Company in the monitoring of services provided by the Company’s
advertising firm, public relations firm and other non-legal professionals to be
employed by the Company; and (iv) advising the Company on the continued
development of an investor relations program and the stimulation of interest in
the Company by institutional investors and other members of the financial
community.





Under the
terms of the agreement, the Company will pay GM Capital the following: (i) a
monthly fee of $10,000, (ii) 10% success fee for any financing facilitated by GM
Capital outside of the United States, and (iii) the issuance of a total of
5,000,000 warrants, each of which entitles the holder to purchase one share of
the Company’s common stock.. The warrants are exercisable at the right of the
holder, have no redemption features, and are settled on a physical basis. The
warrants include 1,000,000 Series A Warrants exercisable at $0.50 per share,
1,000,000 Series B Warrants exercisable at $0.75 per share, 1,000,000 Series C
Warrants exercisable at $1.00 per share, 1,000,000 Series D Warrants exercisable
at $1.25 per share, and 1,000,000 Series E Warrants exercisable at $1.50 per
share. The Series A Warrants will be fully vested upon issuance. They will be
exercisable at any time following their issuance but will expire on June 30,
2007 if not fully exercised on or before that date. The remaining series of
Warrants will each vest and become exercisable only at the time that the
immediately preceding series has been fully exercised. Therefore, the Series B
Warrants will vest only upon the timely exercise of all Series A Warrants, and
the same restriction will apply to each of the succeeding series of warrants
(i.e. the Series C, D and E Warrants). Unless terminated earlier as a result of
failure to vest, the Series B and Series C Warrants will each expire on December
31, 2007 and the Series D and Series E Warrants will each expire on December 31,
2008. However, the Agreement also stipulates that G.M. Capital cannot exercise
any warrants if, after the exercise, G.M. Capital would own 4.99% or more of the
issued and outstanding common stock of Mexoro. G.M. Capital is an accredited
investor. These warrants were issued pursuant an exemption from registration
under Regulation S of the Securities Act of 1933, as amended. The fair value of
the 5,000,000 warrants was determined using the Black-Scholes option pricing
model using a ten-year expected life of the option, a volatility factor of 152%,
a risk-free rate of 5% and no assumed dividend rate and totals $3,898,000 of
stock-based compensation expense which is amortized over the twenty four month
term of the GM Capital contract at $487,250 every quarter until November 30,
2007.








On August
31, 2006, the Company entered into an Amended Consulting Agreement with G.M.
Capital. All of the terms remained the same except for the
following:





(1)
            G.M.
      Capital represented that it does fall within United States jurisdiction in
      regard to this contract.


(2)
            G.M.
      Capital is no longer required to provide services regarding the
      acquisition of a business because the Company does not plan to acquire a
      business in the near future.


(3)
            G.M.
      Capital clarified that the investors, market makers, and other financial
      industry contacts which it will speak to in regard to the Company are
      non-United States persons.


(4)
            The
      Company acquired the sole discretion to determine how many Warrants G.M.
      Capital can exercise in order to restrict G.M. Capital’s beneficial
      ownership at any one time to no more than 4.99% of the issued and
      outstanding shares of the Company.


(5)
            G.M.
      Capital will no longer be the liaison between the Company and its
      stockholders.


(6)
            G.M.
      Capital will no longer advise the Company about potential market makers,
      broker-dealers, underwriters and
investors.


(7)
            The
      Warrants were revised to remove the liquidated damages provision related
      to the registration rights of the holders of the
  Warrants.





Furthermore,
we had amended our agreement with G.M. Capital to eliminate any reference
whereby G.M. Capital would assist us in identifying, evaluating, structuring,
negotiating and closing acquisitions. In the event we discovered no material ore
reserves and have no more exploration plans to continue after June 2008 we would
be without the services of G.M. Capital to assist us in reformulating the
business plan of the Company. If we should abandon our exploration strategy,
current management has sufficient expertise to reformulate the business plan and
pursue other options without the help of G.M. Capital. G.M. Capital’s main
function was to identify and introduce potential investors to us in foreign
jurisdictions for raising capital through the sale of equity or
debt.





In May
2008, the Company verbally terminated the agreement with G.M. Capital for
providing assistance in financing activities.





On March
4, 2006, the Company agreed to issue 1,651,200 shares of common stock at a price
of $0.25 per share to settle $412,800 in promissory notes payable. As a
condition, the promissory note holders waived all accrued interest payable on
the notes. On April 6, 2006, these shares were issued and the Company recorded a
$7,259 gain on settlement of debt.





On April
3, 2006 and May 31, 2006, the Company issued 550,000 shares of common stock and
200,000 shares of common stock respectively and closed a private placement for
total proceeds of $375,000. As at February 28, 2006, the Company had received
$170,000 of subscriptions for this unit offering. Units consisted of one share
of common stock and one-half of one warrant. Each full warrant entitles the
investor to purchase an additional share of the Company’s common stock at a
price of $1.00 per share and is exercisable until April 30, 2008. The units were
priced at $0.50 each.





During
the quarter ended May 31, 2006, the Company issued a total of $2,265,500
convertible debentures. The convertible debentures, with principal and accrued
interest at 7% per year are convertible into $25,000 units at the option of the
holder. Each unit consists of a warrant to purchase 25,000 of the Company’s
shares of common stock at $1.00 and $25,000 of debt, which may be converted to
shares of common stock at $0.50 per share and is exercisable until April 30,
2008. In addition, the warrants are redeemable by the Company, at $0.01 per
share, in the event the Company’s common stock closes with a bid price, on
average, over $3.00 per share for a consecutive 20-day period. Further, under
the terms of the debenture, until May 2007, the Company is prohibited from
effecting or entering into an agreement to affect any subsequent financing
involving a “Variable Rate Transaction”. The term “Variable Rate Transaction”
means a transaction in which the Company issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of common stock at a conversion,
exercise or exchange rate or other price that is based upon and/or varies with
the trading prices of or quotations for the shares of common stock at any time
after the initial issuance of such debt or equity securities.





The
holders of the debentures converted all of the debentures to shares of common
stock at $0.50 per share in June 2006. The Company issued 5,835,000 shares and
2,917,500 warrants to debenture holders upon the conversion. We have paid to the
convertible debenture holders a total of $58,308, which is their accumulated
interest on the debentures. During August 2006, the Company cancelled 50,000
shares of common stock with respect to the conversion and 25,000 warrants with
respect to this conversion due to non-payment of subscription
funds.





Going
Concern





Our
financial statements have been prepared on a going concern basis, which assumes
the realization of assets and settlement of liabilities in the normal course of
business. Our ability to continue as a going concern is dependent upon our
ability to generate profitable operations in the future and/ or to obtain the
necessary financing to meet our obligations and repay our liabilities arising
from normal business operations when they become due. The outcome of these
matters cannot be predicted with any certainty at this time and raise
substantial doubt that we will be able to continue as a going concern. Our
financial statements do not include any adjustments to the amount and
classification of assets and liabilities that may be necessary should we be
unable to continue as a going concern.





The
Company has a history of operating losses and will need to raise additional
capital to fund its planned operations. As at February 29, 2008, the Company had
working capital deficiency of $1,810,011 (2007 - $44,980 working capital) and an
accumulated deficit during the exploration stage of $33,828,000 (2007 –
$25,731,407). These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.





Off-Balance
Sheet Arrangements





We
currently do not have any off-balance sheet arrangements which have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to our
investors.





ITEM 7.FINANCIAL STATEMENTS AND
EXHIBITS


MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 
 
 
 Consolidated
Financial Statements
 (Expressed
in U.S. Dollars)
 
 
 February
29, 2008 and February 28, 2007
 
 
 
 
 
 MEYLER & COMPANY, LLC
 ONE ARIN
PARK
 1715
HIGHWAY 35
 MIDDLETOWN,
NJ 07748
  
   Report of
Independent Registered Public Accounting Firm
   
   To the
Board of Directors and
   Stockholders
of Mexoro Minerals Ltd.
  We have
audited the accompanying consolidated balance sheet of Mexoro Minerals Ltd. (an
Exploration Stage Company) as of February 29, 2008, and the related consolidated
statements of stockholders’ equity (deficiency), operations and comprehensive
income (loss), and cash flows for the year ended February 29, 2008 and for
period from March 1, 2004 (Exploration Stage) to February 29,
2008.  Mexoro Mineral Ltd’s management is responsible for these
financial statements. Our responsibility is to express an opinion on these
financial statements based on our audit.  The relatedconsolidatedstatements of stockholders’deficiency, operations and
comprehensive income(loss), and cash flows from
inception on August 27, 1997 to February 29, 2004(Development Stage)were audited by other auditors whose
reports dated May 24, 2004
and May 27, 2003 expressed unqualified opinions, with an explanatory
paragraph discussing the Company’s ability to continue as a
going-concern..  The relatedconsolidatedstatements of stockholders’equity (deficiency), operations and
comprehensiveincome(loss), and cash flows fromMarch 1, 2004 (Exploration
Stage)to
February 28, 2007were audited by other auditors whose
report datedMay 31,
2007expressedanunqualified opinion, with an explanatory
paragraph discussing the Company’s ability to continue as a going-concern.Our opinion on theconsolidatedstockholders’equity (deficiency),consolidatedstatements of operations and
comprehensive income(loss), andconsolidatedcash flows fromApril 27, 1997(Development Stage)to February 29, 2004 and March 1, 2004(Exploration Stage)to February 28, 2007, isbasedsolely on the reports of other
auditors.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Mexoro Minerals Ltd. as of
February 29, 2008, and the results of its operations and its cash flows for the
year ended February 29, 2008 and the period from March 1, 2004 (Exploration
Stage) to February 29, 2008, in conformity with accounting principles generally
accepted in the United States of America.
  The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has a history of operating
losses, a working capital deficiency of $1,810,905 at February 29, 2008 and a
cumulative loss during the exploration period of $33,828,011.  These
conditions raise substantial doubt about its ability to continue as a going
concern. Management’s plans regarding those matters also are described in Note
3. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
  Meyler
& Company, LLC
 June 12,
2008
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Consolidated
Balance Sheets
 (Expressed
in U.S. Dollars)
 As
at February 29 and February 28
 2008
              2007AssetsCurrentCash
      and cash equivalents
              $
              12,947
              $
              13,148Accounts
      receivable
              
              278,847
              
              165,897Prepaid
      expenses
              
              104,936
              
              173,857396,730
              
              352,902Equipment(note
      4)
              
              460,941
              
              351,335Total
      assets
              $
              857,671
              $
              704,237LiabilitiesCurrentAccounts
      payable and accrued liabilities
              $
              655,677
              $
              263,145Current
      portion of loans payable (note 7)
              
              71,256
              
              25,400Promissory
      notes (note 6)
              
              1,480,702
              
              109,3372,207,635
              
              397,882Loans
      payable (note 7)
              
              27,481
              
              36,863Total
      liabilities
              
              2,235,116
              
              434,745Stockholders’
      equity (deficiency)Capital
      stockPreferred
      stockAuthorized:
      20,000,000 shares without par value (note 8)Issued:
      nil
              
              -
              
              -Common
      stockAuthorized:
      200,000,000 shares without par valueIssued:
      25,380,502 (2007 – 21,036,102) (note 9)
              
              22,978,654
              
              19,304,277Additional
      paid-in capital
              
              11,155,687
              
              8,702,096Stock
      subscriptions
              
              330,000
              
              -Accumulated
      deficit from prior operations
              
              (2,003,427)
              
              (2,003,427)Accumulated
      deficit during the exploration stage
              
              (33,828,011)
              
              (25,731,407)Accumulated
      other comprehensive income (loss)
              
              (10,348)
              
              (2,047)Total
      stockholders’ equity (deficiency)
              
              (1,377,445)
              
              269,492Total
      liabilities and stockholders’ equity (deficiency)
              $
              857,671
              $
              704,237
 
 Going-concern
(note 3)
 Commitments
(notes 5, 11 and 14)
 Subsequent
events (note 15)
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
 
 MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Consolidated
Statements of Stockholders’ Equity (Deficiency)
 (Expressed
in U.S. Dollars)
 Period
from Inception March 1, 2004 (Exploration Stage) to February 29,
2008
 Number
      of
                shares
              
              
              Amount
              
              
              Additional
                paid-in
      capital
              
              
              Stock
                subscriptions
              
              
              Deficit
                accumulated
                from
      prior
                operations
              
              
              Deficit
                accumulated
                during
      the
                exploration
                stage
              
              
              Accumulated
                other
                comprehensive
                income
      (loss)
              
              
              Total
                stockholders
                deficiencyBalance
      from prior operations, March 1, 2004
              
              
              709,168
              
              
              $
              1,701,843
              
              
              $
              194,391
              
              
              $
              67,025
              
              
              $
              (2,003,427
              )
              
              $
              -
              
              
              $
              8,929
              
              
              $
              (31,239
              )Common
      stock issued in share exchange
              
              
              860,000
              
              
              
              10,965,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              10,965,000Options
      issued as finders’ fees
              
              
              -
              
              
              
              -
              
              
              
              1,523,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,523,000Common
      stock issued for cash
              
              
              113,222
              
              
              
              269,134
              
              
              
              -
              
              
              
              (67,025
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              202,109Options
      exercised
              
              
              50,000
              
              
              
              35,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              35,000Options
      issued
              
              
              -
              
              
              
              -
              
              
              
              86,955
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              86,955Warrants
      exercised
              
              
              5,512
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Beneficial
      conversion feature
              
              
              -
              
              
              
              -
              
              
              
              500,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              500,000Foreign
      exchange translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (3,050
              )
              
              
              (3,050
              )Net
      loss for year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (13,912,488
              )
              
              
              -
              
              
              
              (13,912,488
              )Balance,
      February 28, 2005
              
              
              1,737,902
              
              
              $
              12,970,977
              
              
              $
              2,304,346
              
              
              $
              -
              
              
              $
              (2,003,427
              )
              
              $
              (13,912,488
              )
              
              $
              5,879
              
              
              $
              (634,713
              )Common
      stock issued for consulting services
              
              
              30,000
              
              
              
              90,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              90,000Options
      exercised
              
              
              32,000
              
              
              
              43,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              43,000Common
      stock issued on conversion of debenture
              
              
              2,000,000
              
              
              
              300,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              300,000Common
      stock issued in property acquisition
              
              
              2,000,000
              
              
              
              2,100,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,100,000Common
      stock issued for cash
              
              
              7,000,000
              
              
              
              70,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              70,000Options
      issued
              
              
              -
              
              
              
              -
              
              
              
              248,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              248,000Warrants
      issued
              
              
              -
              
              
              
              -
              
              
              
              487,250
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              487,250Beneficial
      conversion feature
              
              
              -
              
              
              
              -
              
              
              
              952,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              952,000Stock
      subscriptions
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              170,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              170,000Foreign
      exchange translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (4,828
              )
              
              
              (4,828
              )Net
      loss for year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (4,425,885
              )
              
              
              -
              
              
              
              (4,425,885
              )Balance,
      February 28, 2006
              
              
              12,799,902
              
              
              $
              15,573,977
              
              
              $
              3,991,596
              
              
              $
              170,000
              
              
              $
              (2,003,427
              )
              
              $
              (18,338,373
              )
              
              $
              1,051
              
              
              $
              (605,176
              )
 
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
 
 MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Consolidated
Statements of Stockholders’ Equity (Deficiency) (continued)
 (Expressed
in U.S. Dollars)
 Period
from Inception March 1, 2004 (Exploration Stage) to February 28,
2007
 Number
      of
                shares
              
              
              Amount
              
              
              Additional
                paid-in
      capital
              
              
              Stock
                subscriptions
              
              
              Deficit
                accumulated
                from
      prior
                operations
              
              
              Deficit
                accumulated
                during
      the
                exploration
                stage
              
              
              Accumulated
      other
                comprehensive
                income
      (loss)
              
              
              Total
                stockholders’
                deficiencyBalance,
      February 28, 2006
              
              
              12,799,902
              
              
              $
              15,573,977
              
              
              $
              3,991,596
              
              
              $
              170,000
              
              
              $
              (2,003,427
              )
              
              $
              (18,338,373
              )
              
              $
              1,051
              
              
              $
              (605,176
              )Common
      stock issued on conversion of debenture
              
              
              5,835,000
              
              
              
              2,917,500
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,917,500Common
      stock issued on settlement of promissory notes
              
              
              1,651,200
              
              
              
              412,800
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              412,800Common
      stock issued for cash
              
              
              750,000
              
              
              
              375,000
              
              
              
              -
              
              
              
              (170,000
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              205,000Warrants
      exercised
              
              
              50,000
              
              
              
              50,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              50,000Shares
      returned to treasury
              
              
              (50,000
              )
              
              
              (25,000
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (25,000
              )Options
      issued
              
              
              -
              
              
              
              -
              
              
              
              496,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              496,000Warrants
      issued
              
              
              -
              
              
              
              -
              
              
              
              1,949,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,949,000Beneficial
      conversion feature
              
              
              -
              
              
              
              -
              
              
              
              2,265,500
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,265,500Foreign
      exchange translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (3,098
              )
              
              
              (3,098
              )Net
      loss for year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (7,393,034
              )
              
              
              -
              
              
              
              (7,393,034
              )Balance,
      February 28, 2007
              
              
              21,036,102
              
              
              $
              19,304,277
              
              
              $
              8,702,096
              
              
              $
              -
              
              
              $
              (2,003,427
              )
              
              $
              (25,731,407
              )
              
              $
              (2,047
              )
              
              $
              269,492Warrants
      exercised
              
              
              4,344,400
              
              
              
              3,674,377
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,674,377Options
      issued
              
              
              -
              
              
              
              -
              
              
              
              974,841
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              974,841Fair
      value of warrants expensed
              
              
              -
              
              
              
              -
              
              
              
              1,478,750
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,478,750Stock
      subscriptions
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              330,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              330,000Foreign
      exchange translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (8,301
              )
              
              
              (8,301
              )Net
      loss for year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (8,096,604
              )
              
              
              -
              
              
              
              (8,096,604
              )Balance,
      February 29, 2008
              
              
              25,380,502
              
              
              $
              22,978,654
              
              
              $
              11,155,687
              
              
              $
              330,000
              
              
              $
              (2,003,427
              )
              
              $
              (33,828,011
              )
              
              $
              (10,348
              )
              
              $
              (1,377,445
              )
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
 
 
 MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Consolidated
Statements of Operations and Comprehensive Income (Loss)
 (Expressed
in U.S. Dollars)
 Period
      fromInception
      ofExplorationStageYear
      Ended
              
              
              (March
      1, 2004)February
      29,
              
              
              February
      28,
              
              
              to
      February 29,2008
              
              
              2007
              
              
              2008ExpensesGeneral
      and administrative
              
              $
              2,326,057
              
              
              $
              1,312,891
              
              
              $
              4,335,695Stock-based
      compensation (note 10)
              
              
              2,453,591
              
              
              
              2,445,000
              
              
              
              5,720,796Mineral
      exploration
              
              
              2,680,680
              
              
              
              1,089,498
              
              
              
              3,770,178Impairment
      of mineral property costs
              
              
              580,000
              
              
              
              259,000
              
              
              
              16,145,422Operating
      loss
              
              
              (8,040,328
              )
              
              
              (5,106,389
              )
              
              
              (29,972,091
              )Other
      income (expenses)Foreign
      exchange gain (loss)
              
              
              1,357
              
              
              
              -
              
              
              
              1,357Interest
              
              
              (57,633
              )
              
              
              (2,293,904
              )
              
              
              (3,997,721
              )Gain
      on settlement of debt (note 6)
              
              
              -
              
              
              
              7,259
              
              
              
              140,444Net
      loss
              
              
              (8,096,604
              )
              
              
              (7,393,034
              )
              
              
              (33,828,011
              )Other
      comprehensive income (loss)Foreign
      exchange translation adjustment
              
              
              (8,301
              )
              
              
              (3,098
              )
              
              
              (10,348
              )Total
      comprehensive loss
              
              $
              (8,104,905
              )
              
              $
              (7,396,132
              )
              
              $
              (33,838,359
              )Total loss per share –
      basic and diluted
              
              $
              (0.35
              )
              
              $
              (0.39
              )
              
              $
              -Weighted
      average number of shares ofcommon stock – basic and
      diluted
              
              
              23,204,827
              
              
              
              18,760,066
              
              
              
              -
 
 
 
 
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
 
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Consolidated
Statements of Cash Flows
 (Expressed
in U.S. Dollars)
 Period
      FromInception
      ofExploration
      StageYear
      Ended
              
              
              (March
      1, 2004)February
      29,
              
              
              February
      28,
              
              
              to
      February 29,2008
              
              
              2007
              
              
              2008Operating
      activitiesNet
      loss
              
              $
              (8,096,604
              )
              
              $
              (7,393,034
              )
              
              $
              (33,828,011
              )Adjustments
      to reconcile net (loss) to net cash flowsWrite-off
      of note receivable
              
              
              -
              
              
              
              -
              
              
              
              57,500Acquisition
      of mineral property costs for stock
              
              
              580,000
              
              
              
              -
              
              
              
              13,645,000Issuance
      of shares for consulting services
              
              
              -
              
              
              
              -
              
              
              
              90,000Amortization
              
              
              79,310
              
              
              
              24,929
              
              
              
              104,239Discount
      on convertible debenture
              
              
              -
              
              
              
              -
              
              
              
              175,000Non-cash
      component of gain on settlement of debt
              
              
              -
              
              
              
              (7,259
              )
              
              
              (182,259
              )Stock-based
      compensation
              
              
              2,453,591
              
              
              
              2,445,000
              
              
              
              7,243,796Beneficial
      conversion feature
              
              
              -
              
              
              
              2,265,500
              
              
              
              3,717,500Prepaid
      expense
              
              
              72,143
              
              
              
              (125,589
              )
              
              
              (95,235
              )Accounts
      receivable
              
              
              (103,654
              )
              
              
              (155,828
              )
              
              
              (261,345
              )Customer
      deposits
              
              
              -
              
              
              
              -
              
              
              
              (44,809
              )Notes
      payable
              
              
              -
              
              
              
              109,337
              
              
              
              109,337Accounts
      payable and accrued liabilities
              
              
              1,178,145
              
              
              
              191,280
              
              
              
              1,426,356Cash
      used in operating activities
              
              
              (3,837,069
              )
              
              
              (2,645,664
              )
              
              
              (7,842,931
              )Investing
      activityPurchase
      of property and equipment
              
              
              (172,036
              )
              
              
              (375,384
              )
              
              
              (548,300
              )Cash
      used in investing activity
              
              
              (172,036
              )
              
              
              (375,384
              )
              
              
              (548,300
              )Financing
      activitiesProceeds
      from loans payable
              
              
              107,106
              
              
              
              75,348
              
              
              
              182,454Proceeds
      from notes payable
              
              
              1,081,202
              
              
              
              -
              
              
              
              1,644,002Proceeds
      from convertible debentures
              
              
              -
              
              
              
              2,240,500
              
              
              
              3,692,500Proceeds
      from exercise of options
              
              
              -
              
              
              
              -
              
              
              
              78,000Proceeds
      from exercise of warrants
              
              
              3,094,377
              
              
              
              50,000
              
              
              
              3,144,377Repayment
      of loans payable
              
              
              (73,374
              )
              
              
              (13,085
              )
              
              
              (86,459
              )Repayment
      of notes payable
              
              
              (181,500
              )
              
              
              -
              
              
              
              (360,000
              )Repayment
      of convertible debentures
              
              
              -
              
              
              
              -
              
              
              
              (530,000
              )Stock
      subscriptions
              
              
              -
              
              
              
              -
              
              
              
              170,000Issuance
      of common stock
              
              
              -
              
              
              
              205,000
              
              
              
              477,109Cash
      provided by financing activities
              
              
              4,027,811
              
              
              
              2,557,763
              
              
              
              8,411,983Outflow
      of cash and cash equivalents
              
              
              18,706
              
              
              
              (463,285
              )
              
              
              20,752Effect
      of foreign currency translation on cash
              
              
              (18,907
              )
              
              
              (3,097
              )
              
              
              (29,882
              )Cash
      and cash equivalents, beginning
              
              
              13,148
              
              
              
              479,530
              
              
              
              22,077Cash
      and cash equivalents, ending
              
              $
              12,947
              
              
              $
              13,148
              
              
              $
              12,947Supplemental
      cash flow informationInterest
      paid
              
              $
              33,131
              
              
              $
              55,473
              
              
              $
              195,288Common
      stock issued on conversion of debt
              
              
              -
              
              
              
              2,917,500
              
              
              
              3,217,500Common
      stock issued on settlement of notes payable
              
              
              -
              
              
              
              412,800
              
              
              
              412,800Shares
      issued for mineral property costs
              
              
              500,000
              
              
              
              -
              
              
              
              500,000Shares
      issued for services
              
              
              -
              
              
              
              -
              
              
              
              90,000
 The
accompanying notes are an integral part of these consolidated financial
statements.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  1.
              BASIS
      OF PRESENTATION
  Mexoro
Minerals Ltd. (formerly Sunburst Acquisitions IV, Inc.) ("Mexoro" or the
“Company”) was incorporated in the state of Colorado on August 27, 1997 and on
February 15, 2006 its name was changed to Mexoro Minerals Ltd. The Company was
formed to seek out and acquire business opportunities. Between 1997 and 2003,
the Company was engaged in two business acquisitions and one business
opportunity, none of which generated a significant profit or created sustainable
business. All were sold or discontinued. Currently, the main focus of the
Company’s operations is in Mexico.
 
 The
Company had previously been pursuing various business opportunities and,
effective March 1, 2004, the Company changed its operations to mineral
exploration. Accordingly, as of March 1, 2004 the Company is considered to be an
exploration stage company.
 
 On May
25, 2004, the Company completed a “Share Exchange Agreement” with Sierra
Minerals and Mining, Inc. (“Sierra Minerals”), a Nevada corporation, which
caused Sierra Minerals to become a wholly-owned subsidiary. Sierra Minerals held
certain rights to properties in Mexico that the Company now owns or has an
option to acquire. Through Sierra Minerals, the Company entered into a joint
venture agreement with Minera Rio Tinto, S.A. de C.V. (“MRT”), a company duly
incorporated pursuant to the laws of Mexico, which is controlled by an officer
of the Company. In August 2005, the Company cancelled the joint venture
agreement in order to directly pursue the mineral exploration opportunities
through a wholly-owned Mexican subsidiary, Sunburst Mining de Mexico S.A. de
C.V. (“Sunburst de Mexico”). On August 25, 2005, Sunburst de Mexico, Mexoro and
MRT entered into agreements providing Sunburst de Mexico the right to explore
and exploit certain properties in Mexico. In December 2005, the Company and
Sunburst de Mexico entered into a new agreement with MRT (the “New Agreement”)
(note 5). On January 20, 2006, Sierra Minerals was dissolved.
  2.
              SIGNIFICANT
      ACCOUNTING POLICIES
  (a)
              Principles
      of consolidation
  The
accompanying financial statements include the accounts and activities of Mexoro
and its wholly-owned subsidiary, Sunburst de Mexico. All intercompany balances
and transactions have been eliminated in consolidation.
 
 (b)
              Financial
      instruments
 
 (i)
              Fair
      value
 
 The
carrying values of cash and cash equivalents, accounts receivable, accounts
payable and accrued liabilities and promissory notes approximate their fair
values because of the short-term maturity of these financial instruments. The
carrying value of convertible debentures approximates their fair value because
these instruments earn interest at the market rate.
 
 (ii)
              Interest
      rate risk
 
 The
Company is not exposed to significant interest rate risk due to the short-term
maturity of its monetary current assets and current liabilities. The convertible
debentures are not exposed to interest rate risk because the interest rate is
fixed to maturity.
 
 (iii)
              Credit
      risk
 
 The
Company's financial assets that are exposed to credit risk consist primarily of
cash that is placed with major financial institutions.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  2.      SIGNIFICANT
ACCOUNTING POLICIES (continued)
  (iv)
              Translation
      risk
 
 The
Company translates the results of non-U.S. operations into U.S. currency using
rates approximating the average exchange rate for the year. The exchange rate
may vary from time to time. This risk is considered moderate, as the Company’s
mining project expenses are recorded in Mexican pesos and converted to U.S.
currency.
 
 (c)
              Equipment
 
 Equipment
is recorded at cost less accumulated amortization. Amortization is provided on
the following basis:
 
 Software
              
              2
      years straight-lineMachinery
              
              10%
      declining-balanceVehicles
              
              25%
      declining-balanceComputer
      equipment
              
              30%
      declining-balanceOffice
      equipment
              
              30%
      declining-balance
 
 (d)
              Cash
      and cash equivalents
 
 The
Company considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
 
 (e)
              Mineral
      property costs
 
 The
Company has been in the exploration stage since March 1, 2004, and has not yet
realized any revenues from its planned operations. It is primarily engaged in
the acquisition and exploration of mining properties. Mineral property
exploration costs are expensed as incurred. Mineral property acquisition costs
are initially capitalized when incurred using the guidance in EITF 04-02,
“Whether Mineral Rights Are Tangible or Intangible Assets”. The Company assesses
the carrying costs for impairment under SFAS No. 144, “Accounting for Impairment
or Disposal of Long Lived Assets” at each fiscal quarter end. When it has been
determined that a mineral property can be economically developed as a result of
establishing proven and probable reserves, the costs then incurred to develop
such property, are capitalized. Such costs will be amortized using the
units-of-production method over the estimated life of the probable reserve. If
mineral properties are subsequently abandoned or impaired, any capitalized costs
will be charged to operations.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  2.      SIGNIFICANT
ACCOUNTING POLICIES (continued)
  (f)
              Basic
      and diluted income (loss) per share
 
 The
Company computes income (loss) per share in accordance with SFAS No. 128, "Earnings per Share", which
requires presentation of both basic and diluted earnings per share (“EPS”) on
the face of the statement of operations. Basic EPS is computed by dividing
income (loss) available to common shareholders (numerator) by the weighted
average number of shares outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential shares of common stock outstanding
during the period using the treasury stock method and convertible preferred
stock using the if-converted method. In computing diluted EPS, the average stock
price for the period is used in determining the number of shares assumed to be
purchased from the exercise of stock options or warrants. Diluted EPS excludes
all dilutive potential shares if their effect is anti-dilutive. All previously
stated share and per share balances have been restated to give retroactive
effect to the 1:50 reverse stock split that occurred on February 15, 2006.
Dilutive loss per share has not been presented because the effects of all common
share equivalents were anti-dilutive.
 
 (g)
              Impairment
      or disposal of long-lived assets
 
 In August
2001, the FASB issued Statement No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets” (“FAS 144”). FAS 144 clarifies the
accounting for the impairment of long-lived assets and for long-lived assets to
be disposed of, including the disposal of business segments and major lines of
business. The Company has implemented FAS 144. Long-lived assets are reviewed
when facts and circumstances indicate that the carrying value of the asset may
not be recoverable. When necessary, impaired assets are written down to estimate
fair value based on the best information available. Estimated fair value is
generally based on either appraised value or measured by discounting estimated
future cash flows. Considerable management judgment is necessary to estimate
discounted future cash flows. Accordingly, actual results could vary
significantly from such estimates.
 
 (h)
              Use
      of estimates
 
 The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles (“U.S. GAAP”) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Significant areas of estimate include the impairment of assets
and rates for amortization, accrued liabilities, future income tax balances and
the inputs used in calculating stock-based compensation. Actual results could
differ from those estimates and would impact future results of operations and
cash flows.
 
 (i)
              Consideration
      of other comprehensive income items
 
 SFAS No.
130 – “Reporting Comprehensive
Income” requires companies to present comprehensive income (consisting
primarily of net loss plus other direct equity changes and credits) and its
components as part of the basic financial statements.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  2.      SIGNIFICANT
ACCOUNTING POLICIES (continued)
  (j)
              Stock-based
      compensation
 
 Effective
March 1, 2004, the Company adopted the fair value based method of accounting for
stock-based employee compensation in accordance with the provisions of SFAS No.
123 “Accounting for
Stock-Based Compensation”, using the prospective transition method.
Accordingly the Company recognized the fair value of stock-based employee
compensation for all awards made after March 1, 2004. The Company is in
accordance with Emerging Issues Task Force No. 96-18 "Accounting for Equity
Instruments That are Issued to Other than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services" ("EITF 96-18"), with respect to
options and warrants issued to non-employees.
 
 Effective
March 1, 2005, the Company adopted the fair value recognition provisions of SFAS
No. 123R “Share Based
Payments” (“SFAS No. 123R”), using the modified prospective transition
method. Under that transition method, compensation cost is recognized for all
share-based payments granted prior to, but not yet vested as of March 1, 2005,
based on the grant date fair value estimated in accordance with the original
provisions of SFAS No. 123, and compensation cost for all share-based payments
granted subsequent to March 1, 2004, based on the grant-date fair value
estimated in accordance with the provisions of SFAS 123R. Results for prior
periods have not been restated. As of March 1, 2004, there were no unvested
options; and therefore, there was no effect on the Company’s reported loss from
operations, cash flows or loss per share as a result of adopting SFAS No.
123R.
 
 All transactions inwhich goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable.Equity instruments issued to employees
and the cost of the services received as consideration are measured and
recognized based on the fair value of the equity instruments issued (see note
11).
 
 (k)
              Income
      taxes
 
 The
Company accounts for income taxes in accordance with SFAS No. 109 – “Accounting for Income
Taxes”. Deferred tax assets and liabilities are recognized with respect
to the tax consequences attributable to differences between the financial
statement carrying values and tax basis of existing assets and liabilities.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which these temporary
differences are expected to be recovered or settled. Further, the effect on
deferred tax assets and liabilities of changes in tax rates is recognized in
income in the period that includes the enactment. A valuation allowance against
deferred tax assets is recorded. If based on available evidence, it is more
likely than not that some or all of the deferred tax assets will not be
realized.
 
 (l)
              Foreign
      currency translation
 
 Mexoro
and its subsidiary Sunburst de Mexico maintain accounting records in their
functional currencies, U.S. dollars and Mexican pesos, respectively. Mexoro and
Sunburst de Mexico translate foreign currency transactions into the respective
functional currencies in the following manners: at the transaction date, each
asset, liability, revenue and expense is translated into the functional currency
by the use of the exchange rate in effect at that date; at the period end,
foreign currency monetary assets and liabilities are re-evaluated into the
functional currency by using the exchange rate in effect at the balance sheet
date. The resulting foreign exchange gains and losses are included in
operations.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  2.      SIGNIFICANT
ACCOUNTING POLICIES (continued)
  (l)           Foreign
currency translation (continued)
 
 In
preparing consolidated financial statements, the Company translates the assets
and liabilities of its subsidiary into U.S. dollars at the exchange rate in
effect at the balance sheet date. Revenue and expenses are translated into U.S.
dollars at the average exchange rate for the applicable period. Any gain or loss
from such translations is included in stockholders’ equity as a component of
other comprehensive income.
 
 (m)
              Asset
      retirement obligations
 
 During
2004, the Company adopted the requirements regarding asset retirement
obligations. The basis of this policy is the recognition of a legal liability
for obligations related to the retirement of property, plant and equipment and
obligations arising from the acquisition, construction, development, or normal
operations of those assets. Such asset retirement costs must be recognized at
fair value when a reasonable estimate of fair value can be estimated in the
period in which the liability is incurred. A corresponding increase to the
carrying amount of the related asset, where one is identifiable, is recorded and
amortized over the life of the asset. Where a related future value is not easily
identifiable with a liability, the change in fair value over the course of the
year is expensed. The amount of the liability is subject to re-measurement at
each reporting period. The estimates are based principally on legal and
regulatory requirements. It is possible that the Company’s estimates of its
ultimate reclamation and closure liabilities could change as a result of changes
in regulations, changes in the extent of environmental remediation required,
changes in the means of reclamation, or changes in cost estimates. Changes in
estimates are accounted for prospectively commencing in the period the estimate
is revised.
  Although
the Company has begun exploration, a reasonable estimate cannot be made at this
time; therefore, no liability has been recorded. There is no effect on prior
years as a result of adopting this new recommendation.
  (n)
              Recent
      accounting pronouncements
 
 (i)
              In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments, an amendment of FASB Statements No. 133 and
      140”. This statement permits fair value re-measurement for any
      hybrid financial instrument that contains an embedded derivative that
      otherwise would require bifurcation. It establishes a requirement to
      evaluate interests in securitized financial assets to identify interests
      that are freestanding derivatives or that are hybrid financial instruments
      that contain an embedded derivative requiring bifurcation. In addition,
      SFAS 155 clarifies which interest-only strips and principal-only strips
      are not subject to the requirements of Statement 133. It also clarifies
      that concentrations of credit risk in the form of subordination are not
      embedded derivatives. SFAS 155 amends Statement 140 to eliminate the
      prohibition on 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 all financial instruments acquired or issued after the
      beginning of an entity’s first fiscal year that begins after September 15,
      2006. The adoption of this standard did not have a material effect on the
      Company’s results of operations or financial
  position.
 
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29 and February 28, 2008 and 2007
  2.      SIGNIFICANT
ACCOUNTING POLICIES (continued)
  (n)           Recent
accounting pronouncements (continued)
 
 (ii)
              In
      September 2006, the Securities and Exchange Commission (“SEC”) released
      SAB No. 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements” (“SAB
      108”). SAB 108 provides interpretive guidance on the SEC’s views on how
      the effects of the carryover or reversal of prior year misstatements
      should be considered in quantifying a current year misstatement. The
      Company adopted SAB 108 during the fourth quarter of 2006. The adoption
      did not have a material impact on the Company’s financial position, cash
      flows, or results of operations.
 
 (iii)
              In
      September 2006, FASB issued SFAS No. 157, “Fair Value
      Measurements”. SFAS No. 157 provides guidance for using fair value
      to measure assets and liabilities. It clarifies that for items that are
      not actively traded, such as certain kinds of derivatives, fair value
      should reflect the price in a transaction with a market participant,
      including adjustment for risk, not just the company’s mark-to-model value.
      SFAS No. 157 also requires expanded disclosure of the effect on earnings
      for items measured using unobservable data. Fair value refers to the price
      that would be received to sell an asset or paid to transfer a liability in
      an orderly transaction between market participants in the market in which
      the reporting entity transacts. SFAS No. 157 is effective for financial
      statements issued for fiscal years beginning after November 15,
      2007.
 
  (i)
              In
      July 2006, FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in
      Income Taxes – An Interpretation of FASB Statement No. 109”. FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise’s financial statements in accordance with FASB Statement No.
      109, and also 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 is effective for
      financial statements issued for fiscal years beginning after December 15,
      2006. The adoption of this standard is not expected to have a significant
      impact on the Company’s consolidated financial
  statements.
 
 (ii)
              On
      February 15, 2007, the FASB issued SFAS Statement No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities”. This Statement permits
      companies and not-for-profit organizations to make a one-time election to
      carry eligible types of financial assets and liabilities at fair value,
      even if fair value measurement is not required under U.S.GAAP. SFAS 159 is
      effective for fiscal years beginning after November 15, 2007. The Company
      is currently evaluating the effect of the adoption of SFAS
      No. 159.
 
 (iii)
              In
      December 2007, the FASB issued SFAS No. 141 (R), Business Combinations,
      and SFAS No. 160, Noncontrolling Interests in Consolidated Financial
      Statements. SFAS No. 141 (R) requires an acquirer to measure the
      identifiable assets acquired, the liabilities assumed and any
      noncontrolling interest in the acquiree at their fair values on the
      acquisition date, with goodwill being the excess value over the net
      identifiable assets acquired. SFAS No. 160 clarifies that a noncontrolling
      interest in a subsidiary should be reported as equity in the consolidated
      financial statements. The calculation of earnings per share will continue
      to be based on income amounts attributable to the parent. SFAS No. 141 (R)
      and SFAS No. 160 are effective for financial statements issued for fiscal
      years beginning after December 15, 2008. Early adoption is prohibited. We
      have not yet determined the effect on our consolidated financial
      statements, if any, upon adoption of SFAS No. 141 (R) or SFAS No.
      160.
 
 
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  3.
              GOING
      CONCERN
  The
accompanying financial statements have been prepared on a going-concern basis.
The Company has a history of operating losses and will need to raise additional
capital to fund its planned operations. As at February 29, 2008, the Company had
a working capital deficiency of $1,810,905 (2007 - $44,980 working capital) and
a cumulative loss during the exploration period of $33,828,011 (2007 -
$25,731,407). These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
 
 The
Company intends to reduce its cumulative loss through the attainment of
profitable operations, from its investment in a Mexican mining venture (note 5).
In addition, the Company has conducted private placements of convertible debt
and common stock (note 9), which have generated a portion of the initial cash
requirements of its planned Mexican mining ventures (note 5).
  4.
              EQUIPMENT
  February
      29, 2008
              February
      28,2007Cost
              Accumulated
      Depreciation
              Net
      Book
              Net
      BookValue
              ValueSoftware
              $     23,943
              $      16,204
              $      7,739
              $       15,521Machinery
              336,958
              31,737
              305,221
              213,219Vehicles
              154,509
              45,336
              109,173
              87,747Computers
              32,457
              10,659
              21,798
              19,202Office
      equipment
              19,512
              2,502
              17,010
              15,646$   567,379
              $    106,438
              $  460,941
              $     351,335
  5.
              MINERAL
      PROPERTIES
  The
Company incurred exploration expenses as follows in the year ended February 29,
2008:
 
 CieneguitaOperations
              
              
              Sahuayacan
              
              
              Guazapares
              
              
              Cieneguita
              
              
              Encino
      Gordo
              
              
              New
      Projects
              
              
              TotalDrilling
      and sampling
              
              $
              -
              
              
              $
              360,575
              
              
              $
              377,571
              
              
              $
              255,218
              
              
              $
              -
              
              
              $
              -
              
              
              $
              993,364Geological,
      geochemical, geophysics
              
              
              27,679
              
              
              
              59,122
              
              
              
              100,318
              
              
              
              36,799
              
              
              
              95,306
              
              
              
              776
              
              
              
              320,000Land
      use permits
              
              
              -
              
              
              
              112,267
              
              
              
              114,356
              
              
              
              143,503
              
              
              
              52,677
              
              
              
              -
              
              
              
              422,803Automotive
              
              
              19,691
              
              
              
              65
              
              
              
              1,155
              
              
              
              1,469
              
              
              
              -
              
              
              
              -
              
              
              
              22,380Travel
              
              
              11,110
              
              
              
              16,240
              
              
              
              34,878
              
              
              
              19,859
              
              
              
              7,214
              
              
              
              -
              
              
              
              89,301Consulting
              
              
              143,835
              
              
              
              38,371
              
              
              
              137,016
              
              
              
              79,653
              
              
              
              20,748
              
              
              
              -
              
              
              
              419,623Equipment
              
              
              97,306
              
              
              
              -
              
              
              
              22,620
              
              
              
              10,039
              
              
              
              2,603
              
              
              
              -
              
              
              
              132,568General
              
              
              102,238
              
              
              
              3,054
              
              
              
              109,715
              
              
              
              59,149
              
              
              
              6,485
              
              
              
              -
              
              
              
              280,641$
              401,859
              
              
              $
              589,694
              
              
              $
              897,629
              
              
              $
              605,689
              
              
              $
              185,033
              
              
              $
              776
              
              
              $
              2,680,680
 
 
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  5.      MINERAL
PROPERTIES (Continued)
  The
Company incurred exploration expenses as follows in the year ended February 28,
2007:
 
 CieneguitaOperations
              
              
              Sahuayacan
              
              
              Guazapares
              
              
              Cieneguita
              
              
              Encino
      Gordo
              
              
              TotalGeological,
      geochemical, geophysics
              
              $
              84,249
              
              
              $
              8,345
              
              
              $
              8,846
              
              
              $
              9,637
              
              
              $
              4,708
              
              
              $
              115,785Land
      use permits
              
              
              -
              
              
              
              74,974
              
              
              
              33,731
              
              
              
              127,925
              
              
              
              49,683
              
              
              
              286,313Automotive
              
              
              35,324
              
              
              
              11,283
              
              
              
              4,022
              
              
              
              -
              
              
              
              -
              
              
              
              50,629Travel
              
              
              2,296
              
              
              
              13,303
              
              
              
              19,110
              
              
              
              16,329
              
              
              
              1,669
              
              
              
              52,707Consulting
              
              
              79,527
              
              
              
              44,664
              
              
              
              74,950
              
              
              
              84,029
              
              
              
              4,429
              
              
              
              287,599Equipment
              
              
              46,697
              
              
              
              76,589
              
              
              
              6,567
              
              
              
              126
              
              
              
              860
              
              
              
              130,839General
              
              
              59,007
              
              
              
              41,798
              
              
              
              3,985
              
              
              
              60,268
              
              
              
              568
              
              
              
              165,626$
              307,100
              
              
              $
              270,956
              
              
              $
              151,211
              
              
              $
              298,314
              
              
              $
              61,917
              
              
              $
              1,089,498
 
 
 Since May
2004, the Company has held interests in gold exploration properties in
Mexico.
 
 In August
2005, the Company formed its wholly owned subsidiary, Sunburst de Mexico, which
allowed the Company to take title to the properties into the name of Sunburst de
Mexico. On August 25, 2005 the Company entered into property agreements with
MRT, which provided Sunburst de Mexico options to purchase the mineral
concessions of the Cieneguita and Guazapares properties and the right of refusal
on three Encino Gordo properties. The Company also entered into an exploration
and sale agreement, in October 2006, with Minera Emilio for mineral concessions
of the Sahauyacan Property.
 
 In August
2005 the parties also entered into an operator’s agreement, that gave MRT the
sole and exclusive right and authority to manage the Cieneguita Property, and a
share option agreement which granted MRT the exclusive option to acquire up to
100% of all outstanding shares of Sunburst de Mexico if the Company did not
comply with the terms of the property agreements. The operating agreement and
share option agreement have subsequently been cancelled.
 
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  5.      MINERAL
PROPERTIES (Continued)
  The
material provisions of the Company’s property agreements are as
follows:
 
 Cieneguita
 
 MRT
assigned to Sunburst de Mexico, with the permission of the Cieneguita owner,
Corporativo Minero, S.A. de C.V. (“Corporativo Minero”), all of MRT’s rights and
obligations acquired under a previous agreement, the Cieneguita option
agreement, including the exclusive option to acquire the Cieneguita Property for
a price of $2,000,000. As the Cieneguita Property was not in production by May
6, 2006, Sunburst de Mexico was required to pay $120,000 to Corporativo Minero
to extend the contract. Corporativo Minero agreed to reduce the obligation to
$60,000, of which $10,000 was paid in April 2006 and the balance paid on May 6,
2006. The Company made this payment to Corporativo Minero and the contract was
extended.
 
 The
Company has the obligation to pay a further $120,000 per year for the next 13
years and the balance of the payments in the 14th year,
until the total amount of $2,000,000 is paid. The Company renegotiated the
payment due May 6, 2007, to $60,000 payable on November 6, 2007, which was paid,
and the balance of $60,000 was paid on December 20, 2007.
 
 In the
alternative, if the Cieneguita Property is put into production, of which there
is no guarantee, the Company must pay the Cieneguita owners $20 per ounce of
gold produced, if any, from the Cieneguita Property to the total $2,000,000 due.
In the event that the price of gold is above $400 per ounce, the property
payments payable to the Cieneguita owners from production will be increased by
$0.10 for each dollar increment over $400 per ounce. The total payment of
$2,000,000 does not change with fluctuations in the price of gold. Non-payment
of any portion of the $2,000,000 total payment will constitute a default. In
such case, the Cieneguita owners will retain ownership of the concessions, but
the Company will not incur any additional default penalty. MRT retained no
interest in the Cieneguita Property.
 
 Guazapares
 
 MRT
assigned to Sunburst de Mexico, with the consent of the Guazapares Property
owner Compañía Minera, S.A. de C.V. (“Compañía Minera”), MRT’s rights and
obligations concerning the Guazapares Property, including the exclusive option,
for a term of four years, to purchase seven of the Guazapares Property
concessions upon payment of $910,000. The total payments for the Company to
acquire and retain 100% ownership of all eight concessions are as follows:
November 30, 2005 - $100,000 (this payment date was extended – see below),
October 31, 2006 - $60,000 (this payment date was extended to February 28, 2007,
then to May 31, 2007 and then to August 31, 2007- see below), August 2, 2007 -
$140,000 (see below), August 2, 2008 - $110,000 and August 2, 2009 -
$500,000.
 
 On
September 19, 2007, Sunburst de Mexico, Mexoro and MRT entered into an agreement
to defer any and all property payments regarding Guazapares, currently owing to
MRT and which would otherwise become due by December 31, 2007, until such time
as Sunburst de Mexico and Mexoro have sufficient funds to make the payments, in
the opinion of the disinterested directors of Mexoro.
 
 Mexoro
agreed to issue 250,000 shares to MRT and/or assignees, in consideration for the
deferral of any and all Guazapares property payments currently outstanding and
those arising on or before December 31, 2007
 
 In
return, Sunburst de Mexico granted MRT a 2.5% NSR and the right to extract from
the Guazapares concessions up to 5,000 tons per month of rock material; this
right will terminate on exercise of the option to purchase the concessions.
Otherwise, MRT retained no interest in the Guazapares Property.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  5.      MINERAL
PROPERTIES (Continued)
  San
Francisco (Guazapares)
 
 MRT
assigned to Sunburst de Mexico, for a term of 60 months, commencing from June
25, 2004 (the “Option Period”), with the consent of the San Francisco
concessions owner Minera Rachasa, S.A. de C.V. (“Minera Rachasa”), MRT’s rights
and obligations acquired under the San Francisco option agreement, including the
option to purchase the San Francisco concessions for a price of $250,000 on June
25, 2009.
 
 To
maintain the option, Sunburst de Mexico assumed the obligation to pay to the San
Francisco owner cumulative annual payments. The payments are: $20,000 on June
25, 2006 (paid); $30,000 on June 25, 2007 (paid); and $40,000 on June 25,
2008.
 
 If the
option is exercised prior to the expiration of the Option Period by payment of
the purchase price of $250,000; the obligation to pay the annual payments will
be terminated. MRT and the San Francisco owner reserved a combined 2.5% NSR. MRT
reserved no other rights on the San Francisco concessions.
 
 San
Antonio (Guazapares)
 
 MRT
assigned to Sunburst de Mexico, with the consent of the San Antonio concessions
owner (Rafael Fernando Astorga Hernández), MRT’s rights and obligations acquired
under the San Antonio option agreement, including the option to purchase the San
Antonio concessions for a price of $500,000, commencing on January 15, 2004, the
signing date of the San Antonio option agreement, and due on January 15,
2010.
 
 To
maintain the option, Sunburst de Mexico assumed the obligation to pay to the San
Antonio owner cumulative annual payments. The remaining payments are: $50,000 on
January 15, 2008 (this payment was deferred to January 31, 2008 and paid) and
$50,000 on January 15, 2009.
 
 If the
option is exercised prior to the expiration of the option period by payment of
the purchase price; the obligation to pay the annual payments will be
terminated. The San Antonio owner reserved the right to extract from the San
Antonio concessions up to 50 tonnes per day of rock material; this right will
terminate on the date of the exercise of the option. MRT and the San Antonio
owner reserved a combined 2.5% NSR to be paid to them. MRT reserved no other
rights on the San Antonio concessions.
 
 Encino
Gordo
 
 On
December 8, 2005, the Company and Sunburst de Mexico entered into the New
Agreement with MRT to exercise their option under the August 18, 2005 sale and
purchase of mining concessions agreement to obtain two mining concessions in the
Encino Gordo region. The New Agreement also provided the Company the option to
obtain three additional concessions in the Encino Gordo region.
 
 The
following are additional material terms of the New Agreement:
 
 (o)
              The
      share option agreement with MRT was
cancelled;
 
 (p)
              The
      Company granted MRT the option to buy all of the outstanding shares of
      Sunburst de Mexico for $100 if the Company failed to transfer $1,500,000
      to Sunburst de Mexico by April 30, 2006. On April 6, 2006, MRT agreed to
      waive its option to purchase the shares of Sunburst de Mexico and also
      waived the Company’s obligation to transfer $1,500,000 to Sunburst de
      Mexico;
 
 (q)
              The
      property agreements were modified to change the net smelter rate to a
      maximum of 2.5% for all properties covered by the agreements. The property
      agreements contained net smelter rates ranging from 0.5% to
      7%;
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  5.      MINERAL
PROPERTIES (Continued)
  (r)
              The
      Company agreed to issue 2,000,000 shares of the Company’s common stock to
      MRT within four months of the date of the signing of the New Agreement.
      These shares were issued to MRT and its assignee at the market value of
      $1.05 per share on February 23, 2006 and $2,100,000 was charged to
      operations for the year ended February 28, 2006. This issuance fulfilled
      the Company’s payment obligations under the previous property
      agreements;
 
 (s)
              The
      Company agreed to issue 1,000,000 additional shares of the Company’s
      common stock to MRT if and when the Cieneguita Property is put into
      production and reaches 85% of production capacity over a 90-day period, as
      defined in the New Agreement; and,
 
 (t)
              The
      operator’s agreement with MRT was
cancelled.
 
 Sunburst
de Mexico purchased two of the Encino Gordo concessions from MRT for a price of
1,000 pesos (approximately US$100), and MRT assigned to Sunburst de Mexico a
first right of refusal to acquire three additional Encino Gordo concessions. The
total payments to acquire 100% of these three additional concessions are as
follows: $10,000 on June 30, 2006 (paid); $25,000 on December 31, 2006 (paid),
$50,000 on December 31, 2007 ($20,000 of this payment was made on January 3,
2008 and the balance was paid on February 29, 2008), $75,000 on December 31,
2008, $125,000 on December 31, 2009 and $200,000 on December 31,
2010.
 
 
 Sahauyacan
 
 On June
21, 2006, Sunburst de Mexico entered into an exploration and sale option
agreement of mining concessions with Minera Emilio, SA de CV for mineral
concessions of the Sahauyacan Property. Minera Emilio granted the Company the
exclusive right to conduct exploration on the Sahauyacan Property and the
Company must pay $282,000 in the following manner: $20,000 on date of signing
agreement (paid); $10,000 due December 1, 2006 (paid); $2,500 per month
effective from August 21, 2006 to July 21, 2007, for a total of $30,000 (paid);
$3,500 per month effective from August 21, 2007 to July 21, 2008 for a total of
$42,000 (the monthly payments have all been paid up to date); $5,000 per month
effective August 21, 2008 to July 21, 2011, for a total of $180,000, when the
balance of the total $282,000 is paid (36 months).
 
 On May
15, 2006, Sunburst de Mexico entered into an exploration contract with Jose
Maria Rascon and Sabino Amador Rascon Polanco and on November 20, 2007 entered
into an exploration contract with Rene Muro Lugo (all three representatives
constitute the “Concessionaires”) for the Segundo Santo Nino concession on the
Sahauyacan Property. Each concession representative owns 33.3% of the total
Segundo Santo Nino title. The Company must pay the Concessionaires a total of
$255,000 for this concession. The total payments to acquire 100% of this
concession are as follows: all payments up to November 15, 2007 totaling $50,000
have been paid, May 15, 2008 - $15,000, November 15, 2008 - $20,000, May 15,
2009 - $20,000, November 15, 2009 - $30,000 and May 15, 2010 -
$120,000.
 
 On
January 25, 2008, Sunburst de Mexico entered into an exploration and option
agreement with Maria Luisa Wong Madrigal for mineral concessions under the “La
Maravilla” project on the Sahauyacan Property. The Company must pay Maria Luisa
Wong Madrigal $600,000 in the following manner: (i) $33,000 – January 25, 2008
(paid); (ii) $33,000 – July 25, 2008; (iii) $34,000 – January 25, 2009; (iv)
$500,000 – at the option to purchase the concession or 36 months – January 25,
2010.
 
 
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  6.
              PROMISSORY
      NOTES
   As at
February 29, 2008, the Company had $1,480,702 (February 28, 2007 - $109,337) of
promissory notes outstanding, comprising of the following:
  During
the twelve months ended February 29, 2008, the Company converted accounts
payable of $465,994 (CHF 565,000) into promissory notes. The notes consist of
one warrant for each CHF 5.00 of notes issued, exercisable at $1.00 each (note
11). The interest rate on the notes is 7.5% p.a. payable semi-annually. The
principal and interest on the notes become due and payable on April 30,
2008.
  As at
February 29, 2008, $1,014,708 of promissory notes are due to related parties and
close associates that bear no interest and have no terms of repayment (see note
13).
   7.
              LOANS
      PAYABLE
  As at
February 29, 2008 there were loans payable in the amount of $98,737, of which
$71,256 is current and $27,481 is long-term. The loans are repayable in monthly
installments of $10,196 including interest ranging from 9.89% to 15.6% per annum
and are partially secured by specified automotive equipment.
  8.
              PREFERRED
      STOCK
  The
Company is authorized to issue 20,000,000 shares of preferred stock. The
Company’s board of directors is authorized to divide the preferred stock into
series, and with respect to each series, to determine the preferences and rights
and qualifications, limitations or restrictions thereof, including the dividend
rights, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, sinking fund provisions, and the number of shares
constituting the series and the designations of such series. The board of
directors could, without stockholder approval, issue preferred stock with voting
and other rights that could adversely affect the voting rights of the holders of
common stock, which issuance could have certain anti-takeover
effects.
  9.
              COMMON
      STOCK
  In the
first two quarters of the year ended February 29, 2008, the Company issued
1,000,000 shares of common stock on the exercise of 1,000,000 warrants where
each warrant was exercisable into shares of common stock at the price of $0.50
per share. The warrants were to expire on June 30, 2007.
 
 In the
second and third quarter of the year ended February 29, 2008, the Company issued
1,000,000 shares of common stock on the exercise of 1,000,000 warrants where
each warrant was exercisable into shares of common stock at the price of $0.75
per share. The warrants were to expire on December 31, 2007.
 
 On
November 7, 2007, the Company issued 670,000 shares of common stock on the
exercise of 670,000 warrants where each warrant was exercisable into shares of
common stock at the price of $1.00 per share. The warrants were to expire on
December 31, 2007.
 
 In the
year ended February 29, 2008, the Company issued 1,174,400 shares of common
stock on the exercise of 1,174,400 warrants where each warrant was exercisable
into shares of common stock at the price of $1.00 per share. The warrants were
to expire on April 30, 2008.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  9.      COMMON
STOCK (Continued)
  On
September 20, 2007, the Company issued 250,000 shares of common stock pursuant
to an agreement in consideration of deferral of any and all Guazapares property
payments currently outstanding and those arising on or before December 31, 2007.
The shares were valued at $1.16 per share, based on the closing quoted market
price on September 18, 2007.
 
 On
September 20, 2007, the Company issued 250,000 shares of common stock pursuant
to Encino Gordo contract. The shares were valued at $1.16 per share, based on
the closing quoted market price on September 18, 2007.
 
 On August
15, 2006, the Company returned to treasury 50,000 shares of common stock that
were issued but not delivered pending payment with respect to the convertible
debt converted into shares of common stock on July 5, 2006.
 
 On August
10, 2006, the Company issued 50,000 shares of common stock on the exercise of
50,000 warrants where each warrant was exercisable into shares of common stock
at a price of $1.00 per share.
 
 On July
5, 2006, the Company issued 5,835,000 shares of common stock on the exercise of
$2,917,500 of convertible debt at a price of $0.50 per share.
 
 On March
4, 2006, the Company agreed to issue 1,651,200 shares of common stock at a price
of $0.25 per share to settle $412,800 in promissory notes payable (note 6). On
April 6, 2006, these shares were issued.
 
 On April
3, 2006 and May 31, 2006 the Company issued 550,000 and 200,000 shares of common
stock respectively pursuant to a private placement unit offering. Units
consisted of one share of common stock and one-half of one warrant. Each full
warrant entitles the investor to purchase an additional share of the Company’s
common stock at a price of $1.00 per share and is exercisable until April 30,
2008.
 
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  10.
              STOCK
      COMPENSATION PROGRAM
  On
February 26, 2007 the board of directors approved the granting of stock options
according to the 2007 Nonqualified Stock Option Plan (the “2007 Option Plan”).
The 2007 Option Plan has the purpose (a) to ensure the retention of the services
of existing executive personnel, key employees, and directors of the Company or
its affiliates; (b) to attract and retain competent new executive personnel, key
employees, consultants and directors; (c) to provide incentive to all such
personnel, employees, consultants and directors to devote their utmost effort
and skill to the advancement and betterment of the Company, by permitting them
to participate in the ownership of the Company and thereby in the success and
increased value of the Company; and (d) allowing vendors, service providers,
consultants, business associates, strategic partners, and others, with or that
the board of directors anticipates will have an important business relationship
with the Company or its affiliates, the opportunity to participate in the
ownership of the Company and thereby to have an interest in the success and
increased value of the Company.
 
 The 2007
Option Plan constitutes a single “omnibus” plan, but is composed of two parts.
The first part is the nonqualified stock option plan (“NQSO Plan”) which
provides grants of nonqualified stock options (“NQSOs”). The second part is the
restricted shares plan (“Restricted Shares Plan”) which provides grants of
restricted shares of Company common stock (“Restricted Shares”). The maximum
number of shares of common stock that may be purchased under the plan is
6,000,000.
 
 Pursuant
to a consulting agreement between the Company and GM Capital Partners Inc. (“GM
Capital”), signed January 31, 2006, the Company granted 5,000,000 warrants (see
note 11). The agreement provided for the provisions of financial public
relations services from December 1, 2005 to November 30, 2007. The fair value of
the 5,000,000 warrants totaled $3,898,000 and was determined using the
Black-Scholes option pricing model using weighted averages: 2.38 year expected
life of the warrants, a volatility factor of 152%, a risk-free rate of 5% and an
assumed dividend rate of 0% The weighted average fair value of the warrant was
$0.78 per warrant, while the weighted average stock price on the dates granted
was $1.00. The fair value was amortized over the 24-month term of the contract
and the Company recorded $487,250 as stock-based compensation expense and an
offsetting credit to additional paid-in capital every quarter until November 30,
2007.
 
 In the
year ended February 29, 2008, the Company awarded 1,915,000 options to purchase
common shares (2007 – 800,000) and recorded stock-based compensation expense of
$939,741 (2007 - $496,000). The weighted average fair value of each option
granted for the year ended February 29, 2008 was $0.71. The following weighted
average assumptions were used for the Black-Scholes option-pricing model used to
value stock options granted in 2008 and 2007:
 
 2008
              
              
              2007Expected
      volatility
              
              
              66.82%
      - 73.37
              %
              
              
              152
              %Weighted-average
      volatility
              
              
              71.32
              %
              
              
              152
              %Expected
      dividend rate
              
              
              -
              
              
              
              -Expected
      life of options in years
              
              
              3 -
      10
              
              
              
              10Risk-free
      rate
              
              
              4.04%
      - 4.91
              %
              
              
              5.00
              %
 
 There
were no capitalized stock-based compensation costs at February 29, 2008 or
February 28, 2007.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
 
  10.           STOCK
COMPENSATION PROGRAM (Continued)
   The
summary of option activity under the stock option plan as of February 29, 2008,
and changes during the period then ended is presented below:
  Weighted-
              
              
              Number
      of
              
              
              Weighted-
              
              
              AggregateAverage
              
              
              Shares
              
              
              Average
              
              
              IntrinsicExercise
              
              
              
              
              
              Remaining
              
              
              ValuePrice
              
              
              
              
              
              ContractualOptions
              
              
              
              
              
              
              
              TermBalance
      at February 28, 2007
              
              $
              0.54
              
              
              
              930,000Options
      granted
              
              
              1.10
              
              
              
              1,915,000Options
      exercised
              
              
              -
              
              
              
              -Options
      cancelled/forfeited
              
              $
              1.24
              
              
              
              (370,000
              )Balance
      at
                February
      29, 2008
              
              $
              0.87
              
              
              
              2,475,000
              
              
              
              7.93
              
              
              $
              222,500Exercisable
      at
                February
      29, 2008
              
              $
              0.72
              
              
              
              1,410,000
              
              
              
              7.70
              
              
              $
              222,500
 
  The
weighted-average grant-date fair value of options granted during the twelve
months ended February 29, 2008 and February 28, 2007 was $0.71 and $nil,
respectively.
   A summary
of the status of the Company’s nonvested options as of February 29, 2008, and
changes during the twelve month period ended February 29, 2008, is presented
below:
  
 Weighted-averagegrant-dateNon-vested
      options
              
              
              Shares
              
              fair
      valueNonvested
      at February 28, 2007
              
              200,000
              
              $
      1.24Granted
              
              1,915,000
              
              0.88Vested
              
              
              (700,000)
              
              1.25Cancelled/forfeited
              
              
              (350,000)
              
              0.91Nonvested
      at February 29, 2008
              
              1,065,000
              
              $
      0.76
 
  As of
February 29, 2008, there was an estimated $728,142 of total unrecognized
compensation cost related to nonvested share-based compensation arrangements
granted under the NQSO Plan. That cost is expected to be recognized over a
weighted-average period of approximately 1.64 years.
   
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  11.
              WARRANTS
  As at
February 29, 2008, the Company had a total of 4,486,100 (2007 – 8,217,500)
warrants outstanding to purchase common stock. Each warrant entitles the holder
to purchase one share of the Company’s common stock. The Company has reserved
4,486,100 shares of common stock in the event that these warrants are
exercised.
 
 During
the year ended February 29, 2008, the Company issued 113,000 warrants under a
‘Promissory Note and Warrant Purchase Agreement’, where one warrant is issued
for each CHF5.00 of promissory notes issued (note 6). The warrants can be
exercised at any time beginning on April 1, 2008 and prior to January 31, 2010.
The fair value of the 113,000 warrants totaled $64,000 and was determined using
the Black-Scholes option pricing model using weighted averages: 1.83 years
expected life of the warrants, a volatility factor of 68%, a risk-free rate of
3.66% and an assumed dividend rate of 0%. The weighted average fair value of the
warrant was $0.57 per warrant, while the weighted average stock price on the
date granted was $1.26. Stock-based compensation for these warrants of $64,000
is being amortized over the six month term of the promissory notes starting on
October 17, 2007.
 
 At
February 28, 2007, the warrants included 1,000,000 Series A Warrants exercisable
at $0.50 per share, 1,000,000 Series B Warrants exercisable at $0.75 per share,
1,000,000 Series C Warrants exercisable at $1.00 per share, 1,000,000 Series D
Warrants exercisable at $1.25 per share, and 1,000,000 Series E Warrants
exercisable at $1.50 per share; of which all were exercisable at the option of
the holder, had no redemption features, and are settled on a physical basis. The
Series A Warrants were fully vested upon issuance. At February 29, 2008, there
were 330,000 Series C Warrants, 1,000,000 Series D Warrants and 1,000,000 Series
E Warrants outstanding. The Company received stock subscriptions of $330,000,
which were settled with accounts payable for the 330,000 Series C Warrants on
December 31, 2007. On November 6, 2007, British Columbia Securities Exchange
Commission (‘BCSC’) issued a cease trade order (‘CTO’) to the Company for not
filing certain regulatory reports. The Company will issue shares for the Series
C Warrants once the CTO has been lifted. The remaining series of warrants will
become exercisable only at the time that the immediately preceding series has
been fully exercised.
 
 Unless
terminated earlier as a result of failure to vest, the Series D and Series E
Warrants will each expire on December 31, 2008. The fair value of the 5,000,000
warrants totaled $3,898,000 and was determined using the Black-Scholes option
pricing model using weighted averages: 2.38 year expected life of the warrants,
a volatility factor of 152%, a risk-free rate of 5% and an assumed dividend rate
of 0% The weighted average fair value of the warrant was $0.78 per warrant,
while the weighted average stock price on the dates granted was $1.00. The fair
value was amortized over the 24-month term of the contract and the Company
recorded $487,250 as stock-based compensation expense and an offsetting credit
to additional paid-in capital every quarter until November 30,
2007.
 
 The
Company has also issued 2,917,500 warrants exercisable at $1.00 each pursuant to
the issuance of convertible debentures. These warrants expire on April 30, 2008,
are redeemable by the Company, at $0.01 per share, in the event the Company’s
common stock closes with a bid price, on average, over $3.00 per share for a
consecutive 20 day period and are settled on a physical basis. On August 10,
2006, 50,000 warrants were exercised into 50,000 shares of common stock at a
price of $1.00 per share. On August 15, 2006, 25,000 warrants were cancelled due
to non-payment of funds with respect to a convertible debt subscription in the
amount of $25,000.
 
 The
Company has also issued 375,000 warrants exercisable at $1.00 each pursuant to
the issuance of a private placement unit offering. These warrants expire on
April 30, 2008, are redeemable by the Company, at $0.01 per share, in the event
the Company’s common stock closes with a bid price, on average, over $3.00 per
share for a consecutive 20 day period and are settled on a physical
basis.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  11.           WARRANTS
(Continued)
  The
following table summarizes the continuity of the Company’s share purchase
warrants:
 
 Number
      of
                Warrants
              Weighted
      average exercise priceBalance,
      February 28, 2005
              -
              
              -Issued
              5,652,000
              $
              1.00Balance,
      February 28, 2006
              5,652,000
              
              1.00Issued
              2,640,500
              
              1.00Cancelled
              (25,000)
              
              1.00Exercised
              (50,000)
              
              1.00Balance,
      February 28, 2007
              8,217,500
              $
              1.00Issued
              113,000
              
              1.00Cancelled
              -
              
              -Exercised
              (3,844,400)
              
              0.80-Balance,
      February 29, 2008
              4,486,100
              $
              1.17
 
 
 As at
February 29, 2008, the following share purchase warrants were
outstanding:
 
 
 Number
      of Warrants
              Exercise
      Price
              
              Expiry
      Date330,000
              $
      1.00
              
              December
      31, 20072,043,100
              $
      1.00
              
              April
      30, 20081,000,000
              $
      1.25
              
              December
      31, 20081,000,000
              $
      1.50
              
              December
      31, 2008113,000
              $
      1.00
              
              December
      31, 20104,486,100
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  12.
              RELATED
      PARTY TRANSACTIONS
  The
Company paid management fees of $258,701 (2007 - $191,500) to certain officers
and directors and to companies controlled by directors. The Company paid $90,066
(2007 - $44,418) to certain officers and directors and to companies controlled
by directors for travel, office and other related expenses.
 
 The
Company paid consulting fees of $55,890 (2007 - $nil) to a company owned by a
former officer and director.
 
 As at
February 29, 2008, accounts payable included $48,000 (2007 - $8,711) owing to an
officer and director of the Company and $71,426 (2007 - $11,514) owing to a
company controlled by a director. In addition, promissory notes of $1,014,708
(2007 - $109,337) were owed to directors and companies controlled by directors
(note 6).
 
 All
related party transactions are in the normal course of business at the exchange
amount agreed to by each party.
  13.
              INCOME
      TAXES
  Deferred
income taxes reflect the tax effect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for tax purposes. The components of the net deferred income tax
assets are as follows:
 
 2008
              
              2007Deferred
      income tax assetsEquipment
              $
              33,500
              $
              -Net
      operating loss and credit carry forwards
              
              4,271,900
              
              2,587,400Gross
      deferred tax assets
              
              4,305,400
              
              2,587,400Valuation
      allowance
              
              (4,305,400)
              
              (2,587,400)$
              -
              $
              -
 
 As at
February 29, 2008, the Company's net operating loss carry-forwards for income
tax purposes were approximately $11,586,174 (2007 - $6,567,000). If not
utilized, they will start to expire in 2020.
  14.
              COMMITMENTS
  During
the year ended February 28, 2007 the Company entered into an agreement for the
lease of new office premises for a two-year period, commencing on September 15,
2006 and ending on September 14, 2008. The Company is committed to spend
approximately $22,800 under this arrangement.
  
  MEXORO
MINERALS LTD.
 (An
Exploration Stage Company)
 Notes
to the Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 Years
Ended February 29, 2008 and February 28, 2007
  15.
              SUBSEQUENT
      EVENTS
  (a)
              Stock
      Options
 
 Subsequent
to February 29, 2008, the Company granted 400,000 stock options to employees and
consultants at a price of $0.52 per share. These stock options vest over 30
months with 1/6 vested at the date of grant and 1/6 every six months
thereafter.
 
 The
Company also granted 700,000 stock options to officers and directors at a price
of $0.52 per share. These stock options vest over 30 months with 1/6 vested at
the date of grant and 1/6 every six months thereafter.
 
 (b)
              Share
      Stock Awards
 
 The
Company has agreed to grant share stock awards to officers and directors for
each newly discovered reserves of 1,000,000 oz AU (or Au-Ag equivalent) to a
maximum of 400,000 shares.
 
 (c)
              Change
      in Directors
 
 On April
7, 2008, Mr. Robert Knight resigned as a director of the Company. Mr. Steven
Sanders was appointed as a director to fill the vacancy created by Mr. Robert
Knight’s resignation from the Board of Directors.
  (d)Change in Principal
Officer
  On April
14, 2008, Mr. Robert Knight resigned from his position as president and chief
financial officer of the Company. The Company’s directors appointed Mr.
 Mario
Ayub as president of the Company to fill the vacancy created by Mr. Robert
Knight’s resignation.
  (e)Stock subscriptions
  On April 25, 2008, 330,000
shares of common stock were issued to settle the stock
subscription.
  Subsequent to February 29, 2008,
the Company converted $535,500 of debt into subscription proceeds. The
subscribers to the subscription proceeds have agreed to purchase one unit for each $1.00 of
debt. Each unit consists of two shares of Company’s common stock and one warrant
each exercisable at $0.75, which expire in four years.
  (f)Strategic Alliance
Agreement
  On May 5,
2008, the Company signed a letter of intent (‘LOI’) to enter into a strategic
alliance with Paramount Gold and Silver Corp. (‘Paramount’). The agreement calls
for Paramount to invest a minimum of $4 million and maximum of $6 million into
the Company, fixed at a price of $0.50 per unit by June 23, 2008. Each unit will
consist of 1 common share of Mexoro and one half warrant to purchase additional
common shares at a price of $0.75 per share exercisable immediately for a period
of four years from closing. Should Paramount subscribe for the maximum, it would
receive 12 million shares and 6 million warrants in the offering. The closing
price of Mexoro shares quoted on the OTCBB on May 2, 2008 was $0.59 per share.
The letter of intent contemplates that Paramount will provide an immediate cash
infusion into Mexoro in the amount of $500,000 in the form of a secured
convertible debenture bearing interest at a rate of 8% per annum for a term of
one year. Paramount will have the option to convert the debt into units as part
of the overall financing. Paramount will retain the first right of refusal on
all future financings of Mexoro for a period of four years.
 
 
 (d)
              Change
      in Principal Officer
 
 On April
14, 2008, Mr. Robert Knight resigned from his position as president and chief
financial officer of the Company. The Company’s directors appointed Mr. Mario
Ayub as president of the Company to fill the vacancy created by Mr. Robert
Knight’s resignation.
 
 (i)
              On
      May 5, 2008, the Company signed a letter of intent (‘LOI’) to enter into a
      strategic alliance with Paramount Gold and Silver Corp. (‘Paramount’). The
      agreement calls for Paramount to invest a minimum of $4 million and
      maximum of $6 million into the Company, fixed at a price of $0.50 per unit
      by June 23, 2008. Each unit will consist of 1 common share of Mexoro and
      one half warrant to purchase additional common shares at a price of $0.75
      per share exercisable immediately for a period of four years from closing.
      Should Paramount subscribe for the maximum, it would receive 12 million
      shares and 6 million warrants in the offering. The closing price of Mexoro
      shares quoted on the OTCBB on May 2, 2008 was $0.59 per share. The letter
      of intent contemplates that Paramount will provide an immediate cash
      infusion into Mexoro in the amount of $500,000 in the form of a secured
      convertible debenture bearing interest at a rate of 8% per annum for a
      term of one year. Paramount will have the option to convert the debt into
      units as part of the overall financing. Paramount will retain the first
      right of refusal on all future financings of Mexoro for a period of four
      years.
 
 (e)
              Stock
      subscriptions
 
 On April 25, 2008, 330,000 shares of
common stock were issued to settle the stock subscription.
 
 Subsequent
to February 29, 2008, the Company converted $535,500 of debt into subscription
proceeds. The subscribers to the subscription proceeds have agreed to purchase
one unit for each $1.00 of debt. Each unit consists of two shares of Company’s
common stock and one warrant each exercisable at $0.75, which expire in four
years.





ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.





On
December 6, 2007, Pannell Kerr Forster (registered with the PCAOB as “Smythe
Ratcliffe”), 7th Floor, Marine Building, 355 Burrard Street, Vancouver, BC
Canada V6C 2G8, resigned as the auditor for Mexoro.





The
reports of Smythe Ratcliffe on the Company’s financial statements for the past
two fiscal years did not contain any adverse opinion or disclaimer of opinion,
and were not qualified or modified as to uncertainty, audit scope, or accounting
principles. During the Company’s two most recent fiscal years and any subsequent
interim period up to and including the date of Smythe Ratcliffe’s resignation,
there have been no disagreements with Smythe Ratcliffe on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to the satisfaction of Smythe
Ratcliffe, would have caused them to make reference thereto in their report on
the financial statements for such periods.





On
December 7, 2007, the board of directors of the Company appointed the firm of
Meyler & Company, LLC (“Meyler & Company”), One Arin Park, 1715 Highway
35, Middletown, NJ 07748, as the independent auditor of the Company for the
fiscal year ending February 29, 2008.





During
the two most recent fiscal years or subsequent interim period, neither the
Company, nor anyone on its behalf, consulted with Meyler & Company regarding
the application of accounting principles to a specific transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, nor did the entity of Meyler & Company,
provide advice to the Company, either written or oral, that was an important
factor considered by the Company in reaching a decision as to the accounting,
auditing or financial reporting issue. Further, during the Company's two most
recent fiscal years or subsequent interim period, the Company has not consulted
the entity of Meyler & Company, on any matter that was the subject of a
disagreement or a reportable event.








ITEM
8A.  DISCLOSURE CONTROLS AND PROCEDURES.





The Company maintains disclosure
controls and procedures that are designed to ensure that information required to
be disclosed in its SEC reports are recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to the Company’s management, including its president
and acting principal financialofficer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, as thecompaniesare designed to do, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.





For the fiscal year ending February 28,
2007, our independent registered public accounting firm reported to our board of
directors certain conditions involving internal controls which they believe
represented material weaknesses in our internal control environment. These
matters were with regard to insufficient personnel resources within the
accounting function, based on the size and complexity of the organization, to
affect timely financial close process and to effectively evaluate and resolve
certain routine and non-routine and/or complex accounting transactions. A
material weakness is a significant deficiency, or combination of significant
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. Significant deficiencies are control issues that could have a
significant adverse effect on the ability to record, process, summarize and
report financial data in the financial statements.





Our management and the board of
directors agreed with our independent registered public accounting firm on the
matter raised in their report and agreed to address the material
weakness.





To remediate our internal control
weaknesses, management implemented the following measures: the Company has added
sufficient accounting personnel to properly segregate duties and to effect a
timely, accurate preparation of the financial statements.





There
were no other changes in internal controls over financial reporting, known to
the president or acting principal financial officer that occurred during the
period covered by this report that has materially affected, or is likely to
materially effect, the Company’s internal control over financial
reporting.





This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management's report
in this annual report.








ITEM
8B. OTHER INFORMATION.





Not applicable.





PART
III





ITEM
9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.





The
directors and executive officers currently serving the Company are as
follows:





Name
            Age
            TenureMario
      Ayub
            54
            COO
      and director since May 2005
              President
      since April 2008Francisco
      Quiroz
            45
            Director
      since February 2008Steven
      A. Sanders
            62
            Director
      since March 2008





The
directors named above will serve until the next annual meeting of the Company’s
stockholders. Thereafter, directors will be elected for one-year terms at the
annual stockholders' meeting. Officers will hold their positions at the pleasure
of the board of directors, absent any employment agreement, of which none
currently exists or is contemplated. There is no arrangement, plan or
understanding between any of the directors or officers of the Company and any
other person pursuant to which any director or officer was or is to be selected
as a director or officer, and there is no arrangement, plan or understanding as
to whether non-management shareholders will exercise their voting rights to
continue to elect the current directors to the Company's board. There are also
no arrangements, agreements or understandings between non-management
shareholders and management under which non-management shareholders may directly
or indirectly participate in or influence the management of the Company's
affairs. Officers are elected by the board of directors and serve until their
successors are appointed by the board of directors. Biographical resumes of each
officer and director are as follows:




Mario
Ayub







Mr. Ayub
has served as a director of the Company since May 25, 2004, chief operating
officer since May 2005 and president since April 14, 2008. He has served as the
president of MRT, a Mexican company, since 1994. From 1997 to 2001, he was a
director on the board of Metalline Mining Company (OTC-BB: MMGG.OB), a US
reporting company, and Sheffield Resources, a Canadian reporting company trading
on the TSX-V exchange. He is a past president of the Chihuahua Mining
Association and of the National Miners Association of Mexico. He graduated in
1976 from the Universidad Iberoamericana in Mexico City with a degree in
chemical engineering and he has completed post-graduate studies in metallurgy at
Comision de Fomento Minero and South Dakota University. Mr. Ayub will contribute approximately40hours per week (approximately65% of his time) to the business and
operations of Mexoro.




Francisco Ramon Quiroz
Luna







Mr.
Quiroz has served as a director of the Company since February 20, 2008 and as
vice president of exploration since March 1, 2007. Prior to joining Mexoro
Minerals, Mr. Quiroz worked for BHP Billiton for 17 years. In his last position
with BHP he was program leader for BHP-Billiton managing all aspects of
exploration business in China and prior to that he was the senior project
geologist for BHP-Billiton in Australia. He has worked as an exploration
geologist, project geologist, project manager and program leader on a variety of
projects and mining properties in Mexico, United States, Canada, Central and
South America, Australia, China, Mongolia and Kazakhstan. For over 20 years, Mr.
Quiroz has overseen the design, management and execution of numerous mineral
exploration programs with expertise in planning, contract negotiations, staff
training, construction supervision and data interpretation.





Mr.
Quiroz’s expertise includes the structuring and implementation of successful
exploration strategies, project reviews, mineral acquisitions and management of
local and expatriate exploration teams on a wide variety of cultures. Mr. Quiroz
obtained a Masters in Science in the field of Economic Geology from the
University of Arizona in Tucson, Arizona, USA and a Bachelors of Science in
Geology from the Universidad Autonoma de Chihuahua in Chihuahua, Chihuahua,
Mexico. Mr. Quiroz will contribute approximately 60 hours per week
(approximately 100% of his time) to the business and operations of
Mexoro




Steven A.
Sanders







Mr.
Sanders was appointed to the Company’s board of directors on April 7, 2008. Mr.
Sanders has a strong back ground in securities and corporate law having
practiced in these areas for over 25 years. He has served as a director and
secretary of Genesis Gold Corporation since 2005. In 2007, he was appointed as a
director of Helijet International Inc. and also serves as a director of Op-Tech
Environmental Services, Inc., a position he has held since 1991. He is currently
a partner in the law firm Sanders, Ortoli, Vaughn-Flam and Rosenstadt LLP. Prior
to that he has been of counsel to the New York law firm Rubin, Bailin, Ortoli
LLP. From 2001 to 2003 he was counsel to the law firm of Spitzer Feldman PC. Mr.
Sanders served as a partner in the law firm of Beckman, Millman Sanders LLP from
1997 to 2000. Mr. Sanders is a director of the Roundabout Theatre (the largest
not-for-profit theatre in North America), Town Hall, New York City and the New
York Theatre Ballet. Mr. Sanders will contribute approximately 20 hours per week
(approximately 30% of his time) to the business and operations of the
Company.








Audit
Committee




As our
company is relatively small and a developmental company, we have neither an
audit committee of the Board of Directors nor an “audit committee financial
expert”, as such term is defined under the Securities Exchange Act. We believe
that the members of our Board of Directors are collectively capable of analyzing
and evaluating our financial statements and understanding our internal controls
and procedures, including those pertaining to financial reporting.  In
addition, we believe that retaining an independent Director who would qualify as
an “audit committee financial expert” would be overly costly and burdensome and
is not warranted in light of our current size.




Code
of Ethics




Our Board
of Directors adopted a code of business conduct and ethics policy, the “Code of
Ethics”. The Code of Ethics allows us to focus our Board of Directors and each
Director and officer on areas of ethical risk, provide guidance to Directors to
help them recognize and deal with ethical issues, provide mechanisms to report
unethical conduct and help foster a culture of honesty and
accountability.




Section
16(a) Beneficial Ownership Reporting Compliance




Section
16(a) of the Exchange Act requires our directors, officers (including a person
performing a principal policy-making function) and persons who own more than 10%
of a registered class of our equity securities to file with the Commission
initial reports of ownership and reports of changes in ownership of our common
stock and other equity securities of ours. Directors, officers and 10% holders
are required by Commission regulations to send us copies of all of the Section
16(a) reports they file. Based solely upon a review of the copies of the forms
sent to us and the representations made by the reporting persons to us, we
believe that during the fiscal year ended December 31, 2007, our directors,
officers and 10% holders complied with the filing requirements under Section
16(a) of the Exchange Act.





ITEM
10.  EXECUTIVE COMPENSATION.





The
following table sets forth executive compensation for fiscal years ended
February 29 and 28, 2008, 2007 and 2006. We have not paid any salaries or
bonuses to any of our officers from our inception through the date hereof. We
refer to all of these officers collectively as our "named executive
officers".





Summary Compensation Table





Name
      And Principal Position
            Fiscal
      year Ended February 28 and 29
            Salary
            Bonus
            Stock
      Awards ($)
            Securities
      Underlying Options
            Options
      Awards (Value of Options) ($) (7)
            Total
      CompensationMario
      Ayub
              President
              COO,
      Director
            2008
              2007
              2006
            72,000
              $86,850(1)
              $27,000(2)
            --
              --
              --
            --
              --
              --
            250,000
              --
              200,000
            228,530
              --
              248,000
            $300,530
              $86,850
              $275,000Francisco
      Quiroz
              VP
      Exploration,
              Director
            2008
              2007
              2006
            $120,000
              --
              --
            --
              --
              --
            --
              --
              --
            150,000
              --
              --
            140,875
              --
              --
            $260,875
              --
              --Robert
      Knight, Former CEO, Former director
            2008
              2007
              2006
            $60,000
              $60,000
              $15,000
            --
              --
              --
            --
              --
              --
            250,000
              --
              200,000
            228,530
              --
              248,000
            288,530
              $60,000
              $263,000Tracy
      A. Moore, Former CFO, Former director
            2008
              2007
              2006
            $48,797(3)
              $66,458(4)
              $106,032(5)
            --
              --
              --
            --
              --
              --
            --
              --
              200,000
            182,824
              --
              248,000
            $235,084
              $66,458
              $354,032Terry
      Fields, Former CEO and President
            2008
              2007
              2006
            --
              --
              $15,000
            --
              --
              --
            --
              --
              --
            --
              --
              --
            --
              --
              --
            --
              --
              --Kurt
      Bordian,
              Former
      CFO
            2008
              2007
              2006
            $25,500
              $37,200(6)
              $11,449
            --
              --
              --
            --
              --
              --
            200,000
              --
              100,000
            182,824
              --
              124,000
            $208,324
              $37,200
              $135,449Salil
      Dhaumya
              Former
      CFO
            2008
              2007
              2006
            $3,833
              --
              --
            --
              --
              --
            --
              --
              --
            175,000
              --
              --
            172,000
              --
              --
            175,833
              --
              --





(1)
            Includes
      $32,850 paid to MRT for rent and office services. This amount is
      considered to be indirect compensation to Mr. Ayub because he controls
      MRT. We paid $950 per month for office rent and $5,000 per month for
      office services on a month to month basis from March to August 2006. We
      now maintain an office in a separate location that was leased for two
      years, commencing on September 15, 2006 with a $900 monthly
      rent.





(2)
            Includes
      $15,000 paid to MRT for rent and office services. MRT was paid $5,000 per
      month for office services. This amount is considered to be indirect
      compensation to Mr. Ayub because he controls
  MRT.





(3)
            Includes
      administrative fees till November 8, 2007 and consultant’s fee for the
      remainder of the fiscal year to MCSI. This amount is considered to be
      indirect compensation to Mr. Moore because he is a shareholder of
      MCSI.





(4)
            Includes
      $4,248 (C$4,800) paid to MCSI for rent and office services. MCSI was paid
      C$400 per month for office services. This amount is considered to be
      indirect compensation to Mr. Moore because he is a shareholder of
      MCSI.





(5)
            Includes
      $15,000 salary which Mr. Moore received as chief financial officer of
      Mexoro, as well as compensation he received from consulting work done for
      Mexoro during the fiscal year ended February 28, 2006. For the months of
      July and August of 2005, Mr. Moore received 10,000 shares of common stock
      of Mexoro, which were valued at a price of $1.00 per share, for consulting
      services. For September, October, November, and December of 2005, Mr.
      Moore received 20,000 shares, valued at a price of $4.00 per share, for
      consulting services he rendered. Mr. Moore’s total consulting compensation
      for July 2005 through December 2005 was valued at $90,000. Mr. Moore was
      also the Company’s Chief Operating Officer from June 2005 through December
      2005.





Includes
$1,032 (C$1,200) paid to MCSI for rent and office services. MCSI was paid C$400
per month for office services. This amount is considered to be indirect
compensation to Mr. Moore because he is a shareholder of MCSI.





(6)
            Mr.
      Bordian was appointed CFO effective February 1, 2007 and was paid $5,300
      per month until his resignation in June 2007. Prior to that, Mr. Bordian
      was paid fees for accounting and administrative
  services.





(7)
            See
      the “Options Grants During the Last Fiscal Year” section below for how
      this value was determined.








The
following table demonstrates the outstanding equity awards as at February 29,
2008:





Name
            Securities
      Acquired on Exercise (#)
            Aggregate
      Value Realized ($)
            Unexercised
      Options/SARs at Financial Year-End (#) Exercisable/
              Unexercisable
            Value
      of Unexercised In-the-Money Options/SARs at Financial Year-End ($)
      Exercisable/
              Unexercisable
            Option
      Exercise Price ($)
            Option
      Expiration DateRobert
      Knight
            Nil
            Nil
            200,000/nil
            100,000/nil
            0.50
            2/27/2016Mario
      Ayub
            Nil
            Nil
            200,000/nil
            100,000/nil
            0.50
            2/27/2016Robert
      Knight
            Nil
            Nil
            Nil/250,000
            Nil/nil
            1.15
            4/16/2017Mario
      Ayub
            Nil
            Nil
            Nil/250,000
            Nil/nil
            1.15
            4/16/2017Francisco
      Quiroz
            Nil
            Nil
            Nil/150,000
            Nil/nil
            1.04
            4/16/2017





We have
no written employment agreements with our officers and one with one of our
directors, Mr. Quiroz. Compensation was determined after discussion about
expected time commitments, remuneration paid by comparable organizations and the
flexibility provided to the Company by not having extended terms and other terms
typical of employment agreements. We have no plans or packages providing for
compensation of officers after resignation or retirement.





Options
Granted During the Last Fiscal Year





On April
7, 2008, the board of directors approved the granted of stock option according
to the 2008 Nonqualified Stock Option Plan (“2008 Option Plan”) whereby the
board is authorized to grant to employees and other related persons stock
options to purchase an aggregate of up to 6,000,000 shares of the Company's
common stock. Subject to the adoption of the 2008 Option Plan, all of the
options were granted and vest, pursuant to the terms of the 2008 Option Plan in
six equal installments, with the first installment vesting at the date of grant,
the second installment vesting October 7, 2008, the third installment vesting
April 7, 2009, the fourth installment vesting October 7, 2009, the fifth
installment vesting April 7, 2010 and the last installment vesting October 7,
2010. As of February 29, 2008, the Company had not granted any options under the
2008 Option Plan.




Fiscal
2007







On
February 26, 2007, the board of directors approved the granting of stock options
according to the 2007 Nonqualified Stock Option Plan (the “2007 Option Plan”).
The 2007 Option Plan has the purpose (a) to ensure the retention of the services
of existing executive personnel, key employees, and directors of the Company or
its affiliates; (b) to attract and retain competent new executive personnel, key
employees, consultants and directors; (c) to provide incentive to all such
personnel, employees, consultants and directors to devote their utmost effort
and skill to the advancement and betterment of the Company, by permitting them
to participate in the ownership of the Company and thereby in the success and
increased value of the Company; and (d) allowing vendors, service providers,
consultants, business associates, strategic partners, and others, with or that
the board of directors anticipates will have an important business relationship
with the Company or its affiliates, the opportunity to participate in the
ownership of the Company and thereby to have an interest in the success and
increased value of the Company.





The 2007
Option Plan constitutes a single “omnibus” plan, but is composed of two parts.
The first part is the nonqualified stock option plan (“NQSO Plan”) which
provides grants of nonqualified stock options (“NQSOs”). The second part is the
restricted shares plan (“Restricted Shares Plan”) which provides grants of
restricted shares of Company common stock (“Restricted Shares”). The maximum
number of shares of common stock that may be purchased under the plan is
6,000,000.





In fiscal
2007, options were granted as follows:





·
            On
      March 1, 2007, the Company granted 660,000 NQSOs to employees and
      consultants under the 2007 Option Plan at a price of $1.04 per common
      stock for a period of three years.





·
            On
      April 16, 2007, the Company granted 900,000 NQSOs to officers and
      directors under the 2007 Option Plan at a price of $1.15 per common stock
      for a period of three years.





·
            On
      August 15, 2007, the Company granted 75,000 NQSOs to an employee under the
      2007 Option Plan at a price of $0.75 per common stock for a period of
      three years.





·
            On
      September 1, 2007, the Company granted 105,000 NQSOs to employees under
      the 2007 Option Plan at a price of $1.05 per common stock for a period of
      three years.





·
            On
      October 15, 2007 the Company granted 150,000 NQSOs to a former officer
      under the 2007 Option Plan at a price of $1.33 per common stock for a
      period of three years. These shares were subsequently cancelled when the
      officer resigned in November 2007.





·
            On
      December 21, 2007, the Company granted 25,000 NQSOs to a consultant under
      the 2007 Option Plan at a price of $0.90 per common stock for a period of
      three years.








The fair
value of the 900,000 options granted to directors and officers was determined
using the Black-Scholes option pricing model using a ten-year expected life of
the option, a volatility factor of 152%, a risk-free rate of 5% and no assumed
dividend rate. The options were issued as follows:





Name
            Title/Position
            Number
      of OptionsRobert
      Knight
            Former
      CEO, Former Director
            250,000
      (1)Mario
      Ayub
            President,
      COO, Director
            250,000
      (1)Tracy
      Moore
            Former
      CFO, Former Director
            200,000
      (2)Kurt
      Bordian
            Former
      CFO
            200,000
      (3)





(1) These
options vest based on the following schedule: (a) 41,667 on April 16, 2006; (b)
41,667 on October 16, 2006; (c) 41,667 on April 16, 2007; (d) 41,667 on October
16, 2007; (e) 33,333 on April 16, 2009 and (f) 33,333 on October 16,
2009.


(2) These
options vest based on the following schedule: (a) 33,333 on April 16, 2007; (b)
33,333 on October 16, 2007; (c) 33,333 on April 16, 2008; (d) 33,333 on October
16, 2008; (e) 33,333 on April 16, 2009 and (f) 33,333 on October 16,
2009.


(3) Mr.
Bordian’s options terminated 3 months after his consulting contract
ended..







Fiscal
2006







On
February 27, 2006, the Company granted 800,000 ISOs under the ISO Plan to
directors, officers and consultants at a price of $0.50 per common stock for a
period of ten years. The ISOs vest in four equal installments, at the time of
the grant and then every six months thereafter. Compensation cost, being the
fair value of the options, is calculated to be $982,000 of which $248,000 is
expensed on the date of issue and as the remainder vests.





The fair
value of the 800,000 options was determined using the Black-Scholes option
pricing model using a ten-year expected life of the option, a volatility factor
of 152%, a risk-free rate of 5% and no assumed dividend rate. The options were
issued as follows:





Name
            Title/Position
            Number
      of OptionsRobert
      Knight
            Former
      CEO, Former Director
            200,000
      (1)Tracy
      Moore
            Former
      CFO, Former Director
            200,000
      (1)Mario
      Ayub
            President  &
      COO, Director
            200,000
      (1)





(1) These
options vest based on the following schedule: (a) 50,000 on February 27, 2006;
(b) 50,000 on August 27, 2006; (c) 50,000 on February 27, 2007 and (d) 50,000 on
August 27, 2007.





Two
consultants were issued 100,000 options each. One such consultant, Kurt Bordian,
was CFO of the Company from February 2007 to June 2007.








Aggregate Option Exercises in Last Fiscal Year





None of
the named executive officers exercised options during the year ended February
29, 2008.





Director
Compensation





We do not
currently compensate our directors for their services as directors. Directors
are reimbursed for their reasonable out-of-pocket expenses incurred while
attending board or committee meetings.





Employment
Agreements





In the
year ended February 29, 2008, the Company entered into the following
agreements:





(1)
            Employment
      agreement between the Company and Francisco Quiroz of calle Las Matrinas
      6510, colonia Haciendas del Valle C.P. 31217, Chihuahua, Chihuahua,
      Mexico, dated March 1, 2007. Mr. Quiroz is hired as the Company’s vice
      president of exploration for an initial term of three years, until
      February 28, 2010, unless terminated earlier, with an annual salary of
      $110,000 paid by Sunburst de Mexico. The Company granted Mr. Quiroz
      150,000 stock options at a 10% discount to market price on the day of
      acceptance, vesting over a two and a half year period (25,000 shares semi
      annually) commencing February 19, 2007 and ending August 19,
      2009.





(2)
            Employment
      agreement between the Company and Juan Miranda Aliaga of Av Andres Avelino
      Caceres #010, Santa Lucia Puno, Peru dated August 15, 2007. Mr. Aliaga is
      hired as a geological consultant for an initial term of three years, until
      August 31, 2010, unless terminated earlier, with a monthly salary of
      $5,500 paid by the Company. The Company granted Mr. Aliaga 75,000 stock
      options at a price of $0.75, with the options vesting over a two and a
      half year period (12,500 shares semi annually) commencing February 15,
      2008 and ending August 15, 2010.





(3)
            Employment
      agreement between the Company and Ademir Durand of calle Yaracmarca Mz. L3
      Lte. 44 Los Olivos, Lima, Peru dated August 22, 2007. Mr. Durand is hired
      as a geological consultant for an initial term of three years, until
      August 31, 2010, unless terminated earlier, with a monthly salary of
      $5,000 paid by the Company. The Company granted Mr. Durand 75,000 stock
      options at a price of $1.05, with the options vesting over a two and a
      half year period (12,500 shares semi annually) commencing September 1,
      2007 and ending February 1, 2010.





(4)
            Employment
      agreement between the Company and Ivette Hilario Cabello of Avenida
      Federico R. Recavarren 435, Miraflores, Lima, Peru, dated August 22, 2007.
      Ms. Cabello is hired as a geological consultant for an initial term of
      three years, until August 31, 2010, unless terminated earlier, with a
      monthly salary of $3,500 paid by the Company. The Company granted Ms.
      Cabello 30,000 stock options at a price of $1.05 with the options vesting
      over a two and a half year period (5,000 shares semi annually) commencing
      September 1, 2007 and ending February 1,
2010.














ITEM 11.  SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.





The
following table sets forth information regarding the beneficial ownership of our
common stock as of February 29, 2008. The information in this table provides the
ownership information for each person known by us to be the beneficial owner of
more than 5% of our common stock; each of our directors; each of our executive
officers; and our executive officers and directors as a group.





Beneficial
ownership has been determined in accordance with the rules and regulations of
the SEC and includes voting or investment power with respect to the shares.
Unless otherwise indicated, the persons named in the table below have sole
voting and investment power with respect to the number of shares indicated as
beneficially owned by them. Common stock beneficially owned and percentage
ownership is based on 25,380,502 shares outstanding on February 29, 2008, and
assuming the exercise of any options, which are presently exercisable or will
become exercisable within 60 days after February 29, 2008.





Name
      and Address
            Amount
      and Nature of Beneficial Owner
            Percent
      of ClassMario
      Ayub(1)
              Pascual
      Orozco # 2117-A
              Chihuahua,
      Chih. 31310
              Mexico
            2,276,666(2)
            8.97%Francisco
      Quiroz (1)
              Calle
      Las Matrinas 6510
              Colonia
      Haciendas del Valle
              CP
      31217
              Chihuahua,
      Mexico
            83.333(3)
            0.33%Steven
      A. Sanders (1)
              431
      East 20th
      Street
              New
      York, New York
              10010
            131,000(4)
            0.52%All
      officers and directors as a group (3 in number)
            2,490,999
            9.81%Alpine
      Atlantic Asset Management (5)
              Usteristrasse
      19CH-8023
              Zurich,
      Switzerland
            1,354,000
      (6)
            5.33%Walter
      Stapher
              2
      rue Thalberg
              CH-1211
      Geneva 1
              Switzerland
            1,200,000
      (7)
            4.73%





(1)
            Officer
      and/or director of our company.





(2)
            Includes
      1,952,000 shares held by MRT Investments, Inc., which is controlled by Mr.
      Ayub. Also includes 324,666 vested options owned by Mr.
      Ayub.





(3)
            These
      are vested options owned by Mr.
Quiroz.





(4)
            Includes
      106,000 shares owned by Mr. Sanders. Also includes 25,000 vested options,
      which are owned by Mr. Sanders.





(5)
            The control person of this entity is Martin
      Hochschorner.





(6)
            Includes
      454,000 shares underlying warrants, which have not been
      exercised.





(7)
            Includes
      600,000 shares owned by Shamrock Group Holdings Ltd. and 600,000 shares
      owned by Tiffany Financial Trading Ltd., which are both controlled by Mr.
      Stapher.








ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.





On
September 18, 2007, the Company issued 500,000 common shares to MRT, a company
controlled by our President and Director Mario Ayub>  The Company
also issued MRT 250,000 shares of common stock were issued pursuant to the
Encino Gordo contract. The Company issued 250,000 shares of common stock
pursuant to an agreement in consideration of deferral of any and all Guazapares
property payments currently outstanding and those arising on or before December
31, 2007. The shares were valued at $1.16 per share, based on the closing quoted
market price on September 18, 2007.





We
currently rent an office in Mexico for our wholly owned subsidiary Sunburst de
Mexico. The office is located at C. General Retana, 706 Col. San Felipe,
Chihuahua, Chih., Mexico, C.P. 31203. The lease is for two years that commenced
on September 15, 2006, and we pay $900 per month for it. Previously, we leased
an office and office services from MRT, a company controlled by Mario Ayub, an
officer and director of the Company. We paid $950 per month for office rent and
$5,000 per month for office services on a month to month basis.





Previous
to February 29, 2008, we had been paying monthly management fees of $5,000 to
Robert Knight (Knight Financial Ltd.), our former CEO, $3,710 from February 2007
to November 2007 to Tracy A. Moore, our former CFO, for corporate financial
advisory services and $6,000 to Mario Ayub, our President and COO. We also paid
$7,950 to Salil Dhaumya for CFO services from October 16 to November 30,
2007.




Indemnification of Officers
and Directors







Our
articles of incorporation, as amended, provide that, to the fullest extent
permitted by Colorado law, our directors or officers shall not be personally
liable to us or our shareholders for damages for breach of such director's or
officer's fiduciary duty. The effect of this provision of our articles of
incorporation, as amended, is to eliminate our rights and our shareholders’
rights (through shareholders' derivative suits on behalf of our company) to
recover damages against a director or officer for breach of the fiduciary duty
of care as a director or officer (including breaches resulting from negligent or
grossly negligent behavior), except under certain situations defined by statute.
We believe that the indemnification provisions in our Articles of Incorporation,
as amended, are necessary to attract and retain qualified persons as directors
and officers.





Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the
"Act" or "Securities Act") may be permitted to directors, officers or persons
controlling us pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.




Exclusion of
Liability







Pursuant
to the Colorado Corporation Code, the Company’s articles of incorporation
exclude personal liability for its directors for monetary damages based upon any
violation of their fiduciary duties as directors, except as to liability for any
breach of the duty of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, acts in violation
of Section 7-5-114 of the Colorado Corporation Code, or any transaction from
which a director receives an improper personal benefit. This exclusion of
liability does not limit any right which a director may have to be indemnified
and does not affect any director's liability under federal or applicable state
securities laws.




Conflicts of
Interest







None of the officers of the Company will devote more than a portion of
their time to the affairs of the Company. There will be occasions when the time
requirements of the Company’s business conflict with the demands of the
officers’ other business and investment activities. Such conflicts may require
that the Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.








ITEM
13. EXHIBITS





The
following exhibits are filed in reference:





3.1           Articles
of Incorporation, as amended on December 10, 2001 and February 13, 2006 (Herein
incorporated by reference from the Registration Statement on Form SB-2 filed
with the Securities and Exchange Commission on April 7, 2006 )





3.2           Bylaws
of the Corporation (Herein incorporated by reference from the Registration
Statement on Form SB-2/A filed with the Securities and Exchange Commission on
September 25, 2006.)





4.1           Registration
Agreement dated April 20, 2004, by and among Sunburst Acquisitions IV, Inc., a
Colorado company, and each of the purchasers in a private placement of shares of
Sunburst (Herein incorporated by reference from the Registration Statement on
Form SB-2/A filed with the Securities and Exchange Commission on September 25,
2006.)





4.2           Promissory
Note between Sunburst Acquisitions IV, Inc. and Minera Rio Tinto S.A. de C.V. in
the amount of $ 57,500 dated January 9, 2004 (incorporated by reference from
Current Report on Form 8-K filed with the Securities and Exchange Commission on
June 3, 2004).





4.3           Promissory
Note between Sierra Mineral and Mining, Inc. and Minera Rio Tinto S.A. de C.V.
in the amount of $167,500, dated May 3, 2004 (incorporated by reference from
Current Report on Form 8-K filed with the Securities and Exchange Commission on
June 3, 2004).





4.4           Securities
Purchase Agreement with exhibits entered in connection with the $1,350,000
original issued discount secured convertible debenture financing dated August
25, 2004 (Herein incorporated by reference from the Registration Statement on
Form SB-2/A filed with the Securities and Exchange Commission on September 25,
2006.)





4.5           Secured
Convertible Debenture by and between Bristol Capital, LLC and Sunburst
Acquisitions IV, Inc. dated January 15, 2004 (Herein incorporated by reference
from the Registration Statement on Form SB-2/A filed with the Securities and
Exchange Commission on July 10, 2006).





4.6           Transaction
Fee Agreement dated April 22, 2004 between Sunburst Acquisitions IV Inc. and
T.R. Winston & Company LLC (Herein incorporated by reference from the
Registration Statement on Form SB-2 filed with the Securities and Exchange
Commission on April 7, 2006).





4.7           Finder’s
Fee Agreement dated 2004 between Sunburst Acquisitions IV, Inc. and Liberty
Management, LLC (Herein incorporated by reference from the Registration
Statement on Form SB-2/A filed with the Securities and Exchange Commission on
September 25, 2006.)





4.8           Convertible
Debenture template used to sell debentures and units of Mexoro Minerals Ltd. for
the offering that occurred in January through May of 2006 (Herein incorporated
by reference from the Registration Statement on Form SB-2 filed with the
Securities and Exchange Commission on April 7, 2006).





4.9           Stock
option plan approved by the shareholders of Mexoro Minerals, Ltd. on February
13, 2006. (Herein incorporated by reference from the Registration Statement on
Form SB-2 filed with the Securities and Exchange Commission on April 7,
2006).





4.10           Subscription
Agreement template used to sell units of Mexoro Minerals Ltd. for the offering
that occurred in February and March of 2006 and was offered to accredited
investors under Regulation D (Herein incorporated by reference from the
Registration Statement on Form SB-2/A filed with the Securities and Exchange
Commission on September 25, 2006.)





4.11           Convertible
Debentures issued December 8, 2005 to Daimler Capital, James Longshore, and
Spectrum International in the amount of $300,000 (Herein incorporated by
reference from the Registration Statement on Form SB-2/A filed with the
Securities and Exchange Commission on September 25, 2006.)





10.1           Share
Exchange Agreement, dated May 3, 2004, by and among Sunburst Acquisitions IV,
Inc., a Colorado corporation, Sierra Minerals and Mining, Inc., a Nevada
corporation, and the shareholders of Sierra Minerals & Mining, Inc. (Herein
incorporated by reference from the Registration Statement on Form SB-2/A filed
with the Securities and Exchange Commission on September 25, 2006.)





10.2           Joint
Venture Agreement, dated April 26, 2004 and amended on June 1, 2004, by and
between Sierra Mining and Minerals, Inc., a Nevada corporation, and Minera Rio
Tinto S.A. de C.V., a Mexican company (Herein incorporated by reference from the
Registration Statement on Form SB-2/A filed with the Securities and Exchange
Commission on September 25, 2006.)





10.3           Amendment
to Joint Venture Agreement dated June 1, 2004. (Herein incorporated by reference
from the Registration Statement on Form SB-2/A filed with the Securities and
Exchange Commission on September 25, 2006.)





10.4           SHARE
OPTION AGREEMENT among Minera Rio Tinto, S.A. de C.V. a corporation duly
incorporated and validly existing pursuant to the laws of the United Mexican
States and having an office at Pascual Orozco No. 2117 - A Chihuahua, State of
Chihuahua, Mexico 31310 and Sunburst Acquisitions IV, Inc., a corporation duly
incorporated and validly existing pursuant to the laws of the State of Colorado,
USA and having an office at Suite 206, 595 Howe St., Vancouver, B.C. Canada V6C
2T5 (Herein incorporated by reference from the Registration Statement on Form
SB-2/A filed with the Securities and Exchange Commission on September 25,
2006.)





10.5           AGREEMENT
made and entered in the City of Chihuahua, State of Chihuahua as of the 18th day
of August, 2005 among COMPAÑÍA MINERA DE NAMIQUIPA, S. A. DE C. V. a company
duly incorporated and validly existing pursuant to the laws of the United
Mexican States, and MINERA RIO TINTO, S. A. DE C. V. a company duly incorporated
and validly existing pursuant to the laws of the United Mexican States, and
MARIO HUMBERTO AYUB TOUCHE having a domicile at San Antonio No. 2036 Chihuahua,
Chihuahua and SUNBURST MINING DE MÉXICO, S. A. DE C. V., a company duly
incorporated and validly existing pursuant to the laws of the United Mexican
States  (herein incorporated by reference from the Registration
Statement on Form SB-2/A filed with the Securities and Exchange Commission on
December 18, 2006.)








10.6           AGREEMENT
made and entered at the City of Chihuahua, State of Chihuahua on this the 18th
day of August of the year 2005, among MINERA RIO TINTO, S. A. DE C. V. a company
duly incorporated and validly existing pursuant to the laws of the United
Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a company duly
incorporated and validly existing pursuant to the laws of the United Mexican
States (Encino Gordo) (Herein incorporated by reference from the Registration
Statement on Form SB-2/A filed with the Securities and Exchange Commission on
September 25, 2006.)





10.7           OPERATOR’S
AGREEMENT dated effective as of the 18th day of August, 2005, among Minera Rio
Tinto, S.A. de C.V. a corporation duly incorporated and validly existing
pursuant to the laws of the United Mexican States and having an office at
Pascual Orozco No. 2117 - A Chihuahua, State of Chihuahua, Mexico 31310, and
Sunburst de Mexico, S.A. de C.V. a corporation duly incorporated and validly
existing pursuant to the laws of the United Mexican States and having an office
at Suite 5, Avenida del Mar No.1022 Zona Costera, Mazatlan, State of Sinaloa,
Mexico (Herein incorporated by reference from the Registration Statement on Form
SB-2/A filed with the Securities and Exchange Commission on September 25,
2006.)





10.8           ASSIGNMENT
OF CONTRACT AGREEMENT made and entered in the City of Chihuahua, State of
Chihuahua as of this the 18th day of August, 2005 among MINERA RIO TINTO, S. A.
DE C. V. a company duly incorporated and validly existing pursuant to the laws
of the United Mexican States, and CORPORATIVO MINERO, S.A. DE C.V. a company
duly incorporated and validly existing pursuant to the laws of the United
Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a company duly
incorporated and validly existing pursuant to the laws of the United Mexican
States (herein incorporated by reference from the Company’s report on Form 8-K
for report date August 22, 2005 and filed with the Securities and Exchange
Commission on August 25, 2005).





10.9           ASSIGNMENT
OF CONTRACT AGREEMENT made and entered in the City of Chihuahua, State of
Chihuahua as of this the 18th day of August, 2005, among MINERA RIO TINTO, S. A.
DE C. V. a company duly incorporated and validly existing pursuant to the laws
of the United Mexican States, and RAFAEL FERNANDO ASTORGA HERNÁNDEZ, having a
domicile at Calle República de Uruguay No. 706 of the City of Chihuahua, Chih,
and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a company duly incorporated and
validly existing pursuant to the laws of the United Mexican States (San
Antonio)  (herein incorporated by reference from the Registration
Statement on Form SB-2/A filed with the Securities and Exchange Commission on
December 18, 2006.)





10.10                      ASSIGNMENT
OF CONTRACT AGREEMENT made and entered in the City of Chihuahua, State of
Chihuahua as of this the 18th day of August, 2005 among MINERA RIO TINTO, S. A.
DE C. V. a company duly incorporated and validly existing pursuant to the laws
of the United Mexican States, having an office at Av. Pascual Orozco Number
2117- Altos, La Cima, C. P. 31310, Chihuahua, Chihuahua, and MINERA RACHASA,
S.A. DE C.V., a company duly incorporated and validly existing pursuant to the
laws of the United Mexican States, and having an office at Niños Héroes No. 410
Colonia Centro, Chihuahua, Chihuahua (RFC BMM-900120-8B6), and SUNBURST MINING
DE MÉXICO, S. A. DE C. V. a company duly incorporated and validly existing
pursuant to the laws of the United Mexican States (San
Francisco)  (herein incorporated by reference from the Registration
Statement on Form SB-2/A filed with the Securities and Exchange Commission on
December 18, 2006.)





10.11                      THE
NEW AGREEMENT entered into on December 8, 2005 among the Company, Sunburst de
Mexico, and MRT (herein incorporated by reference from the Company’s current
report on Form 8-K for report date December 8, 2005 and filed with the
Securities and Exchange Commission on December 14, 2005).





10.12                      Funds
Escrow Agreement dated July 2005, among Sunburst Acquisitions IV, Inc.,
Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP, and Grushko &
Mittman, P.C. (herein incorporated by reference from the Company’s current
report on Form 8-K dated July 1, 2005 and filed with the Securities and Exchange
Commission on August 17, 2005).





10.13                      Repayment
Agreement dated July 15, 2005 by and among Sunburst IV, Inc. and Investment
Fund, Ltd., Alpha Capital AG and Stonestreet LP. (herein incorporated by
reference from the Company’s current report on Form 8-K dated July 1, 2005 and
filed with the Securities and Exchange Commission on August 17,
2005).





10.14                      Consulting
Agreement dated July 1, 2005 between Tracy A. Moore and Sunburst Acquisitions
IV, Inc. (herein incorporated by reference from the Company’s current report on
Form 8-K dated July 1, 2005 and filed with the Securities and Exchange
Commission on August 17, 2005).





10.15                      Consulting
Agreement with G.M. Capital Partners, Ltd. dated January 30, 2006 (incorporated
by reference from Current Report on Form 8-K filed with the Securities and
Exchange Commission on February 7, 2006).





10.17                      Amendment
to the New Agreement, dated April 6, 2006 by and among Mexoro Minerals, Ltd.,
Sunburst Mining de Mexico S.A. de C.V., and Minera Rio Tinto, S.A. de C.V.
(Herein incorporated by reference from the Registration Statement on Form SB-2/A
filed with the Securities and Exchange Commission on September 25,
2006.)





10.18                      Addendum
To Purchase Contract Of Mining Rights To Lump Sum Entered Into On May 6, 2004 by
Corporativo Minero, S.A. De C.V. And Sunburst Mining De Mexico, S.A. De C.V.,
dated March 24, 2006 (Herein incorporated by reference from the Registration
Statement on Form SB-2/A filed with the Securities and Exchange Commission on
September 25, 2006.)








10.19                      Agreement
to Extend August Payment Due Date, entered into on July 18, 2006 by Minera Rio
Tinto and Sunburst de Mexico (Herein incorporated by reference from the
Registration Statement on Form SB-2/A filed with the Securities and Exchange
Commission on September 25, 2006.)





10.20                      Amended
Agreement with G.M. Capital Partners, Ltd. dated August 31, 2006 (herein
incorporated by reference to the Current Report on Form 8-K dated August 31,
2006 and filed on September 21, 2006).





10.21                      Letter
Employment Agreement with Mathew Wunder, dated August 15, 2006 (Herein
incorporated by reference from the Registration Statement on Form SB-2/A filed
with the Securities and Exchange Commission on September 25, 2006.)





10.22                      Original
Agreement between MRT and Corportivo Minero dated 2004 concerning the Cieneguita
property (herein incorporated by reference from the Registration Statement on
Form SB-2/A filed with the Securities and Exchange Commission on December 18,
2006.)





10.23                      Agreement
between MRT and La Empresa Denominada Minera Rachasa dated 2004 concerning the
San Francisco concessions (Herein incorporated by reference from the
Registration Statement on Form SB-2/A filed with the Securities and Exchange
Commission on September 25, 2006.)





10.24                      Agreement
between MRT and Rafael Astorga Hernandez, dated July 20, 2006, concerning the
San Antonio concessions (Herein incorporated by reference from the Registration
Statement on Form SB-2/A filed with the Securities and Exchange Commission on
September 25, 2006.)





10.25                      Consent
of MRT to assign the Agreement between MRT and Rafael Astorga Hernandez to
Sunburst de Mexico (herein incorporated by reference from the Registration
Statement on Form SB-2/A filed with the Securities and Exchange Commission on
December 18, 2006.)





10.26                      Exploration
And Sale Option Agreement Of Mining Concessions Entered By And Between Minera
Emilio, S.A. De C.V. And Sunburst Mining De Mexico, S.A. De C.V. (Herein
incorporated by reference from the Current Report on Form 8-K filed with the
Securities and Exchange Commission on October 30, 2006.)





10.27                      Agreement
to Defer Guazapares Property Payments entered into on September 19, 2007 by
Sunburst de Mexico S.A. de C.V., Mexoro and MRT (herein incorporated by
reference to the Current Report on Form 8-K dated September 19, 2007 and filed
on October 9, 2007.)





10.28                      Agreement
to Defer Cieneguita Property Payments, entered into on May 4, 2007 by
Corporativo Minero S.A. de C.V. and Sunburst de Mexico S.A. de C.V. (herein
incorporated by reference to the Quarterly Report on Form 10-QSB filed with the
Securities and Exchange Commission on January 14, 2008).





10.29                      Exploration
Agreement and Purchase Option between Mr. Tomasa Lopez Amado of Rascon, Mr.
Leopoldo Rascon Lopez, and Mr. Sabino Amador Rascon Polanco and Sunburst de
Mexico S.A. de C.V. dated May 15, 2006 concerning a 66% interest in the Segundo
Santo Nino concession on the Sahauyacan Property, translated from
Spanish.*





10.30                      Exploration
Agreement and Purchase Option between Mr. Rene Muro Lugo (acting in capacity as
executor and successor or Mr. Jose Muro Delgado) and Sunburst de Mexico S.A. de
C.V dated May 15, 2006 concerning a 33% interest in the Segundo Santo Nino
concession on the Sahauyacan Property, translated from Spanish.*





10.31                      Secured
Convertible Debenture by and between Paramount Gold and Silver Corp. and Mexoro
Minerals Ltd. dated May 7, 2008 (herein incorporated by reference from the
Company’s current report on Form 8-K dated May 9, 2008 and filed with the
Securities and Exchange Commission on May 16, 2008).





10.32                      Common
Stock Purchase Warrant by and between Paramount Gold and Silver Corp. and Mexoro
Minerals Ltd. dated May 9, 2008 (herein incorporated by reference from the
Company’s current report on Form 8-K dated May 9, 2008 and filed with the
Securities and Exchange Commission on May 16, 2008).





10.33                      Security
Agreement, dated as of May 9, 2008 between Mexoro Minerals Ltd. and Paramount
Gold and Silver Corp. (herein incorporated by reference from the Company’s
current report on Form 8-K dated May 9, 2008 and filed with the Securities and
Exchange Commission on May 16, 2008).








14.1           Code
of Ethics (Herein incorporated by reference from the Registration Statement on
Form SB-2 filed with the Securities and Exchange Commission on April 7,
2006).





16.1           Responsive
letter of Comiskey & Co. (incorporated by reference from Current Report on
Form 8-K filed with the Securities and Exchange Commission on July 16,
2004).





16.2           Responsive
letter of Pannell Kerr Forster (registered with the PCAOB as “Smythe Ratcliffe”)
(incorporated by reference from Current Report on Form 8-K dated December 6,
2007 and filed December 12, 2007)





21.1           Subsidiaries
of the Registrant (Herein incorporated by reference from the Registration
Statement on Form SB-2 filed with the Securities and Exchange Commission on
April 7, 2006).





31.1           Certification
of Acting Principal Executive Officer of Mexoro Minerals Ltd. pursuant to Rule
13a-14(a)/15d-14(a).*





31.2           Certification
of Acting Principal Financial Officer of Mexoro Minerals Ltd. pursuant to Rule
13a-14(a)/15d-14(a). *





32.1           Certification
of Acting Principal Executive Officer of Mexoro Minerals Ltd. pursuant to 18
U.S.C. Section 1350. *





32.2           Certification
of Acting Principal Financial Officer of Mexoro Minerals Ltd. pursuant to 18
U.S.C. Section 1350. *





*filed
herewith





ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES




Audit
Fees







The
aggregate fees billed by Meyler & Company LLC for the audit of the Company’s
annual financial statements were $40,000 for the fiscal year ended February 29,
2008 and $nil for the fiscal year ended February 28, 2007. The aggregate fees
billed by Meyler & Company LLC for review of the Company's financial
statements included in its quarterly reports on Form 10-QSB were $7,500 during
the year ended February 29, 2008 and $nil during the year ended February 28,
2007.





The
aggregate fees billed by Pannell Kerr Forster (registered with the PCAOB as
“Smythe Ratcliffe”) for audit of the Company's annual financial statements were
$nil for the fiscal year ended February 29, 2008 and $36,505 for the fiscal year
ended February 28, 2007. The aggregate fees billed by  Pannell Kerr Forster
(registered with the PCAOB as “Smythe Ratcliffe”) for review of the Company's
financial statements included in its quarterly reports on Form 10-QSB were
$12,852 during the year ended February 29, 2008 and $15,600 during the year
ended February 28, 2007.




Audit-Related
Fees







Meyer
& Company LLC did not bill the Company any amounts for assurance and related
services that were related to its audit or review of the Company's financial
statements during the fiscal years ending February 29, 2008 or February 28,
2007.





Pannell
Kerr Forster (registered with the PCAOB as “Smythe Ratcliffe”) did not bill the
Company any amounts for assurance and related services that were related to its
audit or review of the Company's financial statements during the fiscal years
ending February 29, 2008 or February 28, 2007.




Tax Fees







The
aggregate fees billed by Meyler & Company LLC for tax compliance, advice and
planning were $nil for the fiscal year ended February 29, 2008 and $nil for the
fiscal year ended February 28, 2007.





The
aggregate fees billed by Pannell Kerr Forster (registered with the PCAOB as
“Smythe Ratcliffe”) for tax compliance, advice and planning were $nil for the
fiscal year ended February 29, 2008, $nil for the fiscal year ended February 28,
2007 and $nil for the fiscal year ended February 28, 2006.




All Other
Fees







Meyler
& Company LLC did not bill the Company for any products and services other
than the foregoing during the fiscal years ended February 29, 2008 and February
28, 2007.





Pannell
Kerr Forster (registered with the PCAOB as “Smythe Ratcliffe”) billed the
Company $1,158 for a letter to the SEC for change of auditors and a review of an
8-K during the fiscal year ended February 29, 2008 and $nil for the fiscal year
ended February 28, 2007.








SIGNATURES





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





MEXORO
MINERALS LTD.








By: /s/ MARIO AYUB


Mario
Ayub, President, COO and Director





Date:
June 12, 2008





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





By: /s/ MARIO AYUB


Mario
Ayub, President, Acting Principal Executive Officer,


Acting
Principal Financial Officer and Director




Date:
June 12, 2008