**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      DC 20549





**FORM
      10-QSB**





x
            Quarterly
                Report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934For
                the quarterly period endedSeptember
                30, 2007o
            Transition
                Report pursuant to 13 or 15(d) of the Securities Exchange Act of
                1934For
                the transition period __________ 
                to __________Commission
                File Number:000-51013





Colombia
      Goldfields Ltd.


(Exact
      name of small business issuer as specified in its charter)





Delaware
            76-0730088(State
                or other jurisdiction of incorporation or
                organization)
            (IRS
                Employer Identification No.)




#208-8
                King Street East, Toronto, Ontario, Canada M5C 1B5(Address
                of principal executive offices)





416-203-3856(Issuer’s
                telephone number)_________________________________________________________(Former
                name, former address and former fiscal year, if changed since last
                report)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
      (or
      for such shorter period that the issuer was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days x
      Yes o
      No




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




State
      the
      number of shares outstanding of each of the issuer’s classes of common stock, as
      of the latest practicable date: 77,299,849 common shares as of October 31,
      2007.




Transitional
      Small Business Disclosure Format (check one): Yes o No x












TABLE
                OF CONTENTS
            PagePART
                I - FINANCIAL INFORMATIONItem
                1.
            Financial
                Statements
            3Item
                2.
            Plan
                of Operation
            4Item
                3.
            Controls
                and Procedures
            27PART
                II - OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            28Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            28Item
                3.
            Defaults
                Upon Senior Securities
            29Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            29Item
                5.
            Other
                Information
            29Item
                6.
            Exhibits
            29












2


PART
      I -
      FINANCIAL INFORMATION




**Item****1.****Financial
      Statements**





Our
                unaudited consolidated financial statements included in this Form
                10-QSB
                are as follows:F-1
            Interim
                Consolidated Balance Sheets as of September 30, 2007 and December
                31, 2006
                (unaudited);F-2
            Interim
                Consolidated Statements of Operations for the three and nine months
                ended
                September 30, 2007 and 2006 and from inception (March 25, 2003) through
                September 30, 2007 (unaudited);F-3
            Interim
                Consolidated Statements of Stockholders’ Equity (Deficiency) for the
                period from inception (March 25, 2003) through September 30, 2007
                (unaudited);F-6
            Interim
                Consolidated Statements of Cash Flows for the three and nine months
                ended
                September 30, 2007 and 2006 and from inception (March 25, 2003) through
                September 30, 2007 (unaudited);F-7
            Notes
                to interim Consolidated Financial Statements;





These
      unaudited interim consolidated financial statements have been prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America for interim financial information and the SEC instructions to Form
      10-QSB. In the opinion of management, all adjustments considered necessary
      for a
      fair presentation have been included. Operating results for the interim period
      ended September 30, 2007 are not necessarily indicative of the results that
      can
      be expected for the full year.




3


**COLOMBIA
      GOLDFIELDS LTD.**


**(An
      Exploration Stage Company)**


**INTERIM
      CONSOLIDATED BALANCE SHEETS**


**(unaudited)**





**September
                30,**
            
            **December
                31,***US
                Dollars*
            
            **2007**
            
            **2006****ASSETS****Current**Cash
                and cash equivalents
            
            $
            1,924,923
            
            $
            882,913Prepaid
                expenses and deposits
            
            
            711,861
            
            
            176,347Prepaid
                consulting fees (Note 5)
            
            
            499,850
            
            
            -3,136,634
            
            
            1,059,260Mineral
                and exploration properties and rights (Note 3)
            
            
            57,420,549
            
            
            43,528,386Property
                and equipment, net of accumulated amortization (Note 4)
            
            
            1,041,371
            
            
            419,733$
            61,598,554
            
            $
            45,007,379**LIABILITIES****Current**Accounts
                payable and accrued liabilities
            
            $
            1,706,806
            
            $
            428,133Mineral
                property purchase obligations (Note 6)
            
            
            2,901,468
            
            
            5,609,5384,608,274
            
            
            6,037,671**Non-Current**Deferred
                income tax liability (Notes 3 and 7)
            
            
            11,337,557
            
            
            9,759,52415,945,831
            
            
            15,797,195**STOCKHOLDERS’
                EQUITY****Common
                stock (Notes 5 & 12)**Authorized:200,000,000
                common shares, $0.00001 par value
            
            
            773
            
            
            560Issued
                and Outstanding:77,299,849
                common shares (December 31, 2006, 56,039,849common
                shares)**Additional
                paid-in capital (Note 5)**
            
            
            63,134,120
            
            
            37,039,27163,134,893
            
            
            37,039,831**Deficit
                accumulated during the exploration stage**
            
            
            (17,482,170
            )
            
            (7,829,647
            )45,652,723
            
            
            29,210,184$
            61,598,554
            
            $
            45,007,379





**See
      accompanying Notes to Interim Consolidated Financial
      Statements**


***
      Going Concern (Note 1)**


***
      Commitments and Contingencies (Note 13)**




F-1





**COLOMBIA
        GOLDFIELDS LTD.**
 **(An
        Exploration Stage Company)**
 **INTERIM
        CONSOLIDATED STATEMENTS OPERATIONS**
 **(unaudited)**




**Three**
              **Months**
            
            **Three**
              **Months**
            
            **Nine**
              **Months**
            
            **Nine**
              **Months**
            
            **Cumulative**
              **From**
              **Inception**
              **(March
                25,**
              **2003)****Ended**
            
            **Ended**
            
            **Ended**
            
            **Ended**
            
            **through****September**
              **30,**
            
            **September**
              **30,**
            
            **September**
              **30,**
            
            **September
                30,**
            
            **September
                30,***US
                Dollars*
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**
            
            **2007****REVENUES**
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -**OPERATING
                EXPENSES**Mineral
                property exploration expenses
              (Notes
                3 and 5)
            
            
            2,457,274
            
            
            1,074,629
            
            
            5,489,878
            
            
            2,187,686
            
            
            9,967,614General
                and administrative
              (Note
                5)
            
            
            1,607,307
            
            
            848,836
            
            
            4,298,618
            
            
            2,666,714
            
            
            8,649,923Foreign
                exchange
            
            
            371,964
            
            
            70,862
            
            
            1,307,180
            
            
            109,579
            
            
            1,296,492Amortization
            
            
            38,022
            
            
            2,059
            
            
            77,601
            
            
            19,694
            
            
            145,706Total
                operating expenses
            
            
            4,474,567
            
            
            1,996,386
            
            
            11,173,277
            
            
            4,983,673
            
            
            20,059,735Other
                income
            
            
            (5,062
            )
            
            (50,764
            )
            
            (18,594
            )
            
            (103,187
            )
            
            (136,628
            )Loss
                from continuing operations before
              deferred
                income taxes
            
            
            (4,469,505
            )
            
            (1,945,622
            )
            
            (11,154,683
            )
            
            (4,880,486
            )
            
            (19,923,107
            )Deferred
                income tax recovery (Note 7)
            
            
            (539,550
            )
            
            -
            
            
            (1,502,160
            )
            
            -
            
            
            (2,431,110
            )Net
                loss from continuing operations
            
            
            (3,929,955
            )
            
            (1,945,622
            )
            
            (9,652,523
            )
            
            (4,880,486
            )
            
            (17,491,997
            )Income
                from discontinued operations
              (Note
                1)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            9,827Net
                loss
            
            $
            (3,929,955
            )
            $
            (1,945,622
            )
            $
            (9,652,523
            )
            $
            (4,880,486
            )
            $
            (17,482,170
            )**LOSS
                PER SHARE - BASIC AND DILUTED**
            
            $
            (0.06
            )
            $
            (0.04
            )
            $
            (0.15
            )
            $
            (0.12
            )**WEIGTHED
                AVERAGE NUMBER OF**
              **COMMON
                SHARES OUTSTANDING**Basic
                and diluted
            
            
            70,797,110
            
            
            45,079,035
            
            
            64,637,889
            
            
            39,513,913




**See
      accompanying Notes to Interim Consolidated Financial
      Statements**


***
      Going Concern (Note 1)**




F-2







**COLOMBIA
        GOLDFIELDS LTD.**
 **(An
        Exploration Stage Company)**
 **INTERIM
        CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
        (DEFICIENCY)**
 **(unaudited)**








*US
                Dollars*
            
            Common
              Shares
            
            Stock
              Amount
            
            Additional
              Paid-in
              Capital
            
            Share
                Subscriptions Received
            
            Deficit
              Accumulated
                During
              The
              Exploration
              Stage
            
            Total
              Stockholders’
                Equity
              (Deficiency)**Period
                Ended December 31, 2003**
              **(see
                Note 1):**Issue
                of common stock for cash
              at
                $0.000125 per share on
              March
                25, 2003
            
            
            8
            
            $
            -
            
            $
            1
            
            $
            -
            
            $
            -
            
            $
            1Issue
                of common stock for cash
              at
                $0.000125 per share on
              May
                5, 2003
            
            
            16,000,000
            
            
            160
            
            
            1,840
            
            
            -
            
            
            -
            
            
            2,000Repurchase
                of common stock for cash at $0.000125 per share on October 31,
                2003
            
            
            (8,000,008
            )
            
            (80
            )
            
            (920
            )
            
            -
            
            
            -
            
            
            (1,000
            )Donated
                Capital
            
            
            -
            
            
            -
            
            
            35,200
            
            
            -
            
            
            -
            
            
            35,200Net
                loss for the twelve months ended December 31, 2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (36,399
            )
            
            (36,399
            )Balance,
                December 31, 2003
            
            
            8,000,000
            
            
            80
            
            
            36,121
            
            
            -
            
            
            (36,399
            )
            
            (198
            )**Year
                Ended December 31, 2004:**Issue
                of common stock for
              cash
                at $0.00625 per share
              on
                December 20, 2004
            
            
            16,000,000
            
            
            160
            
            
            99,840
            
            
            -
            
            
            -
            
            
            100,000Donated
                Capital
            
            
            -
            
            
            -
            
            
            19,200
            
            
            -
            
            
            -
            
            
            19,200Net
                loss for the twelve months ended December 31, 2004
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (23,094
            )
            
            (23,094
            )Balance
                December 31, 2004
            
            
            24,000,000
            
            
            240
            
            
            155,161
            
            
            -
            
            
            (59,493
            )
            
            95,908**Year
                Ended December 31, 2005:**Issue
                of common stock for mineral concession at $0.25 per share on September
                22,
                2005
            
            
            1,000,000
            
            
            10
            
            
            249,990
            
            
            -
            
            
            -
            
            
            250,000Issue
                of 4,221,000 common stock for cash at $0.25 per share, and 368,100
                of
                common stock for finder’s fee on October 14, 2005
            
            
            4,589,100
            
            
            46
            
            
            1,055,204
            
            
            -
            
            
            -
            
            
            1,055,250Forgiveness
                of advances from a related party
            
            
            
            
            
            
            
            
            4,999
            
            
            -
            
            
            -
            
            
            4,999Share
                Subscriptions Received
            
            
            -
            
            
            -
            
            
            -
            
            
            1,767,650
            
            
            -
            
            
            1,767,650Net
                loss for the twelve months ended December 31, 2005
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,491,470
            )
            
            (1,491,470
            )Balance,
                December 31, 2005
            
            
            29,589,100
            
            $
            296
            
            $
            1,465,354
            
            $
            1,767,650
            
            $
            (1,550,963
            )
            $
            1,682,337







**See
      accompanying Notes to Interim Consolidated Financial
      Statements**


***
      Going Concern (Note 1)**





F-3





**COLOMBIA
      GOLDFIELDS LTD.** **(An
        Exploration Stage Company)**
 **INTERIM
        CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
        (DEFICIENCY)**
 **(unaudited)**
   *US
                  Dollars*
              
              Common
                Shares
              
              Stock
                Amount
              
              Additional
                Paid-in
                Capital
              
              Share
                  Subscriptions Received
              
              Deficit
                Accumulated
                  During
                The
                Exploration
                Stage
              
              Total
                Stockholders’
                  Equity
                (Deficiency)Balance,
                  December 31, 2005
              
              
              29,589,100
              
              $
              296
              
              $
              1,465,354
              
              $
              1,767,650
              
              $
              (1,550,963
              )
              $
              1,682,337**Year
                  Ended December 31, 2006:**Issue
                  of common stock for cash at $0.60 per share on January 24, 2006,
                  net of
                  $187,565 finders fee
              
              
              3,126,083
              
              
              31
              
              
              1,688,054
              
              
              (1,767,650
              )
              
              -
              
              
              (79,565
              )Issue
                  of common stock for
                mineral
                  concessions at $1.90 per share on February 14, 2006
              
              
              1,000,000
              
              
              10
              
              
              1,899,990
              
              
              -
              
              
              -
              
              
              1,900,000Issue
                  of common stock
                for
                  mineral concession at
                $2.25
                  per share on April 10, 2006
              
              
              1,000,000
              
              
              10
              
              
              2,249,990
              
              
              -
              
              
              -
              
              
              2,250,000Issue
                  of common stock
                for
                  cash at $1.50 per unit (common shares & warrants) less finders fee of
                  $585,060 on
                April
                  26, 2006
              
              
              6,500,666
              
              
              65
              
              
              6,416,112
              
              
              -
              
              
              -
              
              
              6,416,177Issue
                  of share purchase warrants with
                April
                  26, 2006 common stock
                issuance
              
              
              -
              
              
              -
              
              
              2,749,762
              
              
              -
              
              
              -
              
              
              2,749,762Issue
                  of common stock for
                Mineral
                  concessions at $2.74
                per
                  share on April 28, 2006
              
              
              2,000,000
              
              
              20
              
              
              5,479,980
              
              
              -
              
              
              -
              
              
              5,480,000Issue
                  of common stock for mineral concessions at $1.10 per share on August
                  22,
                  2006
              
              
              4,200,000
              
              
              42
              
              
              4,619,958
              
              
              **-**
              
              
              **-**
              
              
              4,620,000Issue
                  of common stock for mineral concessions at $1.41 per share on September
                  25, 2006
              
              
              1,150,000
              
              
              11
              
              
              1,621,489
              
              
              -
              
              
              -
              
              
              1,621,500Issue
                  of common shares per exercise of 3,471,000 warrants on October
                  14,
                  2006.
              
              
              3,471,000
              
              
              35
              
              
              1,735,465
              
              
              -
              
              
              -
              
              
              1,735,500Issue
                  of common stock for mineral concessions at $1.28 per share on December
                  14,
                  2006.
              
              
              4,000,000
              
              
              40
              
              
              5,119,960
              
              
              **-**
              
              
              **-**
              
              
              5,120,000Stock
                  based compensation
              
              
              -
              
              
              -
              
              
              1,993,157
              
              
              **-**
              
              
              **-**
              
              
              1,993,157Net
                  loss for the twelve months ended
                December
                  31, 2006
              
              
              
              
              
              
              
              
              -
              
              
              -
              
              
              (6,278,684
              )
              
              (6,278,684
              )Balance
                  December 31, 2006
              
              
              56,036,849
              
              $
              560
              
              $
              37,039,271
              
              $
              -
              
              $
              (7,829,647
              )
              $
              29,210,184





**See
      accompanying Notes to Interim Consolidated Financial
      Statements**


***
      Going Concern (Note 1)**




F-4


**COLOMBIA
        GOLDFIELDS LTD.**
 **(An
        Exploration Stage Company)**
 **INTERIM
        CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
        (DEFICIENCY)**
 **(unaudited)**




*US
                    Dollars*
                
                Common
                  Shares
                
                Stock
                  Amount
                
                Additional
                  Paid-in
                  Capital
                
                Share
                    Subscriptions Received
                
                Deficit
                  Accumulated
                    During
                  The
                  Exploration
                  Stage
                
                Total
                  Stockholders’
                    Equity
                  (Deficiency)Balance,
                    December 31, 2006
                
                
                56,036,849
                
                $
                560
                
                $
                37,039,271
                
                $
                -
                
                $
                (7,829,647
                )
                $
                29,210,184**Nine
                    Months Ended September 30, 2007:**Issue
                    of common stock
                  for
                    cash at $1.00 per share less agents fee of $541,200 on March
                    21,
                    2007
                
                
                9,020,000
                
                
                90
                
                
                8,074,434
                
                
                -
                
                
                -
                
                
                8,074,524Issue
                    of agents’ warrants in connection with March 21, 2007 common stock
                    issuance
                
                
                -
                
                
                -
                
                
                404,276
                
                
                -
                
                
                -
                
                
                404,276Issue
                    of common stock for consulting services
                
                
                650,000
                
                
                7
                
                
                967,118
                
                
                -
                
                
                -
                
                
                967,125Issue
                    of common stock to non-management directors
                
                
                60,000
                
                
                1
                
                
                72,599
                
                
                -
                
                
                -
                
                
                72,600Exercise
                    of common stock options
                
                
                50,000
                
                
                -
                
                
                37,500
                
                
                -
                
                
                -
                
                
                37,500Issue
                    of common stock for cash at CDN $1.40 per unit (common shares
                    and
                    warrants) less agent’s fee of $610,733 on August 14, 2007.
                
                
                8,483,000
                
                
                85
                
                
                9,260,049
                
                
                -
                
                
                -
                
                
                9,260,134Issue
                    of share purchase warrants with August 14, 2007 common stock
                    less agent’s
                    fee of $59,085
                
                
                -
                
                
                -
                
                
                925,665
                
                
                -
                
                
                -
                
                
                925,665Issue
                    of agent’s warrants in connection with August 14, 2007 common stock
                    issuance
                
                
                -
                
                
                -
                
                
                308,011
                
                
                -
                
                
                -
                
                
                308,011Issuance
                    of common stock for mineral Concessions at $1.47 on September
                    14,
                    2007
                
                
                3,000,000
                
                
                30
                
                
                4,409,970
                
                
                -
                
                
                -
                
                
                4,410,000Stock
                    based compensation
                
                
                -
                
                
                -
                
                
                1,635,227
                
                
                -
                
                
                -
                
                
                1,635,227Net
                    loss for the nine months ended September 30, 2007
                
                
                
                
                
                
                
                
                -
                
                
                -
                
                
                (9,652,523
                )
                
                (9,652,523
                )Balance
                    September 30, 2007
                
                
                77,299,849
                
                $
                773
                
                $
                63,134,120
                
                $
                -
                
                $
                (17,482,170
                )
                $
                45,652,723




**See
      accompanying Notes to Interim Consolidated Financial
      Statements**


***
      Going Concern (Note 1)**





F-5





**(An
        Exploration Stage Company)**
 **INTERIM
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(unaudited)**


**Cumulative**
              **Inception****Three**
            
            **Three**
            
            **Nine**
            
            **Nine**
            
            **(March****Months**
            
            **Months**
            
            **Months**
            
            **Months**
            
            **25,
                2003)****Ended**
            
            **Ended**
            
            **Ended**
            
            **Ended**
            
            **through****September**
              **30,**
            
            **September**
              **30,**
            
            **September
                30,**
            
            **September
                30,**
            
            **September
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**
            
            **2007****OPERATING
                ACTIVITIES:**Net
                loss
            
            $
            (3,929,955
            )
            $
            (1,945,622
            )
            $
            (9,652,523
            )
            $
            (4,880,486
            )
            $
            (17,482,170
            )Items
                not requiring cash outlay:-
                Consulting fees
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            52,400-
                Amortization
            
            
            38,022
            
            
            2,059
            
            
            77,601
            
            
            19,694
            
            
            147,706-
                Mineral property exploration
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            250,000-
                Stock based compensation
            
            
            748,971
            
            
            600,468
            
            
            2,175,103
            
            
            1,782,623
            
            
            4,168,260-
                Deferred income taxes
            
            
            (539,550
            )
            
            -
            
            
            (1,502,160
            )
            
            -
            
            
            (2,431,110
            )Changes
                in non-cash working capital items-
                Accounts receivable
            
            
            -
            
            
            (649,007
            )
            
            -
            
            
            (710,850
            )
            
            --
                Prepaid expenses and deposits
            
            
            13,122
            
            
            16,222
            
            
            (535,514
            )
            
            -
            
            
            (711,862
            )-
                Exploration expenditure advances
            
            
            -
            
            
            (56,078
            )
            
            -
            
            
            -
            
            
            --
                Accounts payable, accrued and other
              liabilities
            
            
            1,010,938
            
            
            2,127,891
            
            
            2,039,012
            
            
            1,793,380
            
            
            2,467,145-
                Due to/from related parties
            
            
            -
            
            
            158,202
            
            
            -
            
            
            158,202
            
            
            4,999Net
                cash provided by (used in) operating activities
            
            
            (2,658,452
            )
            
            254,135
            
            
            (7,398,481
            )
            
            (1,837,437
            )
            
            (13,534,632
            )**FINANCING
                ACTIVITIES:**Issuance
                of securities, net of finder’s fees
            
            
            10,493,810
            
            
            -
            
            
            18,972,610
            
            
            9,086,374
            
            
            32,718,385Issuance
                of promissory notes
            
            
            -
            
            
            -
            
            
            7,200,000
            
            
            -
            
            
            7,200,000Repayment
                of promissory notes
            
            
            (3,500,000
            )
            
            -
            
            
            (7,200,000
            )
            
            -
            
            
            (7,200,000
            )Exercise
                of stock options
            
            
            -
            
            
            -
            
            
            37,500
            
            
            -
            
            
            37,500Net
                cash provided by financing activities
            
            
            6,993,810
            
            
            -
            
            
            19,010,110
            
            
            9,086,374
            
            
            32,755,885**INVESTING
                ACTIVITIES:**Purchase
                of mineral exploration rights
            
            
            (4,195,886
            )
            
            (3,548,340
            )
            
            (9,870,380
            )
            
            (5,211,033
            )
            
            (16,109,253
            )Purchase
                of equipment
            
            
            (676,538
            )
            
            (208,752
            )
            
            (699,239
            )
            
            (378,148
            )
            
            (1,166,077
            )Website
                development costs
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (21,000
            )Net
                cash used in investing activities
            
            
            (4,872,424
            )
            
            (3,757,092
            )
            
            (10,569,619
            )
            
            (5,589,181
            )
            
            (17,296,330
            )**INCREASE
                (DECREASE) IN CASH**
            
            
            (537,066
            )
            
            (3,502,957
            )
            
            1,042,010
            
            
            1,659,756
            
            
            1,924,923**CASH
                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD**
            
            
            2,461,989
            
            
            6,728,353
            
            
            882,913
            
            
            1,565,640
            
            
            -**CASH
                AND CASH EQUIVALENTS AT END OF PERIOD**
            
            $
            1,924,923
            
            $
            3,225,396
            
            $
            1,924,923
            
            $
            3,225,396
            
            $
            1,924,923**SUPPLEMENTAL
                CASH FLOW INFORMATION**Interest
                and financing fees - promissory notes
            
            $
            134,480
            
            $
            -
            
            $
            365,391
            
            $
            -
            
            $
            365,391Taxes
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -





**See
      accompanying Notes to Interim Consolidated Financial
      Statements**


***
      Going Concern (Note 1)**





F-6








**COLOMBIA
        GOLDFIELDS LTD.**
 **(An
        Exploration Stage Company)**
 **NOTES
        TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**








**NOTE
      1 - GOING CONCERN AND NATURE OF OPERATIONS**




The
      Company was incorporated under the laws of the State of Nevada, U.S.A., on
      March
      25, 2003. The Company changed its name from Secure Automated Enterprises, Inc.
      to Colombia Goldfields Ltd. on May 13, 2005. The Company changed its operational
      focus from providing electronic filings services for public access document
      submissions to the U.S. Securities Exchange Commission, to acquisition of,
      exploration for, and development of mineral properties. The Company is currently
      in the exploration stage. On July 31, 2006, the Company’s jurisdiction of
      incorporation was changed to the state of Delaware.




In
      the
      first quarter of 2005, the Company discontinued its electronic filings services
      operations and historical income and expenses relating to these discontinued
      operations have been classified as discontinued operations in the Statements
      of
      Operations for all comparative periods presented.




The
      Company has incurred a cumulative net loss since inception on March 25, 2003
      to
      September 30, 2007 of $17,482,170 and has no source of operating revenue. The
      Company’s ability to meet its obligations and continue as a going concern is
      dependent on the ability to identify and complete future funding. While the
      Company has been successful in raising financing to date, there can be no
      assurance that it will be able to do so in the future.





These
      consolidated financial statements have been prepared using U.S. generally
      accepted accounting principles applicable to a going concern which contemplates
      the realization of assets and settlement of liabilities in the normal course
      of
      business as they come due. The Company has a working capital deficiency and
      an
      accumulated deficit at September 30, 2007. These circumstances lend substantial
      doubt as to the ability of the Company to meet its obligations as they come
      due
      and, accordingly, as to the appropriateness of the use of accounting principles
      applicable to a going concern. In recognition of these circumstances, the
      Company raised funding, net of agents’ fees, of $10,493,810 through a private
      placement of additional share capital in August, 2007 and in November, 2007
      the
      Company entered into a $1.5 million short-term bridge loan as disclosed in
      Note
      12. The Company intends to continue relying upon the issuance of securities
      to
      finance exploration, meet contractual obligations and continue as a going
      concern. As of the date of the approval of the consolidated financial
      statements, there is no assurance that these initiatives will be sufficient
      or
      successful.





The
      Company’s ability to continue as a going concern is dependent upon its ability
      to fund its working capital and exploration requirements and, eventually, upon
      the future exploration and development of profitable operations from its mineral
      properties. These consolidated financial statements do not reflect the
      adjustments to the carrying values of assets and liabilities and the reported
      expenses and balance sheet classifications that would be necessary if the going
      concern assumption were not appropriate, and these adjustments could be
      material.




F-7


**COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**Basis
      of Presentation**





The
      accompanying unaudited interim consolidated financial statements have been
      prepared in accordance with the accounting principles generally accepted in
      the
      United States for interim financial information and with the instructions to
      Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include
      all of the information and footnotes required by accounting principles generally
      accepted in the United States for complete financial statements. In the opinion
      of management, all adjustments (consisting of normal recurring adjustments)
      considered necessary for a fair presentation have been included. Operating
      results for the three and nine month periods ended September 30, 2007 are not
      necessarily indicative of the results that may be expected for the year ended
      December 31, 2007.





The
      consolidated balance sheet at September 30, 2007 has been derived from the
      audited financial statements at December 31, 2006 but these financial statements
      do not include all of the information and footnotes required by accounting
      principles generally accepted in the United States for complete financial
      statements. For further information, refer to the financial statements and
      footnotes thereto included in the Company’s annual report on Form 10-KSB for the
      year ended December 31, 2006.





**Use
      of Estimates**





The
      preparation of financial statements in conformity with U.S. generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amount of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amount of revenues and expenses during the period. Actual results
      may differ from those estimates.





**Consolidation**





Entities
      which are controlled by the Company, either directly or indirectly, are
      consolidated. Control is established by the Company’s ability to determine
      strategic, operating, investing and financing policies without the co-operation
      of others. The Company analyzes its level of ownership, voting rights and
      representation on the board of directors in determining if control exists by
      any
      one, or a combination, of these factors.





These
      consolidated financial statements include the accounts of (i) Colombia
      Goldfields Ltd., a Delaware corporation (ii) the Company’s 100% interest in RNC
      (Colombia) Limited (“RNC”), a Belize corporation and its 94.99% owned subsidiary
      - Compania Minera De Caldas, S.A. (“Caldas”), a Colombia corporation, (iii) the
      Company’s 94.99% interest in Gavilan Minerales, S.A. (“Gavilan”) a Colombia
      corporation. Colombian law requires Colombian companies to have at least five
      shareholders and, as a result, the remaining 5.01% of Caldas and Gavilan is
      held
      by directors and senior management of the Company. All
      significant inter-company transactions and balances have been eliminated upon
      consolidation.





In
      accordance with Interpretation No. 46R, *Consolidation
      of Variable Interest Entities* (“FIN 46R”),
      variable interest entities (VIEs) are generally entities that lack sufficient
      equity to finance their activities without additional financial support from
      other parties or whose equity holders lack adequate decision making ability.
      All
      VIEs with which the Company is involved must be evaluated to determine the
      primary beneficiary of the risks and rewards of the VIE. The primary beneficiary
      is required to consolidate the VIE for financial reporting purposes.





F-8


**COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**


In
      connection with the Company’s April 28, 2006 acquisition of an additional 25% of
      RNC, the Company also received rights to nominate three of the four members
      of
      RNC’s board of directors. As such, the Company determined that control over RNC
      existed as of April 28, 2006, and these financial statements reflect the
      consolidation of the Company’s 50% interest in RNC, for the period April 29,
      2006 to August 22, 2006.





On
      August
      22, 2006 the Company acquired an additional 25% of RNC, bringing the Company’s
      total ownership to 75%. These financial statements reflect the consolidation
      of
      the Company’s 75% interest in RNC for the period August 23, 2006 to December 14,
      2006.





On
      December 14, 2006 the Company acquired a further 15% of RNC, bringing the
      Company’s total ownership to 90%. These financial statements reflect the
      consolidation of the Company’s 90% interest in RNC for the period December 15,
      2006 to September 14, 2007.





On
      September 14, 2007 the Company acquired the final 10% of RNC, bringing the
      Company’s total ownership to 100%. These financial statements reflect the
      consolidation of the Company’s 100% interest in RNC for the period of September
      15, 2007 to September 30, 2007.





On
      September 25, 2006 the Company acquired 94.99% of the outstanding shares of
      Gavilan. These financial statements reflect the consolidation of Gavilan for
      the
      period of September 25, 2006 to September 30, 2007.





Since
      the
      non-controlling shareholders of RNC and Gavilan had no obligation to contribute
      any additional capital and the Company was the primary entity obligated to
      fund
      future exploratory work, no non-controlling interest related to RNC or Gavilan
      has been recognized in the consolidated statements of operations for the period
      January 1, 2006 to September 30, 2007 and in the consolidated balance sheet
      at
      September 30, 2007.





**Mineral
      Property Rights Acquisition and Exploration Expenditures**





Costs
      of
      acquiring mining properties are capitalized upon acquisition. Pursuant to
      Statement of Financial Accounting Standards (SFAS) No. 34, *Capitalization of Interest Costs* ,
      interest costs attributable to mineral property acquisitions are also
      capitalized. Mine development costs incurred either to develop new ore deposits,
      expand the capacity of mines, or to develop mine areas substantially in advance
      of current production are also capitalized once proven and probable reserves
      exist and the property is a commercially mineable property. Costs incurred
      to
      maintain current production or to maintain assets on a standby basis are charged
      to operations. Costs of abandoned projects are charged to operations upon
      abandonment. The Company evaluates the carrying value of capitalized mining
      costs and related property, plant and equipment costs, to determine if these
      costs are in excess of their net recoverable amount whenever events or changes
      in circumstances indicate that their carrying amounts may not be recoverable.
      The periodic evaluation of carrying value of capitalized costs and any related
      property, plant and equipment costs is based upon expected future cash flows
      and/or estimated salvage value in accordance with SFAS No. 144, *Accounting
      for Impairment or Disposal of Long-Lived Assets.*





**Asset
      Retirement Obligations**





The
      Company applies SFAS No. 143, *Accounting
      for Asset Retirement Obligations* which
      requires that the fair value of a liability for an asset retirement obligation
      be recognized in the period in which it is incurred. SFAS No. 143 requires
      the
      Company to record a liability for the present value of the estimated site
      restoration costs with a corresponding increase to the carrying amount of the
      related long-lived assets. The liability will be accreted until it has been
      fully incurred





F-9


**COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**


and
      the
      asset will be amortized over the life of the related assets. Adjustments for
      changes resulting from the passage of time and changes to either the timing
      or
      amount of the original present value estimate underlying the obligation will
      be
      made. As at September 30, 2007 and December 31, 2006 the Company does not have
      any asset retirement obligations.





**Cash
      and Cash Equivalents**





The
      Company considers all highly liquid instruments with a maturity of three months
      or less at the time of issuance to be cash equivalents.





**Property
      and Equipment**





Property
      and equipment are carried at cost. For the significant components of property
      and equipment, depreciation is provided for using the following method and
      time
      periods:


**Asset**
            **Basis**
            **Period**Vehicles
            Straight
                line
            5
                yearsBuildings
            Straight
                line
            20
                yearsEquipment
                and Computers
            Straight
                line
            3
                to 10 years





The
      Company evaluates the carrying values of property and equipment to determine
      if
      these costs are in excess of their net recoverable amount whenever events or
      changes in circumstances indicate that the carrying amounts may not be
      recoverable. The periodic evaluation of the carrying value of property and
      equipment costs is based on expected future cash flows and estimated salvage
      value.





**Environmental
      Costs**





Environmental
      expenditures that related to current operations are charged to operations or
      capitalized as appropriate. Expenditures that relate to an existing condition
      caused by past operations, and which do not contribute to current or future
      revenue generation, are charged to operations. Liabilities are recorded when
      environmental assessments and/or remedial efforts are probable, and the cost
      can
      be reasonably estimated.





**Comprehensive
      Income**





In
      accordance with SFAS 130, *Reporting
      Comprehensive Income* (“SFAS
      130”), comprehensive income consists of net income and other gains and losses
      affecting stockholders’ equity that are excluded from net income, such as
      unrealized gains and losses on investments available for sale, foreign currency
      translation gains and losses when the Company has a functional currency other
      than US dollars, and minimum pension liabilities. For all periods presented,
      the
      Company’s financial statements do not include any of the additional elements
      that affect comprehensive income. Accordingly, net income and comprehensive
      income are identical.





**Stock-Based
      Compensation**





On
      January 1, 2006, the Company applied SFAS No. 123(R), *Share-Based
      Payment* ,
      to
      account for stock options and similar equity instruments issued. Accordingly,
      compensation expense attributable to stock options or similar equity instruments
      granted is measured at the fair value at the grant date using the Black-Scholes
      option pricing model and recognized over the expected vesting period. In the
      event stock options are forfeited, any previously recognized compensation
      expense related to unvested and expiring awards is recognized in earnings during
      the period of forfeiture.




F-10


**COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





Although
      the assumptions used to record stock compensation expense reflect management’s
      best estimates, they involve inherent uncertainties based on market conditions
      generally outside of the control of the Company. If other assumptions were
      used,
      stock-based compensation expense could be significantly impacted. As stock
      options are exercised, the proceeds received on exercise, in addition to the
      previously recognized amounts related to those stock options, are credited
      to stockholders’ equity. The adoption of SFAS No. 123(R) did not have an impact
      on the Company’s historical financial statements as the Company had no stock
      options outstanding prior to adoption.





The
      Company provides direct stock awards to certain directors, officers, and
      consultants. Direct stock awards are typically subject to a two year vesting
      period. Direct stock awards are recorded at fair value on the grant date, with
      compensation expense recognized on a straight-line basis over the vesting
      period.





**Foreign
      Currency Translation**





The
      Company’s functional currency is the US dollar. Accordingly, foreign currency
      balances are translated into US dollars as follows i) Monetary assets and
      liabilities are translated at the period-end exchange rate ii) Non-monetary
      assets are translated at the rate of exchange in effect at their acquisition
      date; and iii)  Revenue
      and expense items are translated at the average exchange rate for the respective
      period.





Foreign
      exchange gains and losses are recognized as period expenses.





**Earnings
      (Loss) per Share**





Basic
      earnings (loss) per share is computed by dividing net earnings (loss) available
      to common stockholders by the weighted average number of common shares
      outstanding during the period. Diluted net earnings (loss) per share on the
      potential exercise of equity-based financial instruments is not presented where
      anti-dilutive. For the three and nine months ended September 30, 2007 and 2006,
      outstanding share purchase warrants and options to purchase common shares were
      excluded from the computation of diluted earnings per share as the impact of
      these instruments was antidilutive as a result of losses incurred in these
      periods.





**Income
      taxes**





The
      Company accounts for income taxes using the asset and liability method which
      requires the recognition of deferred tax assets and liabilities for the expected
      future tax consequences of events that have been recognized in the Company’s
      financial statements or tax returns.




**Financial
      Instruments**





The
      Company’s financial instruments consist of cash and cash equivalents, prepaid
      expenses and deposits, accounts payable and accrued liabilities, mineral
      property purchase obligations, amounts due to and from related parties and
      short-term promissory notes. The carrying value of these financial instruments
      approximates their fair value based on their liquidity or their short-term
      nature. The Company is not exposed to significant interest or credit risk
      arising from these financial instruments.





In
      February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      159, “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an amendment of FASB Statement No. 115,”(“SFAS No. 159”). SFAS No. 159
      permits companies to elect to measure many financial instruments and certain
      other assets and liabilities at fair value in earnings. The Company is currently
      evaluating the impact, if any, of SFAS No. 159 on its financial statements.
      If
      elected by the Company, SFAS No. 159 would be effective as of January 1,
      2008.




F-11


**COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





**NOTE
      3 - MINERAL PROPERTIES AND EXPLORATION RIGHTS**





Title
      to
      mineral properties and mining and exploration rights involves certain inherent
      risks due to the difficulties of determining the validity of certain claims
      as
      well as the potential for problems arising from the frequently ambiguous
      conveyance history characteristic of many mining properties. The Company cannot
      give any assurance that title to such properties will not be challenged or
      impugned and cannot be certain that the Company will have valid title to its
      mining properties. The Company relies on title opinions by legal counsel who
      base such opinions on the laws of countries in which the Company operates.





**A)
      Caramanta Project**





(i)
      Caramanta Project - Concessions 6602, 1343 and 6329





On
      September 22, 2005, the Company entered into an Assignment Agreement with
      Investcol Limited (“Investcol”), a related party, where Investcol assigned,
      transferred, and conveyed to the Company all of its rights under a contract
      for
      Purchase Option of Mining Concessions (“Original Option Contract”) entered into
      with Cia Servicios Y Logisticos Ltda. As a result of the Assignment Agreement,
      the Company acquired an option to purchase certain mining, mineral and
      exploration rights on property known as Concessions 6602, 1343 and 6329 located
      in Caramanta Municipality, Antioquia Department, Medellin, Colombia for $10,000,
      on condition that $2,990,000 is invested in exploratory work on the property
      over a three year period. The Company issued 1,000,000 shares of its common
      stock to Investcol at a deemed fair market value $0.25 per share for total
      consideration of $250,000. At the date of acquisition of these mineral rights
      the Company had not yet incorporated a Company in Colombia and had not gained
      the support of the Colombian federal or local governments. Due to these
      uncertainties, the initial $260,000 was considered mineral property exploration
      and was recorded as part of mineral property exploration expenses in the
      consolidated statement of operations in fiscal 2005.





Pursuant
      to the Assignment Agreement, the Company was committed to fund $2,990,000 of
      exploratory work as follows:





a)
            $500,000
                upon the closing of the Assignment
                Agreement;


b)
            $750,000
                during the 12 month period commencing June 25, 2006; and on the earlier
                of
                June, 2006 or commencement of the second exploration phase;
                and


c)
            $1,740,000
                during the 12-month period commencing June 25,
                2007.





On
      September 25, 2006 the Assignment Agreement was superseded in connection with
      the Company’s agreement to acquire the Mining Concessions. (See note 3(A)(iii)
      below for further details)





(ii)
      Caramanta Project - Concessions 6993, 7039, 6821 and 6770 and HET 31, 32, 26,
      27
      and HETG 01





On
      February 16, 2006 the Company entered into a Letter of Intent (“LOI”) with
      Investcol to acquire Investcol’s rights in a Contract for Purchase (“Purchase
      Contract”) entered into with Cia Servicios Y Logisticos Ltda. The LOI outlined a
      proposed transaction where the Company intended to acquire Investcol’s rights to
      acquire mining contracts to exclusively engage in mining activities on
      concessions 6993, 7039, 6821 and 6770 (the “Contracts”) and options that
      Investcol held to acquire the exclusive rights to engage in mining activities
      on
      concessions HET 31, 32, 26, 27 and HETG 01 (the “Options”) all located within an
      area in Colombia referred to as the Caramanta location.





F-12


**COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





The
      LOI
      was non-binding and subject to final negotiation and the execution of a
      definitive agreement. On April 10, 2006, the Company entered into a definitive
      agreement with Investcol finalizing this transaction (“Assignment Agreement”).
      In consideration for this Assignment Agreement, the Company paid Investcol
      total
      consideration in the amount of $350,000 and issued 1,000,000 restricted shares
      of common stock. Under the terms of the Assignment Agreement, Investcol agreed
      to pay the exercise price of $150,000 on the Options whose titles will remain
      in
      the name of Cia Servicios until the final exploration commitments have been
      made. The final option payments were made prior to July 30, 2006.





On
      September 25, 2006 the Assignment Agreement was superseded in connection with
      the company’s agreement to acquire the Mining Concessions. (See note 3(A)(iii)
      below for further details)





(iii)
      Caramanta Project - Acquisition of the Caramanta Exploration
      Properties





On
      September 25, 2006 the Company, through the acquisition of the outstanding
      shares of Gavilan, acquired full legal title to the Caramanta project
      concessions described in Notes 3A(i) and 3A(ii) above. Consideration paid for
      the acquisition included $300,000 cash and the issuance of 1,150,000 restricted
      common shares at a value of $1.41 per share. In addition, a $50,000 finder’s fee
      was paid to Investcol. The total acquisition cost of $1,971,500 was allocated
      to
      the net assets acquired as follows:





Mineral
                and exploration and properties rights
            
            $
            1,780,841Property,
                plant and equipment
            
            
            190,659$
            1,971,500





The
      purchase was recorded as part of i) acquired mineral and exploration properties
      and rights and ii) property, plant and equipment in fiscal 2006. As a result
      of
      the acquisition of Gavilan, the Company no longer has any minimum exploratory
      work obligations related to the Caramanta concessions.





**B)
      Marmato Project**




On
      January 12, 2006, the Company entered into a Stock Purchase Agreement with
      Investcol and RNC (the "Agreement"), whereby the Company (i) acquired
      twenty-five percent (25%) of the issued and outstanding stock of RNC, a Belize
      corporation ("RNC") and (ii) held an option to acquire the remaining seventy
      five percent (75%) of RNC's issued and outstanding stock over a period of time.
      RNC is the beneficial holder of 94.99% of the issued and outstanding stock
      of
      Caldas, a Colombia corporation that (i) owns certain mining, mineral and
      exploration rights, (ii) has options to acquire mining, mineral and exploration
      rights and (iii) has exclusive rights to evaluate certain property, all located
      in the Zona Alta portion of the Marmato project in Colombia.





Pursuant
      to the Stock Purchase Agreement, the Company:





a)
            Acquired
                25% of the outstanding shares of RNC (total 25% of RNC) by the issuance
                of
                1,000,000 common shares of the Company to Investcol and the advance
                to RNC
                of a $1,200,000 non-interest bearing loan. Total consideration of
                $1,900,000 related to this transaction was recorded as part of acquired
                mineral and exploration properties and rights in fiscal
                2006.





b)
            Acquired
                an additional 25% of RNC (total 50% of RNC) by the issuance of 2,000,000
                shares of the Company to Investcol and the advance of an additional
                $4,000,000 non-interest bearing loan to RNC in two instalments of
                $1,000,000 and $3,000,000 on or before March 15, 2006 and April 30,
                2006,
                respectively. On March 10, 2006, the Company entered an




F-13


**COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**




extension
      agreement with Investcol to extend the terms to April 30, 2006, and completed
      the transaction on April 28, 2006. Total consideration of $5,480,000 related
      to
      this transaction was recorded as part of acquired mineral and exploration
      properties and rights in fiscal 2006.





c)
                  
                  Heldthe
                      option to acquire an additional 25% of RNC (total 75% of RNC)
                      by the
                      issuance of 4,000,000 common shares of the Company to Investcol
                      and the
                      advance of an additional $15,000,000 non-interest bearing loan
                      to RNC on
                      or before October 30, 2006.On
                      August 22, 2006, the Company amended its January 12, 2006 Stock
                      Purchase
                      Agreement with Investcol and RNC and concurrently exercised
                      its option to
                      increase the Company’s interest in RNC from 50% to 75%. Under the terms of
                      the amended agreement, the Company issued 4,200,000 common
                      shares and paid
                      $200,000 to Investcol. In connection with this transaction,
                      the Company
                      committed to providing an additional $5,000,000 by way of non-interest
                      bearing demand loan to RNC by December 31, 2006 and to providing
                      sufficient funds to RNC, upon terms satisfactory to the Company,
                      to
                      complete a full bankable feasibility study of the Marmato Project.
                      Total
                      consideration of $4,820,000 related to this transaction was
                      recorded as
                      part of acquired mineral and exploration properties and rights
                      in fiscal
                      2006.





d)
                
                Held
                    the option to acquire an additional 25% of RNC (total 100% of
                    RNC) until
                    May 1, 2009 for a price equal to 25% of the value of Caldas determined
                    by
                    a bankable feasibility study prepared by a certified mineral
                    property
                    evaluator, or other acceptable third party. The purchase price
                    was payable
                    in either cash or the Company’s common shares.Under the terms of the August 22, 2006 amended agreement, the
                    Company held
                    an option to acquire the remaining 25% of RNC on or before May
                    1, 2009 for
                    a purchase price equal to 25% of the fair value of Caldas determined
                    by a
                    feasibility study. The purchase price, pursuant to the amended
                    agreement,
                    was limited to a maximum of $15,000,000 plus 4,000,000 shares
                    of the
                    Company. Payment of the purchase price was payable in either
                    cash or
                    common shares of the Company, or any combination thereof. On
                    December 14,
                    2006, the parties executed a Second Amendment to the Stock Purchase
                    Agreement (the “Second Amendment”) in order to revise the consideration
                    required to exercise the Company’s option to acquire the remaining 25% of
                    the issued and outstanding stock of RNC. Subject to the revised
                    terms set
                    forth in the Second Amendment, the Company held the option to
                    acquire an
                    additional 15% interest in RNC, in exchange for the issuance
                    of 4,000,000
                    common shares of the Company to Investcol. In connection with
                    the
                    execution of the Second Amendment, the Company exercised its
                    option,
                    resulting in the Company acquiring an additional 15% of RNC,
                    bringing the
                    Company’s total ownership to 90%. The revised terms set forth in the
                    Second Amendment provide that the Company has the option to acquire
                    the
                    remaining 10% of RNC until May 1, 2009 in exchange for a purchase
                    price of
                    $15,000,000. The purchase price can be made in either cash, shares
                    of our
                    common stock, or any combination thereof. Total consideration
                    of
                    $5,120,000 related to this transaction was recorded as part of
                    acquired
                    mineral and exploration properties and rights in fiscal
                    2006.





On
      August
      24, 2007 the parties executed a Third Amendment to the Stock Purchase Agreement
      (the “Third Amendment”) in order to revise the consideration required to
      exercise the Company’s option to acquire the final 10% of the issued and
      outstanding stock of RNC. Subject to the revised terms set forth in the Third
      Amendment, on September 14, 2007, the Company acquired the final 10% of RNC
      for
      a cash payment of $300,000 and the issuance of 3,000,000 common shares of the
      Company to Investcol. Total consideration of $4,710,000 related to this
      transaction was recorded as part of acquired mineral and exploration properties
      and rights in fiscal 2007.





F-14


**COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**




**C)
      Kedahda Properties**





On
      August
      30, 2006 the Company, purchased certain mining exploration properties in the
      Republic of Colombia and the related geochemical and other proprietary
      geological data from a wholly-owned subsidiary of Anglo Gold Ashanti, Sociedad
      Kedahda, S.A., for $500,000 cash consideration. The purchase was recorded as
      part of acquired mineral and exploration properties and rights in fiscal
      2006.




**Mineral
      Property Rights Acquisition and Exploration Expenditures**




The
      Company’s mineral property acquisition and exploration expenditures consist
      of




I)
            The
                acquisition of mineral concessions;II)
            The acquisition of mineral and exploration
              rights from existing titleholders;III)
            The exploration of acquired mineral
              properties and related activities; andIV)
            Stock-based compensation allocated pursuant
              to FAS 123(R)





The
      following table summarizes the Company’s mineral concession acquisitions,
      mineral rights acquisitions, and mineral exploration expenses as recorded in
      the
      Company’s Consolidated financial statements:





**Three**
              **Months**
              **Ended**
              **September
                30,**
              **2007**
            
            **Three**
              **Months**
              **Ended**
              **September
                30,**
              **2006**
            
            **Nine**
              **Months**
              **Ended**
              **September
                30,**
              **2007**
            
            **Nine**
              **Months**
              **Ended**
              **September
                30,**
              **2006**
            
            **Cumulative**
              **From**
              **Inception**
              **(March
                25, 2003)**
              **Through**
              **September
                30,**
              **2007**I)
            Acquisition
                of
              mineral
                concessions
            
            $
            4,710,000
            
            $
            7,100,841
            
            $
            4,710,000
            
            
            17,080,841
            
            $
            26,910,841II)
            Acquisition
                of mineral and exploration rights
            
            
            1,670,416
            
            
            2,966,087
            
            
            6,862,309
            
            
            6,932,965
            
            
            17,501,380Total
                acquired mineral and exploration properties and rights
            
            
            6,380,416
            
            
            10,066,928
            
            
            11,572,309
            
            
            24,013,806
            
            
            44,412,221III)
            Exploration
                of
              acquired
              mineral
              properties
            
            
            2,240,849
            
            
            1,034,990
            
            
            4,813,541
            
            
            2,011,487
            
            
            9,077,682IV)
            Stock
                based
              compensation
            
            
            216,425
            
            
            39,639
            
            
            676,337
            
            
            176,199
            
            
            889,932Total
                mineral
              property
              exploration
              expenses
            
            
            2,457,274
            
            
            1,074,629
            
            
            5,489,878
            
            
            2,187,686
            
            
            9,967,614Total
                mineral and
              exploration
              properties
                and rights
              acquisitions
              and
                explorationexpenditures
            
            $
            8,837,690
            
            $
            11,141,557
            
            $
            17,062,187
            
            $
            26,201,492
            
            $
            54,379,835






F-15


**COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





**Capitalized
      Mineral and Exploration Properties and Rights**





Acquired
      mineral and exploration properties and exploration rights have been recorded
      at
      amounts necessary to reflect temporary differences associated with the
      differences between their accounting and tax bases. These differences arise
      primarily due to differences between the assigned values and tax bases of
      acquired Caramanta Project and Marmato Project mineral concessions. As a result,
      acquired mineral and exploration properties and rights are recorded in the
      consolidated balance sheets as follows:





**September
                30, 2007**
            
            **December
                31, 2006**Purchase
                of mineral and exploration properties and rights
            
            $44,412,221
            
            $
                32,839,912Recognition
                of deferred tax liability upon acquisition
            
            
            13,008,328
            
            $
            10,688,474Mineral
                and exploration properties and rights
            
            $
            57,420,549
            
            $
            43,528,386





**NOTE
      4 - PROPERTY AND EQUIPMENT**





**As
                at September 30, 2007**
            
            **Cost**
            
            **Accumulated**
              **Amortization**
            
            **Net
                Book**
              **Value**Equipment
                and computers
            
            $
            747,778
            
            $
            (52,066
            )
            $
            695,712Building
            
            
            94,051
            
            
            (5,108
            )
            
            88,943Vehicles
            
            
            309,248
            
            
            (52,532
            )
            
            256,716Total
            
            $
            1,151,077
            
            $
            (109,706
            )
            $
            1,041,371





**As
                at December 31, 2006**
            
            **Cost**
            
            **Accumulated**
              **Amortization**
            
            **Net
                Book**
              **Value**Equipment
                and computers
            
            $
            171,656
            
            $
            (11,292
            )
            $
            160,364Building
            
            
            87,033
            
            
            (1,451
            )
            
            85,582Vehicles
            
            
            193,149
            
            
            (19,362
            )
            
            173,787Total
            
            $
            451,838
            
            $
            (32,105
            )
            $
            419,733





**NOTE
      5 - STOCKHOLDERS’ EQUITY**





**Common
      Stock**





**September
                30, 2007**
            
            **December
                31, 2006****Authorized:**200,000,000
                common shares,$0.00001
                par value**Issued
                and Outstanding:**77,299,849
                commonshares
                (December 31, 2006:
              56,039,849
                shares)
            
            $
            773
            
            $
            560





F-16


**COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**




i)  During
      the nine months ended September 30, 2007, the Company completed the following
      transactions:





a)
            On
                March 21, 2007, the Company completed a private equity offering of
                9,020,000 common shares at $1.00 per common share. The gross proceeds
                received from the offering were $9,020,000. In connection with this
                private equity offering, the Company paid a commission of $541,200
                and
                issued agents’ warrants to purchase 541,200 shares of the Company’s common
                stock with each warrant exercisable for a period of 36 months from
                the
                closing of the offering at an exercise price of $1.00 per share.
                The fair
                value of the agents’ warrants was $404,276 and has been accounted for as a
                reduction of the additional paid-in capital associated with the related
                March 21, 2007 common stock issuance.On
                April 20, 2007, the Company filed a Registration Statement with the
                Securities and Exchange Commission (SEC) to register 9,170,000 common
                shares previously issued by the Company. On August 13, 2007 the SEC
                declared the Company’s Registration Statement
                effective.





b)
            On March 22, 2007, the Company
                issued
                650,000 common shares to certain consultants
                to the Company for services rendered as described under “Stock Optionsand
                Other Stock-Based Compensation”.




c)
            On
                May 3, 2007 the company issued 50,000 common shares pursuant to the
                exercise of 50,000 options for proceeds of $37,500.





d)
            On
                June 6, 2007 the company issued 60,000 common shares to non-management
                directors of the company in connection with their annual
                remuneration.





e)
            On
                August 7, 2007 the Company issued 150,000 options to purchase the
                Company’s common stock to certain consultants in exchange for services
                rendered.





f)
            On
                August 14, 2007, the Company completed a private equity offering
                of
                8,483,000 Units at $1.40 CDN per Unit to a total of 24 investors.
                Each
                Unit consists of one share of common stock and one-half warrant (“the
                Warrant”), for a total of 8,483,000 common shares and 4,241,500 warrants
                issued. The total gross proceeds raised was $11,163,628 ($11,876,200
                CDN).
                Each Warrant is exercisable for one common share at an exercise price
                of
                $1.85 CDN and the Warrants are exercisable for 12 months following
                the
                closing of the offering. The Warrant also requires the holder, upon
                notice
                from the Company, to exercise in the event that during any fifteen
                consecutive trading days, the common stock of the Company closes
                at or
                above $2.25 CDN on a recognized North American stock exchange.





In
      connection with this private equity offering, the Company paid as a commission
      ($669,818 CDN) and issued additional warrants (“Agents’ Warrants”) to purchase
      508,980 shares of the Company’s common stock with each Agents’ Warant
      exercisable for a price of $1.40 CDN per share. The Agents’ Warrants are
      exercisable at any time for 36 months following the closing of the offering.





F-17
 
  **COLOMBIA
              GOLDFIELDS LTD.**
 **(An
              Exploration Stage Company)**
 **NOTES
              TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





Pursuant
      to the terms of the private placement, the Company is obligated to file a
      Registration Statement with the Securities and Exchange Commission (SEC) to
      register the common shares and common shares underlying the Warrants. On October
      3, 2007 the SEC declared the Company’s Registration Statement
      Effective.





The
      Company has allocated the total net proceeds of the offering to the various
      underlying equity instruments comprising the offering, based on the estimated
      relative fair value of each instrument of the closing date, as
      follows:





**Gross
                Proceeds**
            
            **Net
                Proceeds**Common
                shares
            
            $
            85
            
            $
            85Additional
                paid in capital-common shares
            
            
            10,178,793
            
            
            9,568,060Additional
                paid in capital-share purchase warrants
            
            
            984,750
            
            
            925,665$
            11,163,628
            
            $
            10,493,810





As
      described above, the Warrants and Agents’ warrants (collectively “the Warrants”)
      are denominated in Canadian dollars while the Company’s functional and reporting
      currency is the U.S. dollar. As a result, the fair value of the Warrants will
      fluctuate based on their time to expiry and changes in the exchange rate between
      the U.S. and Canadian dollar.





The
      SEC
      and the FASB have issued recent interpretations of GAAP that suggest warrants
      with exercise prices denominated in a different currency from an entity’s
      functional currency should not be classified as equity. As a result, these
      instruments would be treated as derivatives and recorded as liabilities which
      are carried at their fair value, with period to period changes in the fair
      value
      recorded as a gain or loss in the statement of operations.





The
      recent SEC and FASB interpretations relate to FASB Statement No. 133,
“Accounting for Derivative Instruments and Hedging Activities” and Emerging
      Issue Task Force (“EITF”) EITF 00-19 “ Accounting for Derivative Financial
      Instruments Indexed to and Potentially Settled in a Company’s Own Stock”. In
      April 2007, the FASB released Proposed Statement 133 Implementation Issue C21,
      “Whether Options (Including Embedded Conversion Options) Are Indexed to both
      an
      Entity’s own Stock and Currency Exchange Rates.” The tentative conclusions of
      C21 would mean the Company’s Canadian dollar denominated warrants do not meet
      the scope exception under FAS133 and therefore these warrants would be recorded
      as liabilities and carried at fair value. Transitional provisions would require
      a cumulative-effect adjustment to the opening balance of the Company’s deficit.
      The FASB deferred making a decision on confirming their tentative conclusions
      in
      Issue C21 and asked that it be subsumed in to the new EITF issue of 07-E
“Determining Whether an Instrument is Indexed to a Company’s Own Stock.” A
      conclusion has not yet been reached on this issue by the EITF or the FASB.
      Early
      adoption of C21 is not permitted.





F-18





**COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





If
      the
      Company had recorded such instruments as derivatives, it would have reported
      the
      following unrealized gains for the three and nine month periods ended September
      30, 2007:





**Subscribers’
                Warrants**
            
            **Agents’**
              **Warrants**
            
            **Total**
              **Warrants**Fair
                value - August 14, 2007
            
            $
            1,075,095
            
            $
            327,671
            
            $
            1,402,766Decrease
                in fair value
            
            
            (169,685
            )
            
            (9,402
            )
            
            (179,087
            )Fair
                value - September 30, 2007
            
            $
            905,410
            
            $
            318,269
            
            $
            1,223,679





g)
            The
                Company calculated the amounts using the Black-Scholes option pricing
                model and used the following assumptions to value the instruments
                at
                September 30, 2007: 0% dividend rate, 70% volatility, the actual
                exercise
                price of each instrument, the stock price at September 30, 2007 and
                the
                Canadian risk free interest rate for the remaining life of the
                Warrants.





h)
            On
                September 14, 2007 in connection with the acquisition of the final
                10% of
                RNC, the Company issued 3,000,000 common shares at $1.47 per share
                to
                Investcol (See Note 3).





ii)
            
            During
                the year ended December 31, 2006, the Company completed the following
                transactions:





a)
            On
                January 10, 2006, the Company issued 3,126,083 common shares at $0.60
                per
                share for gross proceeds of $1,875,650. The Company paid finders
                fees in
                the amount of $187,565, for net proceeds of
                $1,688,085.





b)
            On
                February 14, 2006, the Company issued 1,000,000 common shares at
                $1.90 per
                share to Investcol in connection with the acquisition of 25% ownership
                of
                RNC (See Note 3).





c)
            On
                April 10, 2006, the Company issued 1,000,000 common shares at $2.25
                per
                share to Investcol to acquire rights in certain properties in the
                Caramanta area of Colombia. See Note
                3)





d)
            On
                April 26, 2006, the Company completed a private equity offering of
                6,500,666 Units at $1.50 per Unit to a total of 26 investors. Each
                Unit
                consists of one share of common stock, par value $0.00001, and one
                Warrant
                (the “Warrant”) to purchase one share of common stock, exercisable for
                twenty-four months from the closing of the offering. The exercise
                price of
                the Warrant is $2.50. The gross proceeds received from this offering
                were
                $9,751,000. Assuming that the investors exercise all of the Warrants,
                the
                gross proceeds received from the exercise of the Warrants will equal
                $16,251,665.





In
      connection with this private equity offering, the Company paid as a commission
      $585,061 and issued warrants to purchase 390,040 shares of the Company’s common
      stock with each warrant exercisable for a period of thirty-six (36) months
      from
      the closing of the offering at the exercise price of $2.00 per share. Assuming
      that all of these warrants are exercised, the Company will receive gross
      proceeds of $780,080.





F-19




**COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





The
      Company has allocated the total net proceeds from the offering of $9,165,939
      to
      the various underlying equity instruments comprising the equity offering, based
      on the estimated relative fair value of each instrument at the offering date,
      as
      follows:





Common
                shares
            
            $
            65Additional
                paid in capital - common shares
            
            
            6,416,112Additional
                paid in capital - share purchase warrants
            
            
            2,749,762Total
                gross proceeds from private equity offering
            
            $
            9,165,939





e)
            On
                April 28, 2006, in connection with the acquisition of the second
                25% of
                RNC, the Company issued 2,000,000 common shares at $2.74 per share
                to
                Investcol. (See Note 3).





f)
            On
                August 22, 2006 in connection with the acquisition of the third 25%
                of
                RNC, the Company issued 4,200,000 common shares at $1.10 per share
                to
                Investcol. (See Note 3).





g)
            On
                September 25, 2006 in connection with the Company’s acquisition of 100% of
                the Caramanta Exploration Properties, the Company issued 1,150,000
                restricted common shares at $1.41 per share (see Note
                3).





h)
            On
                October 14, 2006 3,471,000 share purchase warrants were exercised
                for net
                proceeds to the Company of $1,735,500 and 3,471,000 common shares
                were
                issued upon exercise.





i)
            On
                December 14, 2006 in connection with the additional acquisition of
                15% of
                RNC, the Company issued 4,000,000 common shares at $1.28 per share
                to
                Investcol (See Note 3).





**Warrants**





As
      at
      September 30, 2007, the following warrants were issued and
      outstanding:





**#
                Warrants**
            
            **Exercise
                Price**
            
            **Expiry
                Date**6,500,666
            
            $
            2.50
                USD per share
            
            
            April
                25, 2008390,040
            
            
            2.00
                USD per share
            
            
            April
                25, 2009541,200
            
            
            1.00
                USD per share
            
            
            March
                22, 20104,241,500
            
            
            1.85
                CDN per share
            
            
            August
                14, 2008508,980
            
            
            1.40
                CDN per share
            
            
            August
                14, 201012,182,386
            
            $
            2.15
                USD per share





**Stock
      Options and Other Stock-Based Compensation**





**Stock
      Options**





In
      fiscal
      2006, the Company adopted the 2006 Stock Incentive Plan, (the “Plan”) which
      provides for the grant of incentive stock options, non-qualified stock options,
      stock appreciation rights, restricted stock, performance shares and performance
      units, and stock awards to officers, directors or employees of, as well as
      advisers and consultants to, the Company.





All
      stock
      options and rights are to vest over a period determined by the Board of
      Directors and expire not more than ten years from the date granted. On
      August
      17, 2007 the Company received shareholder approval for an amended Stock
      Incentive Plan. Pursuant to the amended Plan, the number of shares that may
      be
      issued for awards granted under the 2006 plan was increased to
      6,500,000.




F-20


**COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





Pursuant
      to the Plan, during fiscal 2007 the Company granted 1,790,000 stock options
      to
      employees, directors, officers and consultants of the Company. These stock
      options vest at a rate of 25% every six months over a period of two years,
      and
      have a life of 10 years. For the three months ended September 30, 2007, the
      Company recorded a total of $616,446 in stock based compensation expense related
      to stock options in the consolidated statement of operations. (Nine months
      ended
      September 30, 2007 - $1,635,228).





A
      summary
      of stock options granted and exercised is as follows:





**Shares**
            
            **Weighted
                Average**
              **Exercise**
              **Price**Options
                outstanding at December 31, 2006
            
            
            2,787,500
            
            $
            1.16Granted
                in fiscal 2007
            
            
            1,790,000
            
            
            1.19Exercised
                in fiscal 2007
            
            
            (50,000
            )
            
            (0.75
            )Forfeited
                and expired
            
            
            (400,000
            )
            
            (0.75
            )Options
                outstanding at September 30, 2007
            
            
            4,127,500
            
            $
            1.22





**Fiscal
                2007**Weighted
                  averagefair
            
            $
            0.99value
                of optionsgranted
                during the periodWeighted
                average fairvalue
                of options vested
            
            $
            1.12during
                the period





A
      summary
      of stock options outstanding and exercisable at September 30, 2007 is as
      follows:





**Range
                of**
              **Exercise**
              **Prices**
            
            **Number**
              **Outstanding**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            **Weighted**
              **Average**
              **Remaining**
              **Contractual**
              **Life
                (yrs)**
            
            **Number**
              **Exercisable**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**$0.75
                - $1.00
            
            
            587,500
            
            $
            0.75
            
            $
            8.27
            
            
            525,000
            
            $
            0.75$1.01
                - $2.00
            
            
            3,540,000
            
            
            1.30
            
            
            9.14
            
            
            1,322,500
            
            
            1.39$0.75
                - $2.00
            
            
            4,127,500
            
            $
            1.22
            
            $
            1.22
            
            
            1,847,500
            
            $
            1.21





The
      fair
      value of options granted has been estimated as of the date of the grant using
      the Black-Scholes option pricing model with the following assumptions: risk-free
      interest rate of 4.45%, dividend yield 0%, an estimated volatility of 75%,
      and
      expected term of 10 years, equal to the full life of the options as the Company
      does not expect any options to be exercised early.





F-21


**COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





**Other
      Stock-Based Compensation**





On
      October 1, 2006, the Company agreed to grant 500,000 common shares to a
      consultant providing services to the Company. Pursuant to the terms of the
      Consulting Agreement, should the Consultant’s employment terminate by the
      Consultant’s resignation before the period of two years has elapsed, the
      Consultant is required to return a pro rata portion of the shares based on
      the
      time remaining in the contract. In the case of a change in control of the
      Company by merger or sale of a majority stake or otherwise, the shares held
      by
      the Consultant will immediately vest. The fair value of the common stock award,
      based on the market price of the Company’s common shares at the agreement date,
      was $915,000. The shares were issued on March 22, 2007 and the Company accounts
      for this award by recognizing compensation expense ratably over twenty-four
      months, commencing on the agreement date. For the three months ended September
      30, 2007, the Company recorded a total of $114,375 in stock based compensation
      expense related to this award in the consolidated statement of operations (nine
      months ended September 30, 2007 - $343,125).





On
      January 15, 2007, the Company agreed to grant 150,000 common shares to a
      consultant for services rendered to the Company for the three months ended
      April
      15, 2007. The fair value of the common stock award, based on the market price
      of
      the Company’s common shares at the agreement date, was $166,500. The shares were
      issued on March 22, 2007 and the Company accounts for this award by recognizing
      compensation expense ratably over three months, commencing on the agreement
      date. For the three months ended September 30, 2007, the Company recorded a
      total of $NIL in stock based compensation expense related to this award in
      the
      consolidated statement of operations (nine months ended September 30,
      2007-$166,500).





On
      May 6,
      2007, the Company granted 60,000 common shares to non-management directors.
      The
      fair value of the common stock awards, based on the market price of the
      Company’s common shares at the grant date, was $72,600. The shares were issued
      on June 6, 2007 and the Company accounts for this award by recognizing
      compensation expense ratably over twelve months, commencing on the grant date.
      For the three months ended September 30, 2007, the Company recorded a total
      of
      $18,150 in stock-based compensation expense related to this award in the
      consolidated statement of operations (nine months ended September 30, 2007
      -
      $30,250).





**Summary
      of Stock-Based Compensation Expenses**




The
        following table summarizes stock-based compensation recorded in the consolidated
        statements of operations:


**Three**
              **Months**
              **Ended**
              **September
                30,**
              **2007**
            
            **Three**
              **Months**
              **Ended**
              **September
                30,**
              **2006**
            
            **Nine**
              **Months**
              **Ended**
              **September
                30,**
              **2007**
            
            **Nine**
              **Months**
              **Ended**
              **September
                30,**
              **2006**
            
            **Cumulative**
              **from
                Inception**
              **(March
                25, 2003)**
              **through**
              **September
                30,**
              **2007**Mineral
                property
              exploration
                expenses
            
            $
            216,426
            
            $
            39,639
            
            $
            676,337
            
            $
            176,199
            
            $
            889,933General
                and administrative
            
            
            532,545
            
            
            560,829
            
            
            1,498,766
            
            
            1,606,424
            
            
            3,278,327Total
                stock-based compensation
            
            $
            748,971
            
            $
            600,468
            
            $
            2,175,103
            
            $
            1,782,623
            
            $
            4,168,260





As
      at
      September 30, 2007, there was $1,194,878 of unrecognized compensation cost
      related to unvested stock options. The cost is expected to be recognized as
      follows: Fiscal 2007 - $410,056; Fiscal 2008 - $730,556; Fiscal 2009 - $54,266.






F-22




**COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





At
      September 30, 2007, there was $499,850 of unrecognized compensation cost related
      to unvested direct stock awards recorded as prepaid consulting fees in the
      Company’s consolidated balance sheet. The cost is expected to be recognized in
      the statement of operations as follows: Fiscal 2007-$132,525; Fiscal 2008 -
      $367,325.





**NOTE
      6 - MINERAL PROPERTY PURCHASE OBLIGATIONS**





In
      the
      normal course of business the Company enters into contractual obligations with
      Colombian titleholders to acquire mineral and exploration rights. Upon signing,
      typically 25% of the negotiated purchase price is immediately due and payable
      with an additional 25% due when all required documentation has been submitted
      to
      the local mining department and the final 50% due when the mining claim has
      been
      successfully transferred and registered in the Company’s name. The Company
      records the full contractual obligation as a contract liability upon signing.
      The timing and magnitude of repayment of these obligations will vary between
      periods as will cash flows related to these obligations.





**NOTE
      7 - INCOME TAXES**





The
      potential benefit of net operating loss carry forwards has not been recognized
      in the financial statements. Since the Company has no source of operating
      revenue, it cannot be assured that it is more likely than not that such benefit
      will be realized in future years. The components of the net deferred tax asset,
      net deferred tax liability, differences between the statutory rate and the
      effective rate, and the valuation allowance are as follows:





a)
            Components
                of income tax provision:





The
      components of the Company’s provision for (recovery of) income taxes consists of
      the following:





**Three
                Months Ended**
            
            **Nine
                Months Ended****September
                30, 2007**
            
            **September
                30, 2007**Domestic
            
            $
            -
            
            $
            -Foreign
            
            
            (539,550
            )
            
            (1,502,160
            )$
            (539,500
            )
            $
            (1,502,160
            )





For
      the
      three months ended September 30, 2007 the Company’s loss before provision for
      income taxes was generated in the following jurisdictions: Domestic $1,700,505;
      Foreign $2,769,000. For the nine months ended September 30, 2007 the Company’s
      loss before provision for income taxes was generated in the following
      jurisdictions: Domestic $4,996,683; Foreign $6,158,000.





F-23





**COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**




b)
            Income
                tax rate reconciliation:





The
      effective income tax rate differs from the statutory rate that would be obtained
      by applying the U.S. Federal income tax rate to net income (loss) before income
      taxes. These differences result from the following items:





**Three
                Months Ended**
            
            **Nine
                Months Ended****September
                30, 2007**
            
            **September
                30, 2007**US
                federal income tax rate
            
            
            34.0
            %
            
            34.0
            %Decrease
                inIncome
                tax rate resultingFrom:Losses
                not recognized fortax
                purposes
            
            
            (8.6
            )
            
            (10.5
            )Tax
                rate differences inforeign
                subsidiaries
            
            
            (3.4
            )
            
            (3.1
            )Other
                permanentdifferences
            
            
            (9.9
            )
            
            (6.9
            )Effective
                income tax rate
            
            
            12.1
            %
            
            13.5
            %





c)
            Component
                of deferred income tax provision:





The
      components of the temporary differences, which resulted in deferred income
      tax
      provision, are as follows:





**Three
                Months Ended**
            
            **Nine
                Months Ended****September
                30, 2007**
            
            **September
                30, 2007**Losses
                carriedforward
            
            $
            (824,516
            )
            $
            (1,698,245
            )Tax
                depreciationless
                thanaccounting
                depreciation
            
            
            10,927
            
            
            65,878Foreign
                exploration costs
            
            
            (539,550
            )
            
            (1,502,160
            )$
            (1,353,139
            )
            $
            (3,134,527
            )Change
                in valuationallowance
            
            
            813,589
            
            
            1,632,367Deferred
                income tax provision
            
            $
            (539,550
            )
            $
            (1,502,160
            )





d)
            Components
                of deferred tax asset and
                liability:





The
      components of the temporary differences, which resulted in deferred tax assets,
      are:





**September
                30, 2007**
            
            **December
                31, 2006**Tax
                depreciation less thanDepreciation
            
            $
            336,161
            
            $
            402,039Losses
                carriedForward
            
            
            2,450,568
            
            
            752,3232,786,729
            
            
            1,154,362Valuation
                allowance
            
            
            (2,786,729
            )
            
            (1,154,362
            )Deferred
                tax asset
            
            $
            -
            
            $
            -





F-24


**COLOMBIA
              GOLDFIELDS LTD.**
 **(An
              Exploration Stage Company)**
 **NOTES
              TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





The
      components of the temporary differences, which have resulted in the deferred
      tax
      liability, are:





**September
                30, 2007**
            
            **December
                31, 2006**Tax
                depreciation less thanAccounting
                depreciation
            
            $
            
            
            $
            -Tax
                basis less than accountingbasis
                for mineral concessions
            
            
            (13,768,667
            )
            
            (10,688,474
            )Foreign
                exploration costs
            
            
            2,431,110
            
            
            928,950Deferred
                tax liability
            
            $
            (11,337,557
            )
            $
            (9,759,524
            )





e)  The
      Company has income tax losses available for carry forward of $7,205,000 which
      expire as follows:





**Expiry
                Year**
            
            **Domestic**
            
            **Foreign**
            
            **Total**2023
            
            $
            36,500
            
            $
            -
            
            $
            36,5002024
            
            
            23,000
            
            
            -
            
            
            23,0002025
            
            
            310,500
            
            
            -
            
            
            310,5002026
            
            
            1,535,000
            
            
            -
            
            
            1,535,0002027
            
            
            5,300,000
            
            
            -
            
            
            5,300,000$
            7,205,000
            
            $
            -
            
            $
            7,205,000





**NOTE
      8 - RELATED PARTY TRANSACTIONS**





During
      the normal course of operations, the Company engages in transactions with
      certain directors, senior officers, and shareholders of the
      Company.





Significant
      related party transactions reflected within the Company’s consolidated financial
      statements include:





i)
            The
                acquisition of the Company’s interest in the Caramanta and Marmato
                projects as described in notes 3(A) and 3(B) from Investcol, a company
                controlled by certain shareholders of the
                Company;





ii)
            Management
                and consulting fees paid to certain directors, senior officers, and
                shareholders of the Company; and





iii)
            Office
                rent paid to a Company related to a former director of the Company
                during
                the fiscal 2006 year.





iv)
            The
                issuance and repayment of a short-term bridge-loan during the first
                quarter of fiscal 2007 and the repayment of the loan during the third
                quarter of fiscal 2007. On February 27, 2007 the Company entered
                into a
                $3,700,000 promissory note between the Company and the Company’s
                President, a shareholder, and a Company controlled by these individuals.
                The loan, collateralized by the Company’s investment in RNC, was due and
                payable upon closing a planned equity financing, but in no case later
                than
                April 15, 2007. Upon repayment, an $185,000 loan origination fee
                was
                payable to the note holders. The note bore interest at 10% per annum,
                with
                monthly interest payments commencing February 28, 2007. Subsequent
                to the
                private placement described in note 5(i), in September, 2007 a total
                of
                $3,930,911 (representing the principal amount of the promissory note
                of
                $3,700,000, the loan origination fee of $185,000, and accrued interest
                of
                $45,911) was paid to the holders in full satisfaction of all amounts
                owing.





F-25




**COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





v)
            The
                issuance of a second short-term bridge loan during the second quarter
                of
                fiscal 2007. On June 6, 2007 the Company entered into a $3,500,000
                promissory note between the Company and the Company’s President, a
                shareholder, and a Company controlled by these individuals. The loan,
                collaterized by the Company’s investment in RNC, was due and payable upon
                the closing of a planned equity financing, but in no case later than
                August 15, 2007. Upon repayment, a $52,500 fee was payable to the
                note
                holders. The note bore interest at 10% per annum, with monthly interest
                payments commencing June 30, 2007. Subsequent to the private placements
                described in note 5, in September, 2007 a total of $3,634,480
                (representing the principal amount of the promissory note of $3,500,000,
                the loan origination fee of $52,500, and accrued interest of $81,980)
                was
                paid to the holders in full satisfaction of all amounts
                owing.





During
      the three and nine months ended September 30, 2007 the Company:





a)
            Incurred
                $6,500 for board and committee meeting fees from non-management directors
                of the Company (nine months ended September 30, 2007:$11,500) and
                issued
                60,000 common shares to directors in connection with the Company’s annual
                remuneration of its directors during the nine months ended September
                30,
                2007.





b)
            Incurred
                $42,000 in management and consulting fees from directors of the Company
                (nine months ended September 30, 2007:
                $42,000)





c)
            Incurred
                $116,943 in management and consulting fees from senior officers of
                the
                Company (nine months ended September 30, 2007:
                $329,268).





d)
            Incurred
                $88,021 in management and consulting fees from shareholders of the
                Company
                (nine months ended September 30, 2007:
                $299,500).





e)
            Incurred
                $42,480 in interest and administration fees on bridge loans from
                shareholders of the Company (nine months ended September 30, 2007:
                $365,391).





During
      the three and nine months ended September 30, 2006 the Company:





a)
            Incurred
                $229,501 in management and consulting fees from directors, senior
                officers
                of the Company (nine months ended September 30, 2006 :
                $500,251)





b)
            Incurred
                $Nil in office rent to a company related to a director of the Company.
                (nine months ended September 30, 2006 :
                $10,256)





Included
      in prepaid expenses at September 30, 2007 is $16,000 related to a senior officer
      of the Company (December 31, 2006: $30,000). Included in accounts payable and
      accrued liabilities at September 30, 2007 is $45,753 (December 31, 2006:
      $49,213) owing to directors or senior management companies controlled by
      shareholders of the Company.





**NOTE
      9 - NON-CASH ACTIVITIES**





The
      Company has issued common shares as consideration for the acquisition of certain
      mineral rights as disclosed in Notes 3 and 5.





**NOTE
      10 - SEGMENTED INFORMATION**





The
      Company has determined that it operates in a single reportable segment, being
      the acquisition of, exploration for, and development of mineral
      properties.




F-26


**COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**





**NOTE
      11 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS**





The
      FASB
      has issued FIN 48, which prescribes rules on accounting for uncertainty in
      income tax positions.





FIN
      48
      requires all material tax positions to undergo a new two-step recognition and
      measurement process. All material tax positions in all jurisdictions in all
      tax
      years in which the statute of limitations remains open upon the initial date
      of
      adoption are required to be assessed. For a tax benefit to be recognized it
      must
      be more likely than not that a tax position will be sustained upon examination
      based solely on its technical merits. If the recognition standard is not
      satisfied, then no tax benefit otherwise arising from the tax position can
      be
      recorded for financial statement purposes. If the recognition standard is
      satisfied, the amount of tax benefit recorded for financial statement purposes
      will be the largest amount of tax benefit with a greater than 50% likelihood
      of
      being realized upon ultimate settlement with a taxing authority. The adoption
      of
      FIN 48 did not have a material impact on the Company’s financial position,
      results of operations, or cash flows for the three and nine months ended
      September 30, 2007.





**NOTE
      12 - SUBSEQUENT EVENTS**





i)
            On
                October 1, 2007 the Company issued 150,000 options to purchase the
                Company’s common stock to a consultant in exchange for services rendered.
                On November 8, 2007 the Company approved the issuance of 1,850,000
                options
                to purchase the company’s stock to certain directors, officers, and
                employees.





ii)
            On
                November 12, 2007 the Company entered into a $1,500,000 promissory
                note
                between the Company’s President and the Company’s Chief Executive Officer.
                The loan, collateralized by the Company’s investment in RNC, is due and
                payable upon closing an equity financing, but in no case later than
                December 31, 2007. Upon repayment a $22,500 fee is payable to the
                note
                holders. The note bears interest at 10% per annum with monthly interest
                payments commencing November 30,
                2007.





**NOTE
      13 - COMMITMENTS AND CONTINGENCIES**





i)
            Caramanta
                Project





Persuant
      to an option agreement to purchase concession No. 669-17 in the Caramanta
      region, provided the Company determines that it is in its best interests to
      continue exploration, the Company is scheduled to make payments over the next
      twenty-four months totalling $1,050,000. In the event that the Company ceases
      exploration of the project, no payments are required and title to the project
      remains with the original owner.





ii)
            Other
                Obligations





In
      the
      normal course of business the Company enters into purchase commitments to
      acquire drilling and other equipment to advance its exploration activities.
      As
      at September 30, 2007 the Company has outstanding purchase commitments of
      $200,000 to purchase equipment not yet received.





**NOTE
      14 - RECLASSIFICATIONS**





Certain
      prior period amounts have been reclassified to conform to the current period
      presentation.




F-27


**Item** **2.**  **Plan of Operation**


***Introduction***
 
 This
        Mangement’s Discussion and Analysis (“MD&A”), which has been prepared as of
        October 31, 2007, is intended to supplement and complement our unaudited
        interim
        consolidated financial statements and notes thereto for the three and nine
        months ended September 30, 2007 prepared in accordance with United States
        generally accepted accounting principles, or U.S. GAAP (collectively, our
        “Financial Statements”). You are encouraged to review our Financial Statements
        in conjunction with your review of this MD&A. Additional information
        relating to our Company, is available at www.sec.gov.com ,
        and www.sedar.com .
        All
        dollar amounts in our MD&A are expressed in U.S. dollars, unless otherwise
        specified.
 
 ***Forward-Looking
        Statements***
  Historical
        results and trends should not be taken as indicative of future operations.
        Management’s statements contained in this report that are not historical facts
        are forward-looking statements. Forward-looking statements, which are based
        on
        certain assumptions and describe our future plans, strategies and expectations,
        are generally identifiable by use of the words “believe, expect, intend,
        estimate, project,” “prospects,” or similar expressions.
 
 Our
        ability to predict results or the actual effect of future plans or strategies
        is
        inherently uncertain. Factors which could have a material adverse affect
        on our
        operations and future prospects on a consolidated basis include, but are
        not
        limited to: changes in economic conditions, legislative/regulatory changes,
        availability of capital, interest rates and commodity prices, competition,
        and
        changes in generally accepted accounting principles, as well as items described
        under “Risks and Uncertainties” elsewhere in this MD&A. These risks and
        uncertainties should be considered in evaluating forward-looking statements
        and
        undue reliance should not be placed on such statements.
 
 ***Third
        Quarter Fiscal 2007 Overview***
 
 During
        the third quarter of fiscal 2007 progress was made towards our objective
        of
        defining and consolidating our ownership of a bulk-mineable ore body in the
        Marmato region of Colombia. Our objective is to consolidate a new gold district
        around the Marmato Mountain in Colombia by:
 
 §
              Acquiring
                  the rights to an historic prospective gold project in Marmato (the
                  “Marmato Mountain Project”);
 §
              Acquiring
                  the majority of Marmato Mountain’s legally registered mineral
                  titles;
 §
              Acquiring
                  certain surrounding properties in the Caramanta region (the “Caramanta
                  Exploration Project”); and
 §
              Planning
                  for and executing the acquisition of additional ancillary
                  properties.
 
 Our
        focus
        in fiscal 2007 is to continue to advance the Marmato Mountain Development
        Project towards development through:
 
 §
              The
                  acquisition of additional Colombian mineral concessions and mineral
                  rights;
 §
              Commencing
                  the resettlement of the town of
                  Marmato;
 §
              Continued
                  drilling and sampling programs;
 §
              The
                  preparation of revised resource estimates;
                  and
 §
              Preparing
                  for a feasibility study which is expected by early
                  2009.
  4
  In
        the
        third quarter of fiscal 2007 we advanced our business plan by:
 
 §
              Increasing
                  our mineral and exploration rights ownership to 99 of 121 legally
                  registered mineral titles from existing Colombian titleholders;
 §
              Continuing
                  data collection for a baseline study;
                  and
 §
              Continuing
                  drilling and sampling on the Marmato
                  Mountain
 
 As
        at
        September 30, 2007, the Zona Alta portion of the Marmato project in Colombia
        hosts approximately 275 total small mines which Compañia Minera de Caldas, S.A.
        (“Caldas”), our Colombian subsidiary is seeking to individually purchase. We own
        94.99% of Caldas, with the remaining 5.01% held directly or indirectly by
        directors, officers, and senior management of the Company. 85 of these mines
        have registered titles in the Ministry of Mines in Caldas. We refer to these
        mines as Category 1. 36 mines are located in an area called CHG-081 in which
        there is one mining contract and we refer to these mines as Category 2. Once
        all
        of these Category 2 mines have been purchased, Caldas will own the entire
        CHG-081 contract. Our objective is to secure ownership to these 121 properties.
        Approximately 90 of the remaining mines have made applications for legalization
        under the previous mining law. We refer to these mines as Category 3. Of
        the
        applications made, management believes that less than 30 will be approved.
        Approximately 64 are illegal mines.
 
 Certain
        mining properties have been purchased or optioned and are awaiting final
        payment
        once the documentation and registration is complete. The total number of
        legally
        registered mineral titles acquired by Caldas at September 30, 2007 is 99,
        an
        increase of 2 from 97 at June 30, 2007. Caldas is also purchasing the existing
        mills on the Zona Alta and has so far purchased 12 out of a total of
        approximately 26, an increase of 1 from 11 at June 30, 2007.
 
 ***Our
        Business***
 
 We
        were
        incorporated under the laws of the State of Nevada, U.S.A., on March 25,
        2003
        and changed our name from Secure Automated Enterprises, Inc. to Colombia
        Goldfields Ltd. on May 13, 2005. At that time, we changed our operational
        focus
        from providing electronic filings services for public access document
        submissions to the U.S. Securities Exchange Commission, to the acquisition
        of,
        exploration for, and development of mineral properties. On July 31, 2006,
        our
        jurisdiction of incorporation was changed to the state of Delaware.
 
 We
        are an
        exploration stage company engaged in the acquisition and exploration of mineral
        resource projects. Our main activity is the exploration and development of
        the
        Marmato Mountain Gold District in Colombia. The Company’s head office is located
        in Toronto, Canada and its exploration and administrative office in Colombia
        is
        located in the city of Medellin. The Marmato Mountain Gold District is located
        80 km south of Medellin. We are actively advancing two areas within the Marmato
        Mountain Gold District. These are the Marmato Mountain Development Project
        and
        the Caramanta Exploration Project. The Caramanta Exploration Project surrounds
        the Marmato Mountain Development Project and we are actively securing additional
        exploration concessions between the two in order to consolidate the district.
 
 The
        disclosure that follows is a discussion of each of the properties that we
        have
        an interest in and our results of operations for the three and nine months
        ended
        September 30, 2007 and September 30, 2006.
  5
  ***Principal
        factors affecting our results of operations***
 
 Our
        consolidated financial statements are prepared in accordance with U.S. generally
        accepted accounting principles, and we maintain our accounts in U.S. Dollars.
 
 We
        believe that the key determinants of our operating and financial results
        are the
        following:
 
 (a)
              
              The
                  state of capital markets, which affects our ability to finance
                  exploration
                  activities;  (b)
              
              The valuation of mineral properties
                as
                exploration results provide further information relating to the underlying
                reserves of such properties; and  (c)
              
              Prices for metals, particularly,
                gold.
 
 There
        is
        no assurance that commercially exploitable reserves of gold exist on any
        of our
        property interests. In the event that commercially exploitable reserves of
        gold
        exist on any of our property interests, there is no guarantee that we will
        make
        a profit. If we cannot acquire or locate gold deposits, or if it is not
        economical to recover the gold deposits, our business and operations will
        be
        materially adversely affected.
 
 ***Revenues***
 
 We
        have
        not yet completed our economic feasibility studies to establish the existence
        of
        proven or probable reserves for our properties and, as a result, to date
        we have
        not recognized any revenues from mining activities for the period since
        incorporation to September 30, 2007.
 
 ***Expenses***
 
 Our
        primary expenses consist of mineral property exploration expenditures and
        general and administrative expenses.
 
 ***Critical
        accounting policies***
 
 The
        following are the accounting policies that we consider to be Critical Accounting
        Policies *.* Critical
        Accounting Policies are those that are both important to the portrayal of
        our
        financial condition and results and those that require the most difficult,
        subjective, or complex judgments, often as result of the need to make estimates
        about the effect of matters that are subject to a degree of
        uncertainty.
 
 Going
        Concern
 
 We
        incurred a net loss of $17.5 million for the period from inception on March
        23,
        2003 to September 30, 2007, and we are not presently generating any revenue.
        Furthermore, we have used in excess of $ 30.8 million during this period
        to fund
        our operations and mineral acquisitions program. At September 30, 2007, we
        have
        a working capital deficiency of $1.5 million. Our future is dependent upon
        our
        ability to obtain additional financing and future acquisition, exploration
        and
        development of profitable operations from our mineral properties. We plan
        to
        continue to seek additional financing in private and/or public equity offerings
        to secure funding for our operations. Our estimate of our project cost to
        feasibility is $50.0 million. We estimate that a minimum of $20.0 million
        will
        be required over the next twelve to eighteen months to complete the initial
        phase of drilling at Marmato as well as cover our administration and property
        purchases costs. Pending the results of our initial drill program, an additional
        $30 million will be required to complete the Marmato feasibility study,
        including an additional 50,000 meters of drilling at Marmato, and 10,000
        meters
        of drilling at Caramanta. We currently do not have any arrangements for
        additional financing. There can be no assurance that such additional financing
        will be available to us on acceptable terms or at all. These factors, among
        others, raise substantial doubt about our ability to continue as a going
        concern. Our financial statements do not include any adjustment to reflect
        the
        possible future effect on the recoverability and classification of the assets
        or
        the amounts and classification of liabilities that may result should we cease
        to
        continue as a going concern.
  6
  Basis
        of Presentation
 
 Entities
        that are controlled by us, either directly or indirectly, are consolidated.
        Control is established by our ability to determine strategic, operating,
        investing and financing policies without the co-operation of others. We analyze
        our level of ownership, voting rights and representation on the board of
        directors in determining if control exists by any one, or a combination,
        of
        these factors.
 
 Our
        consolidated financial statements include the accounts of (i) Colombia
        Goldfields Ltd., a Delaware Corporation, (ii) our wholly-owned subsidiary
        in RNC
        (Colombia) Limited, a Belize corporation and its 94.99% owned subsidiary
        -
        Compania Minera de Caldas, S.A., a Colombia corporation, (iii) our 94.99%
        interest in Gavilan Minerales, S.A. (“Gavilan”) a Colombia Corporation.
        Colombian law requires a minimum of five shareholders for Colombian companies;
        as a result, the remaining 5.01% of Caldas and Gavilan is held by directors,
        officers, and senior management of the Company. All
        significant inter-company transactions and balances are eliminated upon
        consolidation.
 
 Mineral
        and Exploration Properties and Rights Acquisition and Exploration
        Expenditures
 
 Title
        on
        mineral properties and mining and exploration rights involve certain inherent
        risks due to the difficulties of determining the validity of certain claims
        as
        well as the potential for problems arising from the frequently ambiguous
        conveyance history characteristic of many mining properties. We cannot give
        any
        assurance that title to such properties will not be challenged or impugned
        and
        we cannot be certain that we will have valid title to our mining properties.
        We
        rely on title opinions by legal counsel who base such opinions on the laws
        of
        countries in which we operate.
 
 Our
        mineral property rights acquisition and exploration activities consist
        of
 i)
                The
                    acquisition of mineral concessions;ii)
                The
                    acquisition of mineral and exploration rights from existing titleholders;iii)
                The
                    exploration of acquired mineral properties and related activities;
                    andiv)
                The
                    allocation of stock based compensation related to participants
                    in our
                    stock option plan.
  Costs
        of
        acquiring mining properties, including interest costs attributable to mineral
        property acquisitions, are capitalized upon acquisition. Pursuant to SFAS
        No.34, *Capitalization
        of Interest Costs* ,
        interest costs attributable to mineral property acquisitions are also
        capitalized. Mine development costs incurred either to develop new ore deposits,
        expand the capacity of mines, or to develop mine areas substantially in advance
        of current production are also capitalized once proven and probable reserves
        exist and the property is a commercially mineable property. Costs incurred
        to
        maintain current production or to maintain assets on a standby basis are
        charged
        to operations. Costs of abandoned projects are charged to operations upon
        abandonment. We evaluate the carrying value of capitalized mining costs and
        related property, plant and equipment costs, to determine if these costs
        are in
        excess of their net recoverable amount whenever events or changes in
        circumstances indicate that their carrying amounts may not be recoverable.
        The
        periodic evaluation of carrying value of capitalized costs and any related
        property, plant and equipment costs is based upon expected future cash flows
        and/or estimated salvage value in accordance with Statement of Financial
        Accounting Standards (SFAS) No. 144, *Accounting
        for Impairment or Disposal of Long-Lived Assets.*
  7
  Asset
        Retirement Obligations
 
 We
        apply
        SFAS No. 143, *Accounting
        for Asset Retirement Obligations* that
        requires that the fair value of a liability for an asset retirement obligation
        be recognized in the period in which it is incurred. SFAS No. 143 requires
        us to
        record a liability for the present value of the estimated site restoration
        costs
        with a corresponding increase to the carrying amount of the related long-lived
        assets. The liability will be accreted until it has been fully incurred,
        and the
        asset will be amortized over the life of the related assets. Adjustments
        for
        changes resulting from the passage of time and changes to either the timing
        or
        amount of the original present value estimate underlying the obligation will
        be
        made. As at September 30, 2007, and December 31, 2006, we do not have any
        asset
        retirement obligations.
 
 Stock-Based
        Compensation
 
 On
        January 1, 2006, we applied SFAS No. 123(R), *Share-Based
        Payment* ,
        to
        account for stock options and similar equity instruments issued. Accordingly,
        compensation expense attributable to stock options or similar equity instruments
        granted is measured at the fair value at the grant date, using the Black-Scholes
        option pricing model and the resultant compensation expenses are classified
        in
        our consolidated statement of operations based on the classification of the
        underlying option plan participants’ related compensation expenses. In the event
        stock options are forfeited, any previously recognized compensation expense
        related to unvested and expiring awards is recognized in earnings during
        the
        period of forfeiture. The majority of our stock based compensation relates
        to
        either i) mineral exploration activities associated with our exploration
        personnel or ii) general and administrative expenses associated with our
        administrative employees, directors, and consultants.
 
 Although
        the assumptions used to record stock compensation expense reflect management’s
        best estimates, they involve inherent uncertainties based on market conditions
        generally outside of our control. If other assumptions were used, stock-based
        compensation expense could be significantly impacted. As stock options are
        exercised, the proceeds received on exercise, in addition to the previously
        recognized amounts related to those stock options, are credited to stockholders’
equity.
 
 ***Selected
        Financial Information***
 
 The
        following table sets forth selected financial information for the three and
        nine
        months ended September 30, 2007, and 2006. This summary of selected financial
        information is derived from, and should be read in conjunction with, and
        is
        qualified in its entirety by reference to, our audited financial statements
        for
        the fiscal year ended December 31, 2006 and related note disclosures.
 
 8
 
 
 **Three
                  Months Ended**
                **September
                  30,**
                **2007**
              
              **Three
                  Months Ended**
                **September**
                **30,**
                **2006**
              
              **Nine**
                **Months**
                **Ended**
                **September
                  30,**
                **2007**
              
              **Nine**
                **Months**
                **Ended**
                **September
                  30,**
                **2006**
              
              **Cumulative**
                **from
                  Inception (March 25, 2003**
                **through**
                **September
                  30,**
                **2007****Statement
                  of Loss and Deficit**Total
                  Expenses
              
              $
              4,474,567
              
              $
              1,996,386
              
              $
              11,173,277
              
              $
              4,983,673
              
              $
              20,059,735Net
                  loss
              
              $
              (3,929,955
              )
              $
              (1,945,622
              )
              $
              (9,652,523
              )
              $
              (4,880,486
              )
              $
              (17,482,170
              )Loss
                  per Share-basic and diluted
              
              $
              (0.06
              )
              $
              (0.04
              )
              $
              (0.15
              )
              $
              (0.12
              )
              
              N/A**Balance
                  Sheet Data**
              
              
              **As
                  at September 30, 2007**
              
              
              **As
                  at September 30, 2006**
              
              
              **As
                  at September**
                **30,
                  2007**
              
              
              **As
                  at September 30, 2006**
              
              
              **As
                  at September 30, 2007**Total
                  Assets
              
              $
              61,598,554
              
              $
              33,324,257
              
              $
              61,598,554
              
              $
              33,324,257
              
              $
              61,598,554Total
                  Long-Term Debt
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Total
                  Liabilities
              
              $
              15,945,831
              
              $
              9,781,909
              
              $
              15,945,831
              
              $
              9,781,909
              
              $
              15,945,831Total
                  Shareholders’ Equity
              
              $
              45,652,723
              
              $
              23,542,348
              
              $
              45,652,723
              
              $
              23,542,348
              
              $
              45,652,723
  ***Management’s
        Discussion and Analysis***
 
 The
        following discussion and analysis should be read in conjunction with our
        unaudited interim consolidated financial statements for the three and nine
        months ended September 30, 2007 and September 30, 2006 and the accompanying
        notes thereto.
 
 ***The
        Caramanta and Marmato Projects***
 
 We
        are
        actively advancing the Marmato Mountain Development Project and the Caramanta
        Exploration Project, both of which are located in Colombia’s Marmato Mountain
        Gold District. These projects are separated by approximately seven kilometers
        and our focus is on securing the region between Caramanta and Marmato and
        any
        other outlying targets that may contain similar mineralization or that have
        the
        potential for mining. We have advanced our ownership interests in these projects
        in fiscal 2006 and 2007 as follows:
 
 **(A)
        Caramanta Project**
 
 (i)
        Caramanta Project - concessions 6602, 1343 and 6329
 
 On
        September 22, 2005, we entered into an Assignment Agreement with Investcol
        Limited (“Investcol”) where Investcol assigned, transferred, and conveyed to us
        all of its rights under a contract for Purchase Option of Mining Concessions
        (“Original Option Contract”) entered into with Cia Servicios Y Logisticos Ltda.
        As a result of the Assignment Agreement, we acquired an option to purchase
        certain mining, mineral and exploration rights on property known as Concessions
        6602, 1343 and 6329 located in Caramanta Municipality, Antioquia Department,
        Medellin, Colombia for $10,000, on condition that $2,990,000 be invested
        in
        exploratory work on the property over a three year period. As additional
        consideration for these rights, we issued 1,000,000 restricted shares of
        our
        common stock to Investcol at a deemed fair market value of $ 0.25 per share
        for
        total consideration of $260,000.
  9
  Pursuant
        to the Assignment Agreement, we also committed to fund $2,990,000 of exploratory
        work as follows:
 
 a)
              $500,000
                  upon the closing of the Assignment
                  Agreement;
 b)
              $750,000
                  during the 12 month period commencing June 25, 2006; and on the
                  earlier of
                  June, 2006 or commencement of the second exploration phase;
                  and
 c)
              $1,740,000
                  during the 12-month period commencing June 25,
                  2007.
 
 On
        September 25, 2006 the Assignment Agreement was superseded in connection
        with
        our agreement to buy the Mining Concessions outright as described in (iii)
        below.
 
 (ii)
        Caramanta Project - concessions 6993,7039,6821 and 6770 and HET 31, 32, 26,
        27
        and, HETG 01
 
 On
        February 16, 2006 we entered into a Letter of Intent “LOI” with Investcol to
        acquire Investcol’s rights in a Contract for Purchase entered into with Cia
        Servicios Y Logisticos Ltda. (“Cia Servicios”) The LOI outlined a proposed
        transaction where we intended to acquire Investcol’s rights in certain mining
        contracts to exclusively engage in mining activities on concessions 6993,
        7039,
        6821 and 6770 (the “Contracts”) and options that Investcol held to acquire the
        exclusive rights to engage in mining activities on concessions HET 31, 32,
        26,
        27 and HETG 01 (the “Options”) all located within an area in Colombia referred
        to as the Caramanta location.
 
 The
        LOI
        was non-binding and subject to final negotiation and the execution of a
        definitive agreement. On April 10, 2006, we entered into a definitive agreement
        with Investcol finalizing this transaction (the “Assignment
        Agreement” *)* .
        In
        connection with the Assignment Agreement, we paid Investcol total consideration
        of $350,000 and issued 1,000,000 restricted shares of our common stock. Under
        the terms of the Assignment Agreement, Investcol agreed to pay the exercise
        price of $150,000 on the Options whose titles remained in the name of Cia
        Servicios until the final exploration commitments have been made. The final
        option payments were made prior to July 30, 2006.
 
 On
        September 25, 2006 the Assignment Agreement was superseded in connection
        with
        our agreement to acquire the Mining Concessions outright as described
        below.
 
 On
        November 12, 2007 we entered into a $1,500,000 promissory note between our
        President and Chief Executive Officer. The loan, collateralized by the Company’s
        investment in RNC, is due and payable upon closing of an equity financing,
        but
        in no case later than December 31, 2007 upon repayment a $22,500 fee is payable
        to the note holders. The note bears interest at 10 % per annum with monthly
        interest payments commencing November 30, 2007.
 
 (iii) Acquisition
        of 100% of the Caramanta Exploration Properties
 
 On
        September 25, 2006, we, through the acquisition of the outstanding shares
        of
        Gavilan Minerales, S.A., (“Gavilan”), acquired full legal title to the Caramanta
        project concessions described in items A(i) and A(ii) above. Consideration
        paid
        for the acquisition included $300,000 cash and the issuance of 1,150,000
        restricted shares of our common stock at a value of $1.41 per share. In
        addition, a $50,000 finders fee was paid to Investcol. The total acquisition
        cost of $1,971,500 was allocated to the net assets acquired as
        follows:
  10
  Mineral
                  and exploration properties and rights
              
              $
              1,780,841Property,
                  plant and equipment
              
              
              190,659$
              1,971,500
 
 The
        purchase of mineral and exploration properties and rights was recorded as
        part
        of mineral and exploration properties and rights in fiscal 2006. As a result
        of
        our acquisition of Gavilan, we no longer have any minimum exploratory work
        obligations related to the Caramanta concessions.
 
 iv)  Caramanta
        Project - Concession 668-17
 
 On
        August
        27, 2007 we entered into an agreement with an unrelated party that provides
        us
        with an option to acquire 100% of concession No. 668-17 in the Caramanta
        region.
        Over a twenty-four month period the Company has the option to pay a total
        of
        $1,200,000 to acquire a 100% interest in the property. At September 30, 2007
        the
        Company has expended an initial $150,000 for a 12.5% interest. We plan to
        explore the region to determine if it is desirable to continue to acquire
        the
        remaining 87.5% interest. Should we decide not to continue with the project,
        we
        are not obligated to make any further payments.
  **(B)
        Marmato Project**
  On
        January 12, 2006, we entered into a Stock Purchase Agreement with Investcol
        and
        RNC (Colombia) Limited (the "Agreement"), whereby we would (i) acquire
        twenty-five percent (25%) of the issued and outstanding stock of RNC (Colombia)
        Limited, a Belize corporation ("RNC") and (ii) hold an option to acquire
        the
        remaining seventy five percent (75%) of RNC's issued and outstanding stock
        over
        a period of time. RNC is the beneficial holder of 94.99% of the issued and
        outstanding stock of Compania Minera De Caldas, S.A. ("Caldas"), a Colombia
        corporation that (i) owns certain mining, mineral and exploration rights,
        (ii)
        has options to acquire mining, mineral and exploration rights and (iii) has
        exclusive rights to evaluate certain property, all located in the Zona Alta
        portion of the Marmato project in Colombia.
 
 Pursuant
        to the Stock Purchase Agreement, we:
 
 a)
              Acquired
                  25% of the total outstanding shares of RNC by the issuance of 1,000,000
                  of
                  our common shares to Investcol and the advance to RNC of a $1,200,000
                  non-interest bearing loan. We completed the acquisition of 25%
                  of RNC by
                  the issuance of 1,000,000 restricted shares of our common stock
                  to
                  Investcol and the advancement of $1,200,000 by way of a non-interest
                  bearing loan to RNC in the second quarter of fiscal 2006;
  b)
              Acquired
                  an additional 25% of RNC by issuance of 2,000,000 of our common
                  shares to
                  Investcol and the advance of an additional $4,000,000 non-interest
                  bearing
                  loan to RNC. We completed the acquisition of the second 25% of
                  RNC by the
                  issuance to Investcol of 2,000,000 restricted shares of our common
                  stock
                  and the advancement of $4,000,000 by way of a non-interest bearing
                  demand
                  loan to RNC in the second quarter of fiscal 2006;
  11
  c)
              Held
                  the option to acquire an additional 25% of RNC by the issuance
                  of
                  4,000,000 of our common shares to Investcol and the advance of
                  an
                  additional $15,000,000 non-interest bearing loan to RNC on or before
                  October 30, 2006.On
                  August 22, 2006, we amended the January 12, 2006 Stock Purchase
                  Agreement
                  with Investcol and RNC (Colombia) Limited and concurrently exercised
                  our
                  option to increase interest in RNC from 50% to 75% in the third
                  quarter of
                  fiscal 2006. Under the terms of the amended agreement, we issued
                  4,200,000
                  restricted shares of our common stock and paid $200,000 to Investcol.
                  In
                  connection with this transaction we committed to provide an additional
                  $5,000,000 by way of non-interest bearing demand loan to RNC by
                  December
                  31, 2006 and provide sufficient funds to RNC, upon terms satisfactory
                  to
                  the Company, to complete a full bankable feasibility study of the
                  Marmato
                  Project; and
 
 d)
              
              Held
                  the option to acquire the final 25% of RNC for a price equal to
                  25% of the
                  value of Caldas determined by a bankable feasibility study prepared
                  by a
                  certified mineral property evaluator, or other acceptable third
                  party. The
                  purchase price was payable in either cash or our common shares.The
                  terms of the agreement were amended on August 22, 2006. Under the
                  terms of
                  the amended agreement, we held the option to acquire the remaining
                  25% of
                  RNC on or before May 1, 2009 for a purchase price equal to 25%
                  of the fair
                  value of Caldas, as determined by a forthcoming feasibility study.
                  The
                  purchase price, pursuant to the amended agreement, was limited
                  to a
                  maximum of $15,000,000 plus 4,000,000 of our common shares. Payment
                  of the
                  purchase price could be satisfied in either cash, shares of our
                  common
                  stock, or any combination thereof.
 
 On
        December 14, 2006, the parties executed a Second Amendment to the Stock Purchase
        Agreement (the “Second Amendment”) in order to revise the consideration required
        to exercise our option to acquire the remaining 25% of the issued and
        outstanding stock of RNC. Subject to the revised terms set forth in the Second
        Amendment, we had the option to acquire an additional 15% interest in RNC,
        in
        exchange for the issuance of 4,000,000 common shares to Investcol. In connection
        with the execution of the Second Amendment, we exercised our option, resulting
        in us acquiring an additional 15% of RNC in exchange for us issuing 4,000,000
        restricted shares of our common stock valued at $5,120,000 in the fourth
        quarter
        of fiscal 2006, bringing our total ownership to 90%. The revised terms set
        forth
        in the Second Amendment provided us with the option to acquire the remaining
        10%
        of RNC until May 1, 2009 in exchange for a purchase price of $15,000,000.
        The
        purchase price could be made in either cash, shares of our common stock,
        or any
        combination thereof.
 
 On
        August
        24, 2007 the parties executed the Third Amendment to the Stock Purchase
        Agreement ( the “Third Amendment”) in order to revise the consideration required
        to exercise our option to acquire the remaining 10% of the issued and
        outstanding stock of RNC to a cash payment of $300,000 and the issuance of
        3,000,000 shares of our common stock. In connection with the execution of
        the
        Third Amendment, we exercised in the third quarter of fiscal 2007 our option
        to
        acquire the additional and final 10% interest in RNC. As consideration for
        the
        acquisition of the final 10% interest of RNC, we paid Investcol $300,000
        and
        issued to Investcol 3,000,000 shares of our common stock.
 
 **(C
        ) The Kedahda Properties**
 
 On
        August
        30, 2006 we purchased, through certain mining exploration properties in the
        Republic of Colombia, and the related geochemical and other proprietary
        geological data from a wholly owned subsidiary of Anglo Gold Ashanti, Sociedad
        Kedahda, S.A., for $500,000 cash consideration.
  12
  ***Results
        of Operations - Third Quarter 2007 and Year-To-Date Compared With Third Quarter
        and Year-To-Date 2006.***
 
 For
        the
        three months ended September 30, 2007, we incurred a net loss of $3,929,955
        (2006 -$1,945,622). We generated interest income of $5,062 for the three
        months
        ended September 30, 2007 (2006-$50,764). The primary contributors to our
        net
        loss for the three months ended September 30, 2007 were mineral property
        exploration expenses of $2,457,274 (of which $216,426 relates to non-cash
        stock-based compensation expenses) and general and administrative expenses
        of
        $1,607,307 (of which $532,545 relates to non-cash stock based compensation
        expenses), along with a foreign exchange losses of $371,964.
 
 For
        the
        comparative period, the primary contributors to our net loss were mineral
        property exploration expenses of $1,074,629 (of which $39,639 relates to
        non-cash stock-based compensation expenses) and general and administrative
        expenses of $848,836, of which $560,829 relates to non-cash stock-based
        compensation expenses) along with foreign exchange losses of
        $70,862.
 
 Our
        exploration activities typically involve the following activities and
        expenditures:
 
 i)
              *The
                  acquisition of mineral concessions*:
                  To September 30, 2007 this has consisted primarily of payments
                  for the
                  assignment contracts and subsequent full legal titles associated
                  with the
                  Caramanta project, the acquisition of the Marmato project via our
                  purchases of RNC (Colombia), and the purchase of the Kedahda properties.
                  The concessions we acquire typically exclusively grant to the
                  concessionaire the faculty to carry out within the given area,
                  the
                  studies, works and installations necessary in order to establish
                  the
                  existence of the minerals, and to exploit them according to the
                  principles, rules and criteria belonging to the accepted techniques
                  of
                  geology and mining engineering. During the three and nine months
                  ended
                  September 30, 2007, we expended a total of $4,710,000 on the acquisition
                  of mineral concessions.
 
 ii)
              *The
                  acquisition of mineral and exploration rights from existing Colombian
                  titleholders*.
                  This typically involves staged payments to affected landholders
                  and
                  related stakeholders. The procedure for payment is normally a payment
                  of
                  25% of the total negotiated purchase price on signing, 25% of the
                  total
                  negotiated purchase price when all documentation has been submitted
                  to the
                  local mining department, and the final 50% payment when the mining
                  claim
                  has been registered in our name. Satisfactory resolution of local
                  landowner or relative concerns is essential to the eventual development
                  and operation of modern gold mines on the Marmato project. As at
                  September
                  30, 2007, we have reached agreements with the titleholders to secure
                  99
                  titles deemed desirable in our business plan (June 30, 2007 - 97),
                  with 73 titles registered in the Company’s name (June 30, 2007: 40).
                  During the three months ended September 30, 2007, we expended a
                  total of
                  $1,670,416 on mineral and exploration rights (nine months ended
                  September
                  30, 2007 - $6,862,309) and have obligations at September 30, 2007
                  to make
                  payments of $2,901,468 pursuant to amounts owing under our purchase
                  agreements; and
 
 iii)
              *The
                  exploration of acquired mineral properties and related
                  activities*.
                  This typically involves the payment of salaries, wages, and other
                  exploration costs in the host country directly attributable to
                  field
                  activities furthering our mineral concessions and rights. During
                  the three
                  months ended September 30, 2007, we expended a total of $2,240,849
                  on the
                  exploration of acquired mineral properties (nine months ended September
                  30, 2007 - $4,813,541).
  13
  As
        a
        result of our fiscal 2007 efforts to explore and evaluate the Marmato Region,
        our mineral property exploration expenses increased significantly for the
        three
        months ended September 30, 2007 to $2,457,274 (including $216,426 in stock-based
        compensation) from $1,074,629 (including $39,639 in stock-based compensation
        )
        for the three months ended September 30, 2006. For the nine months ended
        September 30, 2007 our mineral property exploration expenses increased to
        $5,489,878 (including $676,337 in stock-based compensation) from $2,187,686
        (including $176,199 in stock-based compensation) for the nine months ended
        September 30, 2006.
 
 General
        and administrative expenses also increased in the third quarter of fiscal
        2007,
        to $1,607,307 for the three months ended September 30, 2007 from $848,836
        for
        the three months ended September 30, 2006, reflecting our continued transition
        from a start-up enterprise to a company with an active exploration program
        and
        infrastructure sufficient to support field activities. Another significant
        component of general and administrative expenses in the third quarter of
        fiscal
        2007 was allocated stock based compensation, which totaled $532,545 compared
        to
        $560,829 in the third quarter of fiscal 2006. The remainder of the Company’s
        third quarter 2007 general and administrative expenses consisted primarily
        of
        consulting fees paid to directors, officers, and shareholders, and expenses
        related to accounting, legal, investor relations, and expenses associated
        with
        Sarbanes Oxley and other regulatory compliance. As well, in the third quarter
        of
        fiscal 2007 the Company incurred $371,964 in foreign exchange losses on the
        translation of foreign currency denominated monetary assets and liabilities.
        The
        majority of the Company’s accounts payable accrued liabilities, and deferred
        income taxes in Caldas and Gavilan are denominated Colombian pesos and are
        impacted by fluctuations in foreign currency rates.
 
 The
        increase in our other operating expenses in the third quarter of fiscal 2007,
        primarily amortization expenses, related to the amortization of office
        equipment, computers, and vehicles. For the three months ended September
        30,
        2007, we incurred a loss from operations of $4,469,505 (2006- $1,945,622),
        and
        recorded a deferred income tax recovery of $539,550 related to deductible
        temporary differences associated with our Colombian subsidiaries, resulting
        in a
        net loss of $3,929,955.
 
 For
        the
        nine months ended September 30, 2007 we incurred a net loss of $9,652,523
        compared to $4,880,486 for the nine months ended September 30, 2006. The
        primary
        contributors to our year-to-date fiscal 2007 loss were $5,489,878 in mineral
        property exploration expenses, $4,298,618 in general and administrative
        expenses, foreign exchange losses of $1,307,180 and amortization of $77,601.
        We
        generated $18,594 in interest income during the first nine months of fiscal
        2007
        and recorded a deferred income tax recovery of $1,502,160 related to deductible
        temporary differences associated with our Colombian subsidiaries, for a net
        loss
        of $9,652,523.
 
 During
        the third quarter of fiscal 2007, we used cash of $2,658,452 in operations
        (2006- generated cash of $254,135). The majority of our operating cash
        requirements consisted of exploration costs incurred in our Colombian
        operations, and consulting fees, travel expenses, and audit and legal fees
        related to regulatory compliance. During the third quarter of fiscal 2007,
        we
        issued common shares and share purchase warrants for net proceeds of $10,493,810
        and repaid $3,500,000 in short-term bridge loans. During the third quarter
        of
        fiscal 2007, we expended $676,538 on the purchase of capital assets and
        $4,195,886 funding the acquisition of mineral exploration rights, resulting
        in a
        net cash decrease of $537,066 for the three months ended September 30, 2007.
        Year-to-date, we have used $7,398,481 in operations, raised a net $19,010,110
        from debt and equity issuances, and used $10,569,619 in investing activities,
        resulting in a net increase in cash year-to-date of $1,042,010.
  14
  As
        at
        September 30, 2007, we held cash and cash equivalents of $1,924,923. Our
        working
        capital deficiency of $1,471,640 consisted of i) Cash and cash equivalents
        of
        $1,924,923; ii) Prepaid expenses and deposits of $711,861, consisting primarily
        of advances for mineral and exploration rights and prepaid Marmato exploration
        expenditures; iii) Prepaid consulting fees of $499,850, reflecting the current
        portion of unamortized stock-based compensation associated with direct stock
        awards; and iv) current liabilities of $4,608,274, consisting primarily of
        amounts owing to Marmato titleholders under our mineral and exploration rights
        purchase agreements (at September 30, 2007 $2,901,468 is owing pursuant to
        these
        agreements) with the balance associated with general corporate payables;
 
 ***Results
        of Operations - Third Quarter and Year-To-Date 2006 Compared With Third Quarter
        and Year-To-Date 2005***
 
 We
        incurred a net loss of $1,945,622 in the three months ended September 30,
        2006,
        as compared to a net loss of $339,225 in the three months ended September
        30,
        2005.
 
 We
        incurred operating expenses of $1,996,386 for the three month period ended
        September 30, 2006, compared to operating expenses of $339,225 for the same
        three month period in the prior year. We incurred operating expenses of
        $4,983,673 for the nine month period ended September 30, 2005. The increase
        in
        our operating expenses for the three and nine months ended September 30,
        2006,
        when compared to the same reporting period in the prior year, is attributable
        to
        expenditures relating to mineral property exploration operations under our
        new
        business plan and stock based compensation. Our expenses for the three months
        ended September 30, 2006 consisted primarily of mineral property rights and
        exploration expenses in the amount of $1,074,629 (including stock-based
        compensation of $39,639), and general and administrative expenses in the
        amount
        of $2,187,686 (including stock-based compensation of $560,829).
 
 We
        generated interest income of $50,764 for the three months ended September
        30,
        2006 and $103,187 for the nine months ended September 30, 2006, but did not
        generate any revenue during the reporting period from our current mining
        operations.
 
 We
        did
        not generate any revenue during the three months ended June 30, 2005. During
        the
        nine months ended June 30, 2005, we generated $108,760 from our prior business
        plan which was discontinued in the first quarter of 2005 to pursue the
        acquisition and development of mining properties. We incurred a loss of
        $4,880,486 during the nine months ended September 30, 2006 compared to a
        net
        loss of $339,225 in our comparative fiscal 2005 period. The increased net
        loss
        is attributable to increased expenditures related to mineral property
        exploration operations under our new business plan and stock-based compensation
        expenses.
 
 ***Liquidity
        and Capital Resources***
 
 Our
        cash
        and working capital positions as at the dates indicated were as
        follows:
 
 **September
                  30, 2007**
              
              **December
                  31, 2006**Cash
                  and cash equivalents
              
              $
              1,924,923
              
              $
              882,913Working
                  capital deficiency
              
              $
              1,471,640
              
              $
              4,978,411
  15
  We
        have
        historically relied on equity capital to fund our operations and mineral
        property acquisition and exploration activities. For the cumulative period
        March
        25, 2003 to September 30, 2007, we have raised $32.8 million from the issuance
        of shares of our common stock, share purchase warrants, and short-term bridge
        loans (net of repayments) and used $30.9 million to fund operations and mineral
        property acquisition and exploration activities, leaving cash and cash
        equivalents of $1.9 million at September 30, 2007 and a working capital
        deficiency of $1.5 million.
 
 In
        order
        to continue to advance our operations while we source additional equity
        financing, on June 12, 2007 we entered into a $3,500,000 promissory note
        with
        our President, a shareholder, and a company controlled by these individuals.
        The
        short-term bridge loan, secured by our investment in RNC was due and payable
        upon closing of a planned equity financing, but in no case later than August
        15,
        2007. Upon repayment, a $52,500 loan origination fee was payable to the note
        holders. The note accrued interest at 10% per annum, with monthly interest
        payments commencing June 30, 2007. The note, including accrued interest and
        loan
        origination fees of $134,480 was repaid during the third quarter of
        2007.
 
 Based
        upon our current financial condition, we anticipate that the current cash
        on
        hand is insufficient to operate our business through the end of the current
        fiscal year, as the Company’s cash resources at September 30, 2007 are expected
        to be used in operations in October and November of 2007. We intend to fund
        operations through additional debt and/or equity financing arrangements,
        which
        may be insufficient to fund expenditures or other cash requirements. We plan
        to
        seek additional financing in private and/or public equity offerings to secure
        funding for our operations. There can be no assurance that we will be successful
        in raising additional funding. If we are not able to secure additional funding,
        the implementation of our business plan will be impaired and we may lose
        our
        option to purchase certain mining and mineral rights. There can be no assurance
        that such additional financing will be available to us on acceptable terms
        or at
        all.
 
 On
        August
        14, 2007 we completed a private equity offering of 8,483,000 units at $1.40
        CDN
        per unit to a total of 24 investors. Each unit consists of one share of our
        common stock and one-half Warrant (the “Warrant”) for a total of 8,483,000
        common shares and 4,241,500 Warrants issued. The total gross proceeds raised
        was
        $11,876,200 CDN. Each Warrant is exercisable for one common share at an exercise
        price of $1.85 CDN and the Warrants are exercisable for 12 months following
        the
        closing of the offering. The Warrant also requires the holder to exercise,
        upon
        notice from the Company, in the event that during any fifteen consecutive
        trading days, the common stock of the Company closes at or above $2.25 CDN
        on a
        recognized North American stock exchange.
 
 In
        connection with this private equity offering, we paid as a commission $712,572
        CDN and issued additional warrants (the “Agent’s Warrants”) to purchase 508,980
        shares of our common stock, with each Agent’s Warrant exercisable at a price of
        $1.40 CDN for a period of thirty-six months from the date of
        issuance.
 
 Pursuant
        to the terms of the private placement, the Company was obligated to file
        a
        Registration Statement with the Securities and Exchange Commission (SEC)
        to
        register the common shares and common shares underlying the Warrants. On
        October
        3, 2007 the SEC declared the Company’s registration statement
        effective.
 
 In
        order
        to finance continuing operations and make payments related to the acquisition
        of
        identified properties and the exercise of our rights to the remaining options
        we
        hold, additional funding from external sources will be required.
  16
  On
        November 12, 2007 we entered into a $1,500,000 promissory note between our
        President and Chief Executive Officer. The loan, collateralized by the Company’s
        investment in RNC, is due and payable upon closing of an equity financing,
        but
        in no case later than. December 31, 2007 upon repayment a $22,500 fee is
        payable
        to the note holders. The note bears interest at 10 % per annum with monthly
        interest payments commencing November 30, 2007.
 
 ***Off-balance
        sheet arrangements, Commitments, and Contingencies***
 
 i) Mineral
            Property Purchase Obligations
 
 In
        the
        normal course of business we enter into agreements with existing titleholders
        to
        acquire mineral and exploration rights. Upon signing, typically 25% of the
        negotiated purchase price is due and payable with an additional 25% due when
        all
        required documentation has been submitted to the local mining department
        and the
        final 50% due when the mining claim has been successfully transferred and
        registered in the Company’s name. Our accounting policy is to record the full
        contractual obligation associated with the agreements as a current liability
        upon signing. The timing and magnitude of repayment of these obligations
        will
        vary between periods and therefore our cash outflows related to these
        obligations will also vary.
 
 ii)   Caramanta
        Project
 
 Pursuant
        to an option agreement to purchase concession No. 668-17 in the Caramanta
        region, provided we determine it in the best interest of the Company to continue
        exploration, the contract specifies the following scheduled payments required
        to
        obtain a 100% interest in the project: Fiscal 2008 - $325,000; Fiscal 2009
        -
        $725,000. We intend to continue exploration of the project and accordingly
        determining whether we will continue to make scheduled payments towards
        acquiring a 100% interest. In the event we chose not to continue the project,
        no
        further payments are required.
 
 iii)  Other
        Obligations
 
 In
        the
        normal course of business we enter into purchase commitments to acquire drilling
        and other equipment to advance our exploration activities. As at September
        30,
        2007 we have outstanding purchase commitments of $200,000 to purchase drilling
        equipment that we have not yet received.
 
 ***Contractual
        obligations***
 
 We
        have a
        two-year employment contract with Mr. J. Randall Martin, our Chief Executive
        Officer and Vice Chairman. Under the contract, Mr. Martin is entitled to
        receive
        a monthly compensation of $20,000, and is eligible to participate in our
        share
        compensation arrangements. In addition, Mr. Martin is entitled to reimbursement
        of all reasonable out-of-pocket expenses incurred in the performance of his
        duties. If, Mr. Martin’s contract is terminated without cause, he is entitled
        receive a lump sum equal to 12 months monthly compensation and accelerated
        vesting of his options. Under the contract, Mr. Martin has disclaimed any
        rights
        to all intellectual property created by him or jointly with others while
        with
        us. In addition, following termination of the contract, Mr. Martin will be
        subject to a one-year non-competition covenant.
  17
  We
        have a
        two-year employment contract with Mr. James Kopperson, our Chief Financial
        Officer. Under the contract, Mr. Kopperson is entitled to receive a monthly
        compensation of CDN $17,500, and is eligible to participate in our share
        compensation arrangements. In addition, Mr. Kopperson is entitled to
        reimbursement of all reasonable out-of-pocket expenses incurred in the
        performance of his duties. If, Mr. Kopperson’s contract is terminated without
        cause, he is entitled receive a lump sum equal to 12 months monthly compensation
        and accelerated vesting of his options. Under the contract, Mr. Kopperson
        has
        disclaimed any rights to all intellectual property created by him or jointly
        with others while with us. In addition, following termination of the contract,
        Mr. Kopperson will be subject to a one-year non-competition
        covenant.
 
 We
        have a
        two-year consulting contract with Dr. Stewart Redwood our VP of Exploration.
        Under the contract, Dr. Redwood is entitled to receive compensation at the
        rate
        of $1,000 per day and is eligible to participate in our share compensation
        arrangements. In addition, he is entitled to reimbursement of all reasonable
        out-of-pocket expenses incurred in the performance of his duties. We also
        granted Dr. Redwood 500,000 restricted shares in the first quarter fiscal
        2007.
        Should Dr. Redwood’s contract with us be terminated with cause or by his
        resignation before the period of two years has elapsed, he is required to
        return
        pro rata portion of the shares based on the time remaining on the contract.
 
 On
        November 12, 2007 we entered into a two-year employment contract with Mr.
        Thomas
        Lough, our President. Mr.
        Lough
        is also the President and a director of Investcol Limited. We purchased our
        100%
        interest in RNC  from
        Investcol. Under
        the
        contract, Mr. Lough is entitled to receive a monthly compensation of CDN
        $15,000. In addition Mr. Lough is entitled to reimbursements of all reasonable
        out-of-pocket expenses incurred in the performance of his duties. If Mr.
        Lough’s
        contact is terminated without cause, he is entitled to recover a lump sum
        equal
        to 12 months monthly compensation and accelerated vesting of his options.
        Under
        the contract, Mr. Lough has disclaimed any rights to all intellectual property
        created by him or jointly with others while with us. In addition, following
        termination of the contract, Mr. Lough will be subject to a one-year
        non-competition covenant.
 
 ***Related
        Party Transactions***
 
 Certain
        transactions described under *The
        Caramanta and Marmato Projects* elsewhere
        in this MD&A are considered related party transactions. During certain
        periods we also paid management and consulting fees to directors, senior
        officers and shareholders and for certain prior periods, we paid office rental
        fees to a company related to a former director. Further information on these
        transactions is provided in our accompanying consolidated financial statements
        under Note 8 - “Related Party Transactions”.
 
 ***Risks
        and Uncertainties***
 
 An
        investment in our common stock involves a high degree of risk. You should
        carefully consider the risks described below and the other information in
        the
        prospectus and amendments thereto we filed in connection with our recent
        private
        placements (available on www.sec.gov.com) before investing in our common
        stock.
        If any of the following risks occur, our business, operating results and
        financial condition could be seriously harmed.
 
 18
 
 **Going
        Concern**
  We
        have
        incurred a net loss of $17.5 million for the period from our inception on
        March
        25, 2003 to September 30, 2007. As of September 30, 2007, we had a working
        capital deficiency of $1.5 million. We presently are not generating any revenue
        and do not anticipate that we will generate any revenue from operations in
        the
        near future. Our estimate of our project cost to feasibility is $35.0 million.
        We estimate that a minimum of $20.0 million will be required over the next
        twelve to eighteen months to complete the initial phase of drilling at Marmato
        as well as cover our administration and property purchases costs. Pending
        the
        results of our initial drill program, an additional $50 million will be required
        to complete the Marmato feasibility study, including an additional drilling
        at
        Marmato, and Caramanta.
 
 We
        currently do not have any arrangements for financing and we may not be able
        to
        obtain financing. If we are unable to obtain additional financing when sought,
        we will be required to curtail our business plan. Any additional equity
        financing may involve substantial dilution to our then existing shareholders.
        There is a significant risk to investors who purchase shares of our common
        stock
        because there is a risk that we may not be able to generate and/or raise
        enough
        resources to remain operational for an indefinite period of time.
 
 **Limited
        Operating History**
  We
        have a
        very limited operating history upon which an evaluation of our future success
        or
        failure can be made. It was only recently that we took steps in a plan to
        engage
        in the acquisition of interests in exploration and development properties
        in
        Western Colombia, and it is too early to determine whether such steps will
        lead
        to success. It is premature to evaluate the likelihood that we will be able
        to
        operate our business successfully. To date, we have been involved primarily
        in
        the acquisition of property interests and mining rights in Western Colombia.
        We
        have not earned any revenues from our current operations.
  **Title
        Risk**
  We
        do not
        maintain insurance against title. Title on mineral properties and mining
        rights
        involves certain inherent risks due to the difficulties of determining the
        validity of certain claims as well as the potential for problems arising
        from
        the frequently ambiguous conveyance history characteristic of many mining
        properties. Currently, we are in the process of investigating the title of
        mineral concessions for which we hold either directly or through our equity
        interest in RNC. We cannot give any assurance that title to such properties
        will
        not be challenged or impugned and cannot be certain that we will have or
        acquire
        valid title to these mining properties. For example, there is a risk that
        the
        Colombian government may in the future grant additional titles in excess
        of the
        Company’s expectations to currently illegal miners. Furthermore, although the
        Company believes that mechanisms exist to integrate the titles of legal mineral
        properties currently not owned by the Company, there is a risk that this
        process
        could be time consuming and costly. As the Company begins the processes of
        integration, the Costs of acquiring the remaining properties and associated
        surface rights could rise significantly or become cost prohibitive. Furthemore,
        the risk exists that one or more of the remaining titleholders could delay
        the
        integration process through administrative avenues. The possibility also
        exists
        that title to existing properties or future prospective properties may be
        lost
        due to an omission in the claim of title. As a result, any claims against
        us may
        result in liabilities or costs we will not be able to afford or significant
        delays resulting in the failure of our business.
  19
  **Town
        Relocation Risk**
 
 Our
        business plan includes the move the town of Marmato from its current location
        on
        the Marmato Mountain to a safer location. While we are currently working
        with
        city, state, and federal governments to facilitate this move, we are subject
        to
        the risk of political, economic, or social circumstances that could delay
        our
        ability to complete the town move. If we are unable to complete the town
        move,
        our ability to advance our Marmato project could be impaired.
  **Political
        and Economic Uncertainties**
  Our
        property interests and proposed exploration activities in Western Colombia
        are
        subject to political, economic and other uncertainties, including the risk
        of
        expropriation, nationalization, renegotiation or nullification of existing
        contracts, mining licenses and permits or other agreements, changes in laws
        or
        taxation policies, currency exchange restrictions, and fluctuations changing
        political conditions and international monetary fluctuations. Future government
        actions concerning the economy, taxation, or the operation and regulation
        of
        nationally important facilities such as mines could have a significant effect
        on
        us. Any
        changes in regulations or shifts in political attitudes are beyond our control
        and may adversely affect our business. Exploration may be affected in varying
        degrees by government regulations with respect to restrictions on future
        exploitation and production, price controls, export controls, foreign exchange
        controls, income taxes, expropriation of property, environmental legislation
        and
        mine and/or site safety. No
        assurances can be given that our plans and operations will not be adversely
        affected by future developments in Colombia. Colombia is home to South America’s
        largest and longest running insurgency. Any changes in regulations or shifts
        in
        political attitudes are beyond the control of the Company and may adversely
        affect our business.
  **Government
        Regulation and Environmental Risks**
  Our
        operations are subject to Colombian and local laws and regulations regarding
        environmental matters, the abstraction of water, and the discharge of mining
        wastes and materials. Any changes in these laws could affect our operations
        and
        economics. Environmental laws and regulations change frequently, and the
        implementation of new, or the modification of existing, laws or regulations
        could harm us. We cannot predict how agencies or courts in Colombia will
        interpret existing laws and regulations or the effect of these adoptions
        and
        interpretations may have on our business or financial condition. We may be
        required to make significant expenditures to comply with governmental laws
        and
        regulations.
 
 Any
        significant mining operations will have some environmental impact, including
        land and habitat impact, arising from the use of land for mining and related
        activities, and certain impact on water resources near the project sites,
        resulting from water use, rock disposal and drainage run-off. No assurances
        can
        be given that such environmental issues will not have a material adverse
        effect
        on our operations in the future. While we believe we do not currently have
        any
        material environmental obligations, exploration activities may give rise
        in the
        future to significant liabilities on our part to the government and third
        parties and may require us to incur substantial costs of remediation.
  Additionally,
        we do not maintain insurance against environmental risks. As a result, any
        claims against us may result in liabilities we will not be able to afford
        resulting in the failure of our business. Failure to comply with applicable
        laws, regulations, and permitting requirements may result in enforcement
        actions
        thereunder, including orders issued by regulatory or judicial authorities
        causing operations to cease or be curtailed, and may include corrective measures
        requiring capital expenditures, installation of additional equipment, or
        remedial actions. Parties engaged in exploration operations may be required
        to
        compensate those suffering loss or damage by reason of the exploration
        activities and may have civil or criminal fines or penalties imposed for
        violations of applicable laws or regulations and, in particular, environmental
        laws.
  20
  Amendments
        to current laws, regulations and permits governing operations and activities
        of
        exploration companies, or more stringent implementation thereof, could have
        a
        material adverse impact on the Company and cause increases in expenditures
        and
        costs or require abandonment or delays in developing new mining properties.
 
 **Competition**
  The
        mineral exploration business is highly competitive. This industry has a
        multitude of competitors and many competitors dominate this industry. Many
        of
        our competitors have greater financial resources than. As a result, we may
        experience difficulty competing with other businesses when conducting mineral
        exploration activities or in the retention of qualified personnel. No assurances
        can be given that we will be able to compete effectively.
  
 **Commodity
        Fluctuations**
  The
        availability of markets and the volatility of market prices are beyond our
        control and represent a significant risk. Even if commercially viable deposits
        of gold are found to exist on our property interests, a ready market may
        not
        exist for the sale of the reserves. Numerous factors beyond our control may
        affect the marketability of any substances discovered. These factors include
        market fluctuations, the proximity and capacity of markets and processing
        equipment, government regulations, including regulations relating to prices,
        taxes, royalties, land tenure, land use, importing and exporting of minerals
        and
        environmental protection. These factors could inhibit our ability to sell
        gold
        in the event that commercial viable deposits are found to
        exist.
  **Production
        Risks**
 
 We
        have
        limited prior experience in placing
        mineral properties into production and our ability to do so will be
        dependent upon us using the services of appropriately experienced personnel
        or
        entering into agreements with other major resource companies that can provide
        such expertise. There can be no assurance that we will have available to
        us the
        necessary expertise when and if we place our resource properties into
        production.
  **Dependence
        on Key Management**
  The
        ability to identify, negotiate and consummate transactions that will benefit
        us
        is dependent upon the efforts of our management team and Investcol. We have
        engaged Investcol to provide support for our management and supervise
        exploration and development activities in Colombia. The loss of the services
        of
        any member of management or the principals of Investcol could have a material
        adverse effect on us. Our planned 2007 drilling activities may require
        significant investment in additional personnel and capital equipment. Given
        the
        current shortage of equipment and experienced personnel within the mining
        industry, there can be no assurance that we will be able to acquire the
        necessary resources.
 
 **Dependence
        on a Single Exploration Region**
 
 The
        Company is currently dependent upon one principal mineral exploration region,
        that being the Marmato Mountain Gold District is Colombia. The Marmato Mountain
        Gold District may never develop into commercially viable ore bodies, which
        would
        have a materially adverse affect on the Company’s potential mineral resource
        production, profitability, financial performance and results of
        operations.
  21
  **Exploration
        and Mining Risks**
 
 The
        business of exploring for minerals and mining involves a high degree of
        risk.Only a small proportion of the properties that are explored are ultimately
        developed into producing mines. At present, of our properties have proven
        or
        probable reserves and the proposed programs are an exploratory search for
        proven
        or probable reserves. The mining areas presently being assessed by us may
        not
        contain economically recoverable volumes of minerals or metals. Our operations
        may be disrupted by a variety of risks and hazards which are beyond our control,
        including fires, power outages, labor disruptions, flooding, explosions,
        cave-ins, land slides and the inability to obtain suitable or adequate
        machinery, equipment or labor and other risks involved in the operation of
        mines
        and the conduct of exploration programs. We have relied and may continue
        to
        rely, upon consultants and others for operating expertise. Should economically
        recoverable volumes of minerals or metal be found, substantial expenditures
        are
        required to establish reserves through drilling, to develop metallurgical
        processes, to develop the mining and processing facilities and infrastructure
        at
        any site chosen for mining. Although substantial benefits may be derived
        from
        the discovery of a major mineralized deposit, no assurance can be given that
        minerals will be discovered in sufficient quantities or having sufficient
        grade
        to justify commercial operations or that funds required for development can
        be
        obtained on a timely basis. The economics of developing gold and other mineral
        properties is affected by many factors including the cost of operations,
        variations of the grade of ore mined, fluctuations in the price of gold or
        other
        minerals produced, costs of processing equipment and such other factors as
        price
        of gold or other minerals produced, costs of processing equipment and such
        other
        factors as government regulations, including regulations relating to royalties,
        allowable production, importing and exporting of minerals and environmental
        protection. In addition, the grade of mineralization ultimately mined may
        differ
        from that indicated by drilling results and such differences could be material.
        Short term factors, such as the need for orderly development of ore bodies
        or
        the processing of new or different grades, may have an adverse effect on
        mining
        operations and on the results of operations. There can be no assurance that
        minerals recovered in small scale laboratory tests will be duplicated in
        large
        scale tests under on-site conditions or in production scale operations. Material
        changes in geological resources, grades, stripping ratios or recovery rates
        may
        affect the economic viability of projects. Depending on the price of gold
        or
        other minerals produced, which have fluctuated widely in the past, we may
        determine that it is impractical to commence or continue commercial
        production.
 
 **Risks
        Inherent in Estimating Mineral Resources and Production**
 
 The
        mineral resource estimates included in this document are estimates only and
        no
        assurance can be given that any proven or probable reserves will be discovered
        or that any particular level of recovery of minerals will in fact be realized
        or
        that an identified reserve or resource will ever qualify as a commercially
        mineable (or viable) deposit which can be legally and economically exploited.
        In
        addition, the grade of mineralization which may ultimately be mined may differ
        from that indicated by drilling results and such differences could be material.
        Production can be affected by such factors as permitting regulations and
        requirements, weather, environmental factors, unforeseen technical difficulties,
        unusual or unexpected geological formations and work interruptions. The
        estimated resources described in this document should not be interpreted
        as
        assurances of commercial viability or potential or of the profitability of
        any
        future operations.
  **Reliance
          on Third Parties for Technical Services**
 
 We
          rely
          on a number of third parties to advance our projects and for certain technical
          and operational assistance. For example, we utilize third parties to assist
          us
          with confirming our historic resource estimates and preparing a feasibility
          study, as well as related metallurgical testing, geotechnical support,
          and
          environmental baseline studies. Furthermore, similar to other Companies
          in our
          industry, we utilize independent assay labs extensively in the normal course
          of
          our operations. In the event that the services of any of these third-parties
          are
          unavailable to the Company on a timely basis, we may experience delays
          towards
          our stated objective of completing a feasibility study and our business
          could be
          adversely affected.
  22
  **Conflicts
        of Interest**
 
 The
        Company’s directors and officers may serve as directors or officers of other
        companies or have significant shareholdings in other resource companies and,
        to
        the extent that such other companies may participate in ventures in which
        the
        Company may participate, the directors of the Company may have a conflict
        of
        interest in negotiating and concluding terms respecting the extent of such
        participation. In the event that such a conflict of interest arises at a
        meeting
        of the Company’s directors, a director who has such a conflict will abstain from
        voting for or against the approval of such participation or such terms. In
        accordance with the laws of the State of Delaware, the directors of the Company
        are required to act honestly, in good faith and in the best interests of
        the
        Company. In determining whether or not the Company will participate in a
        particular program and the interest therein to be acquired by it, the directors
        will primarily consider the degree of risk to which the Company may be exposed
        and its financial position at that time.
 
 **Repatriation
        of Earnings**
 
 Currently
        there are no restrictions on the repatriation from Colombia of earnings to
        foreign entities. However, there can be no assurance that restrictions on
        repatriations of earnings from Colombia will not be imposed in the future.
 
 **Currency
        Fluctuations**
 
 The
        Company’s operations in Colombia make it subject to foreign currency
        fluctuations and such fluctuations may materially affect the Company’s financial
        position and results. We report our financial results in U.S. dollars and
        incur
        expenses in U. S. dollars, Canadian dollars, and Colombian pesos. As the
        exchange rate between the Canadian dollar and Colombian peso fluctuates against
        the U.S. dollar, we will experience foreign exchange gains and losses. We
        do not
        hedge any of our foreign currency exposures.
 
 **Enforcement
        of Civil Liabilities**
 
 Substantially
        all of the assets of the Company are located outside of the Unites States,
        and
        certain of the directors and officers of the Company are resident outside
        of the
        United States. As a result, it may be difficult or impossible to enforce
        judgments granted by a court in the United States against the assets of the
        Company or the directors and officers of the Company residing outside of
        the
        United States.
 
 **Internal
        Controls**
  Effective
        internal controls are necessary for us to provide reliable financials reports
        and effectively prevent fraud. If we cannot provide reliable financial reports
        or prevent fraud, our operating results could be harmed. We have in the past
        discovered, and may in the future discover, areas of our internal controls
        that
        need improvement. Any failure to implement required new or improved controls,
        or
        difficulties encountered in their implementation, could harm our operating
        results or cause us to fail to meet our reporting obligations. Inferior internal
        controls could also cause investors to lose confidence in our reported financial
        information, which could have a negative effect on the trading price of our
        stock.
  23
 
 **Sarbanes
        Oxley**
  The
        Sarbanes-Oxley Act of 2002 was enacted in response to public concerns regarding
        corporate accountability in connection with recent accounting scandals. The
        stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility,
        to provide for enhanced penalties for accounting and auditing improprieties
        at
        publicly traded companies, and to protect investors by improving the accuracy
        and reliability of corporate disclosures pursuant to the securities laws.
        The
        Sarbanes-Oxley Act generally applies to all companies that file or are required
        to file periodic reports with the SEC, under the Securities Exchange Act
        of
        1934. As a public company, we are required to comply with the Sarbanes-Oxley
        Act. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series
        of
        rules and regulations by the SEC that increase responsibilities and liabilities
        of directors and executive officers. The perceived increased personal risk
        associated with these recent changes may deter qualified individuals from
        accepting these roles. As a result, it may be more difficult for us to attract
        and retain qualified persons to serve on our board of directors or as executive
        officers. We are currently working towards Sarbanes Oxley 404 compliance,
        but it
        is a costly and time-consuming process and there can be no assurance that
        we
        will be compliant within the relevant legislation requirements. We have limited
        internal and external resources and devote to becoming SOX 404 compliant
        by
        December 31, 2007 and there can be no assurance we will be compliant by this
        date. We continue to evaluate and monitor developments with respect to these
        rules, and we cannot predict or estimate the amount of additional costs we
        may
        incur or the timing of such costs.
 
 ***Recently
        Issued Accounting Standards***
 
 The
        FASB
        has issued FIN 48, which prescribes rules on the accounting for uncertainty
        in
        income tax positions. FIN 48 requires all material tax positions to undergo
        a
        new two-step recognition and measurement process. All material tax positions
        in
        all jurisdictions in all tax years in which the statute of limitations remains
        open upon the initial date of adoption are required to be assessed. In order
        to
        recognize a tax asset it must be more likely than not a tax position will
        be
        sustained upon examination based solely on its technical merits. If the
        recognition standard is not satisfied, then no tax benefit otherwise arising
        from the tax position can be recorded for financial statement purposes. If
        the
        recognition standard is satisfied, the amount of tax benefit recorded for
        financial statement purposes will be the largest amount of tax benefit with
        a
        greater than 50% likelihood of being realized upon ultimate settlement with
        a
        taxing authority. The adoption of FIN 48 did not have a material impact on
        our
        financial position, results of the operations, or cash flows for the three
        and
        nine months ended September 30, 2007.
 
 ***Share
        Data***
 
 At
        October 31, 2007, we have 77,299,849 common shares outstanding. In addition,
        we
        have outstanding:
 
 i)  4,277,500
        stock options, each of which is exercisable into one common share; and
 ii)  12,182,386
        common share purchase warrants, each of which is exercisable into one common
        share.
 
 24
 
 ***Fiscal
        2007 Exploration Activities and Outlook***
 
 **Marmato
        Project**
 
 We
        have
        been working on the Marmato Mountain Development Project since 2005. The
        main
        focus of work since then has been to negotiate the purchase the numerous
        small
        mines that compromise the Zona Alta (Upper Zone) portion of the mountain.
        In
        2007 we began technical studies to carry out a scoping targeted for completion
        in the first quarter of 2008 and the commencement of a feasibility study
        thereafter.
 
 **Resource
        Estimates**
 
 The
        Zona
        Alta has a historical resource estimate made by a previous explorer in 1998
        of
        5.3 million ounces of gold at a cutoff grade of 0.50 g/t. This comprises
        56
        million tonnes at an average grade of 1.06 grammes per tonne gold for a total
        of
        1.9 million ounces gold in the “inferred resource” category, and a further 99
        million tonnes at an average grade of 1.07 grammes per tonnes gold for a
        total
        of 3.4 million ounces in the “mineral potential” category. The historical
        resource was reviewed by Micon International Limited, a leading international
        engineering and geological services firm. Micon concluded because the original
        database and the report appendices were unable to be reviewed and verified,
        the
        1998 resource estimate should be regarded as a historical resource to be
        used
        for information purposes only and only as an indication of the project’s
        potential.
 
 Micon
        International Limited was engaged to carry out an inferred resource estimate
        based on our new drilling and underground sampling, as described below. This
        is
        targeted for completion in early 208, with additional drilling to upgrade
        this
        estimate thereafter.
 
 **Drilling
        and Underground Sampling**
 
 Our
        initial exploration program comprises 8,000 meters of diamond drilling plus
        a
        comprehensive program of channel sampling of underground mines.
 
 Diamond
        drilling started with one drill rig. By the end of the third quarter of fiscal
        2007, a total of 5,646 meters of drilling in 31 holes with depths ranging
        from
        110 to 430 meters had been completed. At the date of this MD&A, the total
        amount drilled was approximately 7,200 meters in 34 holes.
 
 As
        at
        September 30, 2007 we have purchased three portable diamond drills, one of
        which
        had arrived and was operational at quarter-end. We also have three drills
        supplied by third-party contractors on site and operational for a total of
        four
        drills in operation.
 
 The
        underground channel sampling program at Marmato continued during the third
        quarter. The program comprises continuous saw-cut channel samples from all
        cross-cuts, mine faces and at regular intervals along the backs in the numerous
        artisanal mines in the Zona Alta. This is being carried out in conjunction
        with
        detailed surveying of the mine portals by differential global positioning
        system
        instrument and detailed surveying of the underground mines by total station
        survey instruments. This will enable a three-dimensional model of the mines
        and
        veins to be constructed. A program of mine maintenance and rehabilitation
        is
        also being carried out for access for surveying and sampling. In addition,
        we
        also carried out research into historical gold production at
        Marmato.
  We
          have
          recently been experiencing significant delays in receiving assay results
          and
          check assay results from our third party analytical laboratories and as
          a result
          we are at present unable to release our updated drilling results. We will
          be
          working with these laboratories in the fourth quarter to determine the
          cause of
          their delays and will be encouraging them to provide us more timely service.
          While we expect that we will be able to address these delays either with
          our
          current supplier or alternatively make arrangements with different suppliers,
          there exists a risk that further delays may negatively impact our planned
          timeline for completing a resource estimate.
  25
  **Metallurgy**
 
 SGS
        Lakefield Research Limited of Lakefield, Ontario has been contracted by us
        to
        carry out preliminary scoping metallurgy test work to develop a process flow
        sheet for our Scoping Study. Work continued through the third
        quarter.
 
 **Geotechnical
        Studies**
 
 Golder
        Associates Ltd. of Mississagua, Ontario have been contracted by us to carry
        out
        geotechnical data collection and interpretation for open pit design, and
        to make
        a preliminary selection and evaluation of sites for waste rock and tailings
        disposal. This will form part of the Scoping Study. Geotechnical logs are
        being
        made of the drill core by our geologists and Golders will use this and other
        data to carry out data analysis and pit slope determination at a scoping
        study
        level. These studies continued during the third quarter.
 
 **Environmental
        Studies**
 
 An
        Environmental Baseline Study was started in October 2006 by LHC Consultores
        Ambientales of Colombia. The study will give a full year of environmental
        data
        for incorporation on the Scoping Study. The study will form the basis for
        our
        future environmental permits and our Social and Environmental Impact Statement
        (EIS). We
        believe that we have no current environmental liability for past practices
        of
        others and we have received approval for drilling from Corpocaldas under
        an
        approved Environmental Management Plan. Nevertheless, we intend to meet or
        exceed modern global standards of environmental stewardship in the preparation
        of the Baseline study and subsequent EIS.
 
 Knight
        Piesold and Company of Denver, Colorado have been contracted to carry out validation
        of environmental data collection and management and a social impact study,
        including independent supervision of the baseline study being carried out
        by
        LHC., SGS Lakefield has been contracted by us to carry out a preliminary
        and
        rock drainage study (ARD) on tailings and waste rock.
 
 **Scoping
        Study**
 
 We
        have
        contracted Micon International Limited to carry out a Scoping Study and
        preliminary evaluation assessment of Marmato, with completion targeted for
        early
        2008.
 
 **Caramanta
        Project**
 
 We
        currently control in excess of 32,000 hectares of exploration licenses in
        the
        Caramanta project through ownership, options and applications. These surround
        the Marmato Mountain Development Project and our objective is to acquire
        additional licenses to consolidate the district. We believe that there is
        good
        potential for discovery of additional gold deposits in the Marmato District
        in a
        cluster of targets surrounding our core Marmato Mountain Development Project.
        Reconnaissance surface exploration work on the Caramanta project comprising
        rock
        sampling and geological mapping was completed in the third quarter, following
        up
        on anomdies identified by stream sediment sampling. In the third quarter
        we
        announced the discovery of five large, distinct gold targets in the area
        surrounding Marmato. These targets are based on gold anomdies on surface
        rock
        and soil samples. Additional surface sampling and geological mapping is being
        undertaken and the results of these programs will be used to define drill
        targets.




26





**Item** **3.**  **Controls
      and Procedures**





We
      carried out an evaluation of the effectiveness of the design and operation
      of
      our disclosure controls and procedures (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(e)) as of September 30, 2007. This evaluation was carried
      out under the supervision and with the participation of our Chief Executive
      Officer, Mr. J. Randall Martin, and our Chief Financial Officer, Mr. James
      Kopperson. Based upon that evaluation, our Chief Executive Officer and Chief
      Financial Officer concluded that, as of September 30, 2007, our disclosure
      controls and procedures are effective. There have been no changes in our
      internal controls over financial reporting during the quarter ended September
      30, 2007.




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




Limitations
      on the Effectiveness of Internal Controls




Our
      management does not expect that our disclosure controls and procedures or our
      internal control over financial reporting will necessarily prevent all fraud
      and
      material error. Our disclosure controls and procedures are designed to provide
      reasonable assurance of achieving our objectives and our Chief Executive Officer
      and Chief Financial Officer concluded that our disclosure controls and
      procedures are effective at that reasonable assurance level. Further, the design
      of a control system must reflect the fact that there are resource constraints,
      and the benefits of controls must be considered relative to their costs. Because
      of the inherent limitations in all control systems, no evaluation of controls
      can provide absolute assurance that all control issues and instances of fraud,
      if any, within the Company have been detected. These inherent limitations
      include the realities that judgments in decision-making can be faulty, and
      that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the internal control. The design
      of
      any system of controls also is based in part upon certain assumptions about
      the
      likelihood of future events, and there can be no assurance that any design
      will
      succeed in achieving its stated goals under all potential future conditions.
      Over time, control may become inadequate because of changes in conditions,
      or
      the degree of compliance with the policies or procedures may
      deteriorate.




27





**PART
      II - OTHER INFORMATION**





**Item****1.     Legal
      Proceedings**





We
      are
      not a party to any pending legal proceeding. We are not aware of any pending
      legal proceeding to which any of our officers, directors, or any beneficial
      holders of 5% or more of our voting securities are adverse to us or have a
      material interest adverse to us.





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





The
      information set forth below relates to our issuances of securities without
      registration under the Securities Act during the reporting period which were
      not
      previously included in a Current Report on Form 8-K.




On
      August
      14, 2007, we completed a private equity offering of 8,483,000 Units at $1.40
      CDN
      per Unit to a total of 24 investors. Each Unit consists of one share of common
      stock and one-half warrant (“the Warrant”) to purchase one share of our common
      stock, exercisable for twelve months from the closing of the offering. The
      exercise price of the warrant is $1.85 CDN. The Warrant requires the holder,
      upon notice from the Company, to exercise in the event that during any fifteen
      consecutive trading days, the common stock of the Company closes at or above
      $2.25 CDN on a recognized North American stock exchange. We completed this
      offering pursuant to Regulation S of the Securities Act. Each investor
      represented to us that he was a non-US person as defined in Regulation S. We
      did
      not engage in a distribution of this offering in the United States. Each
      investor represented his intention to acquire the securities for investment
      only
      and not with a view toward distribution. We requested our stock transfer agent
      to affix appropriate legends to the stock certificate issued to each investor
      in
      accordance with Regulation S and the transfer agent affixed the appropriate
      legends. Each investor was given adequate access to sufficient information
      about
      us to make an informed investment decision. We issued 508,980 warrants to our
      agents in connection with this transaction, each Agent’s Warrant exercisable for
      one common stock at an exercise price of $1.40 CDN for a period of 36 months.




On
      August
      1, 2007 we issued 150,000 options to purchase our common stock to certain
      consultants in exchange for services rendered. On October 1, 2007 we issued
      150,000 options to purchase our common stock to a consultant in exchange for
      services rendered and on November 8, 2007 the Board of Directors approved the
      issuance of 1,850,000 options to purchase our common stock to directors,
      officers, and employees of the company.




28


**Item** **3.     Defaults
      upon Senior Securities**





None




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





On
      August
      17, 2007, we held the annual meeting of our security holders. The meeting was
      called for the purpose of electing directors, confirming the appointment of
      Pricewaterhouse Coopers LLP as the Company’s independent certified public
      accountant for the fiscal year ended December 31, 2007, and approving amendments
      to the Colombia Goldfields Ltd. 2006 Stock Incentive Plan. The total number
      of
      shares of common stock outstanding on the record date, July 9, 2007, was
      65,816,849 shares. The number of votes represented at the meeting was 35,105,067
      shares, or 53.3% of the shares eligible to vote.




The
      following individuals were elected as directors with the votes being as
      follows:







Nominee
            Votes
                Cast For
            Votes
                Cast Against
            Votes
                WithheldJ.
                Randall Martin
            34,995,181
            0
            109,886Thomas
                Ernest McGrail
            34,995,181
            0
            109,886David
                Bikerman
            34,995,181
            0
            109,886Terry
                Lyons
            34,994,881
            300
            109,886James
                Verraster
            34,994,881
            300
            109,886Edward
                Flood
            34,994,881
            300
            109,886Jonathan
                Berg
            34,994,881
            300
            109,886





The
      appointment of Pricewaterhouse Coopers LLP as the Company’s independent
      certified public accountant for the fiscal year ended December 31, 2007 was
      confirmed, with the votes cast being as follows:







Votes
                Cast For
            
            Votes
                Cast Against
            
            Votes
                Withheld35,008,615
            
            93,952
            
            2,500





With
      respect to the approval of amendments to the Colombia Goldfields Ltd. 2006
      Stock
      Incentive Plan, votes were cast for confirmation as follows:







Votes
                Cast For
            
            Votes
                Cast Against
            
            Votes
                Withheld17,210,685
            
            78,742
            
            26,800




No
      other
      matters were acted upon by our security holders at our annual meeting.
      17,788,840 common shares were broker non-votes.





**Item****5.     Other
      Information**


On
      November 12, 2007, we entered into an employment agreement with Mr. Thomas
      Lough, our President. See “Item 2. Plan of Operation - Contractual
      obligations”.




On
      November 8, 2007, our Board of Directors adopted a resolution amending the
      Company’s bylaws. The amendment set the quorum requirement for shareholder
      meetings at one-third (previously one-half) of the voting power of the issued
      and outstanding shares. The text of the amendment is attached hereto as Exhibit
      3.1.






**Item** **6.      Exhibits**





**Exhibit
                Number**
            **Description**3.1
            Amendment
                to the By-Laws10.1
            Employment
                Agreement dated November 12, 2007, and effective October 15,
                2007, between Thomas Lough and the Company31.1
            Certification
              of Chief
              Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
              to Section 302 of the Sarbanes-Oxley Act of 200231.2
            Certification
              of
              Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
              adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
              200232.1
            Certification
              of Chief
              Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
              Act
              of 2002


29


**SIGNATURES**







In
      accordance with the requirements of the Securities and Exchange Act of 1934,
      the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.





**Colombia
                Goldfields Ltd.**Date:
            November
                13, 2007By:
            /s/
                J. Randall Martin
              J.
                Randall MartinTitle:
            **Chief
                Executive Officer and Vice
                Chairman**





Date:
            November
                13, 2007By:
            /s/
                James Kopperson
              James
                KoppersonTitle:
            **Chief
                Financial Officer**








30