**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 endedJune
                30, 2007[
                ]
            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
      [
      ] No





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





State
      the
      number of shares outstanding of each of the issuer’s classes of common stock, as
      of the latest practicable date: 65,816,849 common shares as of July 31,
      2007.





Transitional
      Small Business Disclosure Format (check one): Yes [ ] No [X]


Table
          of Contents






TABLE
                OF CONTENTS
            PagePART
                I - FINANCIAL INFORMATIONItem
                1.
            Financial
                Statements
            3Item
                2.
            Plan
                of Operation
            4Item
                3.
            Controls
                and Procedures
            30PART
                II - OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            31Item
                2.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            31Item
                3.
            Defaults
                Upon Senior Securities
            32Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            32Item
                5.
            Other
                Information
            32Item
                6.
            Exhibits
            32


2
 Table
          of Contents


**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 June 30, 2007 and
                December 31, 2006 (unaudited);F-2
            Interim
                Consolidated Statements of Operations for the three and
                six months ended June 30, 2007 and 2006 and from inception (March
                25,
                2003) through June 30, 2007 (unaudited);F-3
            Interim
                Consolidated Statements of Stockholders’ Equity
                (Deficiency) for the period from inception (March 25, 2003) through
                June
                30, 2007 (unaudited);F-6
            Interim
                Consolidated Statements of Cash Flows for the three and
                six months ended June 30, 2007 and 2006 and from inception (March
                25,
                2003) through June 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 June 30, 2007 are not necessarily indicative of the results that can
      be
      expected for the full year.


3
 Table
          of Contents


**COLOMBIAGOLDFIELDS
      LTD.**


**(An
      Exploration Stage Company)**


**INTERIM
      CONSOLIDATED BALANCE SHEETS**


**(unaudited)**





*US
                Dollars*
            **June
                  30,**
                **2007**
            
            **December
                  31,**
                **2006****ASSETS****Current**Cash
                and cash equivalents
            $
            2,461,989
            
            $
            882,913Prepaid
                expenses and deposits
            
            724,984
            
            
            176,347Prepaid
                consulting fees (Note 5)
            
            518,000
            
            
            -3,704,973
            
            
            1,059,260Mineral
                and exploration properties and rights (Note 3)
            
            48,720,279
            
            
            43,528,386Property
                and equipment, net of accumulated amortization (Note 4)
            
            402,855
            
            
            419,733Prepaid
                consulting fees (Note 5)
            
            114,375
            
            
            -$
            52,942,482
            
            $
            45,007,379**LIABILITIES****Current**Accounts
                payable and accrued liabilities (Note 6)
            $
            6,583,145
            
            $
            6,037,671Promissory
                note payable to related parties (Note 8)
            
            3,500,000
            
            
            -10,083,145
            
            
            6,037,671**Non-Current**Deferred
                income tax liability (Notes 3 and 7)
            
            8,796,914
            
            
            9,759,52418,880,059
            
            
            15,797,195**STOCKHOLDERS’
                EQUITY****Common
                stock (Notes 5 & 12)**Authorized:
                200,000,000
                  common shares, $0.00001 par value
            
            658
            
            
            565Issued
                  and Outstanding:
                65,816,849
                  common shares (December 31, 2006, 56,039,849 common
                  shares)**Additional
                paid-in capital (Note 5)**
            
            47,613,980
            
            
            37,039,26647,614,638
            
            
            37,039,831**Deficit
                accumulated during the exploration stage**
            
            (13,552,215)
            
            
            (7,829,647)34,062,423
            
            
            29,210,184$
            52,942,482
            
            $
            45,007,379




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


***
      Going Concern (Note 1)**


F-1
 Table
          of Contents


**COLOMBIAGOLDFIELDS
      LTD.**


**(An
      Exploration Stage Company)**


**INTERIM
      CONSOLIDATED STATEMENTS OPERATIONS**


**(unaudited)**




*US
                Dollars*
            **Three**
                    **Months**
                    **Ended**
                    **June
                      30,
                      2007**
            
            **Three**
                  **Months**
                  **Ended**
                  **June
                    30,
                    2006**
            
            **Six**
                    **Months**
                    **Ended**
                    **June
                      30,
                      2007**
            
            **Six**
                    **Months**
                    **Ended**
                    **June
                      30,
                      2006**
            
            **Cumulative**
                    **From****Inception****(March
                      25,****2003)**
                    **through**
                    **June
                      30,
                      2007****REVENUES**
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -**OPERATING
                EXPENSES**Mineral
                property exploration expenses (Notes 3 and 5)
            
            1,560,588
            
            
            540,434
            
            
            3,032,604
            
            
            1,113,057
            
            
            7,510,340General
                and administrative (Note 5)
            
            1,290,079
            
            
            1,059,766
            
            
            2,691,311
            
            
            1,817,880
            
            
            7,042,616Foreign
                exchange loss
            
            889,408
            
            
            38,107
            
            
            935,216
            
            
            38,717
            
            
            924,528Amortization
            
            20,765
            
            
            12,191
            
            
            39,579
            
            
            17,635
            
            
            107,684Total
                operating expenses
            
            3,760,840
            
            
            1,650,498
            
            
            6,698,710
            
            
            2,987,289
            
            
            15,585,168Other
                income
            
            (3,803)
            
            
            (48,870)
            
            
            (13,532)
            
            
            (52,425)
            
            
            (131,566)Loss
                from continuing operations before deferred income taxes
            
            (3,757,037)
            
            
            (1,601,628)
            
            
            (6,685,178)
            
            
            (2,934,864)
            
            
            (15,453,602)Deferred
                income tax recovery (Note 7)
            
            (537,900)
            
            
            -
            
            
            (962,610)
            
            
            -
            
            
            (1,891,560)Net
                loss from continuing operations
            
            (3,219,137)
            
            
            (1,601,628)
            
            
            (5,722,568)
            
            
            (2,934,864)
            
            
            (13,562,042)Income
                from discontinued operations (Note 1)
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            9,827Net
                loss
            $
            (3,219,137)
            
            $
            (1,601,628)
            
            $
            (5,722,568)
            
            $
            (2,934,864)
            
            $
            (13,552,215)**LOSS
                PER SHARE - BASIC AND DILUTED**
            $
            (0.05)
            
            $
            (0.04)
            
            $
            (0.09)
            
            $
            (0.08)**WEIGHTED
                AVERAGE****NUMBER
                OF COMMON****SHARES
                OUTSTANDING**Basic
                and diluted
            
            65,755,750
            
            
            39,258,915
            
            
            61,507,236
            
            
            36,581,942




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


***
      Going Concern (Note 1)**


F-2
 Table
          of Contents


**COLOMBIAGOLDFIELDS
      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
              TheExploration
              Stage
            
            Total
              Stockholders’
                Equity
              (Deficiency)**Period
                Ended December 31, 2003 (see Note 1):**Issue
                of common stock for cashat
                $0.000125 per share onMarch
                25, 2003
            
            8
            
            $
            -
            
            $
            1
            
            $
            -
            
            $
            -
            
            $
            1Issue
                of common stock for cashat
                $0.000125 per share onMay
                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 forcash
                at $0.00625 per shareon
                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
                common
                stock for finder 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
 Table
          of Contents


**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
              TheExploration
              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 forMineral
              concessions at $1.90 per share on February 14, 2006
            
            1,000,000
            
            
            10
            
            
            1,899,990
            
            
            -
            
            
            -
            
            
            1,900,000Issue
              of common stockFor
              Mineral concession at$2.25
              per share on April 10, 2006
            
            1,000,000
            
            
            10
            
            
            2,249,990
            
            
            -
            
            
            -
            
            
            2,250,000Issue
              of common stockfor
              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 withApril
                26, 2006 common stockissuance
            
            -
            
            
            -
            
            
            2,749,762
            
            
            -
            
            
            -
            
            
            2,749,762Issue
                of common stock forMineral
                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
 Table
          of Contents


**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
              TheExploration
              Stage
            
            Total
              Stockholders’
                Equity
              (Deficiency)Balance,
              December 31, 2006
            
            56,036,849
            
            $
            560
            
            $
            37,039,271
            
            $
            -
            
            $
            (7,829,647)
            
            $
            29,210,184**Six
              Months Ended June 30, 2007:**Issue
              of common stockfor
              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
            
            
            **-**
            
            
            **-**
            
            
            37,500Stock
              based compensation
            
            -
            
            
            -
            
            
            1,018,782
            
            
            **-**
            
            
            **-**
            
            
            1,018,782Net
              loss for the six months ended June 30, 2007
            
            
            
            
            
            
            
            -
            
            
            -
            
            
            (5,722,568)
            
            
            (5,722,568)Balance
              June 30, 2007
            
            65,816,849
            
            $
            658
            
            $
            47,613,980
            
            $
            -
            
            $
            (13,552,215)
            
            $
            34,062,423




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


***
      Going Concern (Note 1)**


F-5
 Table
          of Contents


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




**Three**
                      **Months**
                      **Ended**
                      **June
                        30,
                        2007**
            
            **Three**
                    **Months**
                    **Ended**
                    **June
                      30,
                      2006**
            
            **Six**
                      **Months**
                      **Ended**
                      **June
                        30,
                        2007**
            
            **Six**
                      **Months**
                      **Ended**
                      **June
                        30,
                        2006**
            
            **Cumulative**
                        **Inception**
                        **March
                          25, 2003)**
                        **through**
                        **June
                          30,
                          2007****OPERATING
                ACTIVITIES:**Net
                loss
            $
            (3,219,137)
            
            $
            (1,601,625)
            
            $
            (5,722,568)
            
            $
            (2,934,864)
            
            $
            (13,552,215)Items
                not requiring cash outlay:-
                Consulting fees
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            52,400-
                Amortization
            
            20,765
            
            
            12,191
            
            
            39,579
            
            
            17,635
            
            
            109,684-
                Mineral property exploration
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            250,000-
                Stock based compensation
            
            860,580
            
            
            695,666
            
            
            1,426,132
            
            
            1,182,155
            
            
            3,419,289-
                Deferred income taxes
            
            (537,900)
            
            
            -
            
            
            (962,610)
            
            
            -
            
            
            (1,891,560)Changes
                in non-cash working capital items-
                Accounts receivable
            
            -
            
            
            (61,843)
            
            
            -
            
            
            (61,843)
            
            
            --
                Prepaid expenses and deposits
            
            (356,355)
            
            
            (30,371)
            
            
            (548,636)
            
            
            (16,222)
            
            
            (724,984)-
                Exploration expenditure advances
            
            -
            
            
            109,737
            
            
            -
            
            
            56,078
            
            
            --
                Accounts payable and accrued liabilities
            
            317,573
            
            
            (345,097)
            
            
            1,028,074
            
            
            (334,511)
            
            
            1,456,207-
                Due to/from related parties
            
            -
            
            
            (335,516)
            
            
            -
            
            
            -
            
            
            4,999Net
                cash used in operating activities
            
            (2,914,474)
            
            
            (1,556,858)
            
            
            (4,740,029)
            
            
            (2,091,572)
            
            
            (10,876,180)**FINANCING
                ACTIVITIES:**Issuance
                of securities, net of finder fees
            
            -
            
            
            9,165,939
            
            
            8,478,800
            
            
            9,086,374
            
            
            22,224,575Issuance
                of promissory notes
            
            3,500,000
            
            
            -
            
            
            7,200,000
            
            
            -
            
            
            7,200,000Repayment
                of promissory notes
            
            -
            
            
            -
            
            
            (3,700,000)
            
            
            -
            
            
            (3,700,000)Exercise
                of stock options
            
            37,500
            
            
            -
            
            
            37,500
            
            
            -
            
            
            37,500Net
                cash provided by (used in) financing activities
            
            3,537,500
            
            
            9,165,939
            
            
            12,016,300
            
            
            9,086,374
            
            
            25,762,075**INVESTING
                ACTIVITIES:**Purchase
                of mineral exploration rights
            
            (2,094,684)
            
            
            (1,408,293)
            
            
            (5,674,494)
            
            
            (1,662,693)
            
            
            (11,913,367)Purchase
                of equipment
            
            (8,321)
            
            
            (115,858)
            
            
            (22,701)
            
            
            (154,396)
            
            
            (489,539)Website
                development costs
            
            -
            
            
            -
            
            
            -
            
            
            (15,000)
            
            
            (21,000)Net
                cash used in investing activities
            
            (2,103,005)
            
            
            (1,524,151)
            
            
            (5,697,195)
            
            
            (1,832,089)
            
            
            (12,423,906)**INCREASE
                (DECREASE) IN CASH**
            $
            (1,479,979)
            
            $
            6,084,930
            
            $
            1,579,076
            
            $
            5,162,713
            
            $
            2,461,989**CASH
                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD**
            
            3,941,968
            
            
            643,423
            
            
            882,913
            
            
            1,565,640
            
            
            -**CASH
                AND CASH EQUIVALENTS AT END OF PERIOD**
            $
            2,461,989
            
            $
            6,728,353
            
            $
            2,461,989
            
            $
            6,728,353
            
            $
            2,461,989**SUPPLEMENTAL
                CASH FLOW INFORMATION**Interest
                and financing fees- promissory notes
            $
            230,911
            
            $
            -
            
            $
            230,911
            
            $
            -
            
            $
            230,911Taxes
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -





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


***
      Going Concern (Note 1)**


F-6
 Table
          of Contents


**COLOMBIAGOLDFIELDS
        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
      June 30, 2007 of $13,552,215 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. In addition to the Company’s working capital
      requirements and its cumulative losses during the period ended June 30, 2007
      and
      since inception, the Company must also secure sufficient funding to meet its
      spending and purchase option obligations with respect to its mineral properties
      in order to maintain its option to purchase certain mining and mineral rights.
      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
      of
      $9,020,000 through a private placement of additional share capital in March,
      2007 and in June, 2007 the Company entered into a $3.5 million short-term bridge
      loan as disclosed in Note 8. As well, subsequent to June 30, 2007 the Company
      raised additional funding of $11,876,200 CDN through a private placement of
      additional share capital 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
 Table
          of Contents


**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 six month periods ended June 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 June 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 90% 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. 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.





At
      January 12, 2006 and in
      connection with the adoption of FIN 46R, the Company concluded that RNC and
      its 94.99% owned subsidiary, Caldas,
      S.A., were
      VIEs since the Company provided the principal financial support to these
      entities and the Company was their primary beneficiary. Under FIN 46R
      transition rules, the financial statements of RNC and Caldas,
      S.A. were




F-8
 Table
          of Contents


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


considered
      VIEs and the Company’s 25% interest has been included within the Company’s
      consolidated financial statements for the period January 12, 2006 to April
      28,
      2006.





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 June 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 June 30, 2007.





Since
      the
      non-controlling shareholders of RNC and Gavilan have 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 June 30, 2007 and in the consolidated balance sheet at June
      30, 2007.





**Mineral
      Property Rights Acquisition and Exploration Expenditures**





Costs
      of
      acquiring mining properties 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. 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 Statement of Financial
      Accounting Standards (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 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 June 30, 2007 and December 31, 2006 the
      Company does not have any asset retirement obligations.




F-9
 Table
          of Contents


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


**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
                yearsOffice
                equipment & furniture
            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.





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




F-10
 Table
          of Contents


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


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 six months ended June 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, 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, credit or currency risk arising from these financial
      instruments.





F-11
 Table
          of Contents


**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
 Table
          of Contents


**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
 Table
          of Contents


**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)
            Held
                the 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.





**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;





F-14
 Table
          of Contents


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


III)
            The
                exploration of acquired mineral properties and related activities;
                and


IV)
            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
                E****nded**
              **June
                30,****2007**
            
            **Three
                Months E****nded**
              **June
                30,****2006**
            
            **Six****Months****Ended**
              **June
                30, 2007**
            
            **Six****Months****Ended**
              **June
                30,****2006**
            
            **Cumulative**
              **From****Inception**
              **(March
                25, 2003)****Through**
              **June
                30,****2007**I)
            Acquisition
                ofmineral
                concessions
            
            -
            
            $
            8,080,000
            
            
            -
            
            $
            9,980,000
            
            $
            22,200,841II)
            Acquisition
                of mineral and exploration rights
            
            1,451,310
            
            
            3,712,478
            
            
            5,191,893
            
            
            3,966,878
            
            
            15,830,964Total
                acquired mineral and exploration properties and rights
            
            1,451,310
            
            
            11,792,478
            
            
            5,191,893
            
            
            13,946,878
            
            
            38,031,805III)
            Exploration
                ofacquiredmineralproperties
            
            1,315,801
            
            
            469,423
            
            
            2,572,692
            
            
            976,497
            
            
            6,836,833IV)
            Stock
                basedcompensation
            
            244,787
            
            
            71,011
            
            
            459,912
            
            
            136,560
            
            
            673,507Total
                mineralpropertyexplorationexpenses
            
            1,560,588
            
            
            540,434
            
            
            3,032,604
            
            
            1,113,057
            
            
            7,510,340Total
                  mineral andexplorationproperties
                  and rightsacquisitionsand
                  explorationexpenditures
            $
            3,011,898
            
            $
            12,332,912
            
            $
            8,224,497
            
            $
            15,059,935
            
            $
            45,542,145





**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:




F-15
 Table
          of Contents


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




**June
                30, 2007**
            
            **December
                31, 2006**Purchase
                of mineral and exploration properties and rights
            $
            38,031,805
            
            $
            32,839,912Recognition
                of deferred tax liability upon acquisition
            
            10,688,474
            
            
            10,688,474Mineral
                and exploration properties and rights
            $
            48,720,279
            
            $
            43,528,386





**NOTE
      4 - PROPERTY AND EQUIPMENT**





**As
                at June 30, 2007**
            **Cost**
            
            **Accumulated**
              **Amortization**
            
            **Net
                Book**
              **Value**Furniture
                and office equipment
            $
            193,511
            
            $
            (27,367)
            
            $
            166,144Building
            
            87,405
            
            
            (3,844)
            
            
            83,561Vehicles
            
            193,623
            
            
            (40,473)
            
            
            153,150Total
            $
            474,539
            
            $
            (71,684)
            
            $
            402,855





**As
                at December 31, 2006**
            **Cost**
            
            **Accumulated**
              **Amortization**
            
            **Net
                Book**
              **Value**Furniture
                and office equipment
            $
            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**





**June
                30, 2007**
            
            **December
                31, 2006****Authorized:**200,000,000
                common shares, $0.00001
                par value**Issued
                and Outstanding:**65,816,849
                  commonshares (December 31, 2006: 56,039,849
                  shares)
            $
            658
            
            $
            565





i)
            During
                the six months ended June 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





F-16
 Table
          of Contents
 **COLOMBIA
          GOLDFIELDS LTD.**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**


Registration
          Statement with the Securities and Exchange Commission (SEC) to register
          9,170,000 common shares previously issued by the Company. Under the terms
          of the
          Company’s agreements with subscribers to the Company’s $9,020,000 March 21, 2007
          private placement, if the SEC has not issued a Notice of Effectiveness
          regarding
          the Registration Statement by September 30, 2007, the Company is obligated
          to
          pay the subscribers to the offering a cash penalty of 1.5% per month for
          each
          month of delay, or portion thereof. 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 Options and
          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.


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-17
 Table
          of Contents


**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
      June 30, 2007, the following warrants were issued and outstanding:





**#
                Warrants**
            **Exercise
                Price**
            **Expiry
                Date**6,500,666
            $2.50
                per share
            April
                25, 2008390,040
            $2.00
                per share
            April
                25, 2009541,200
            $1.00
                per share
            March
                22, 20107,431,906
            $2.36
                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
      July
      31, 2006 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 from 3,500,000
      to
      5,000,000.





F-18
 Table
          of Contents


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


**Fiscal
                2007**
            
            **Fiscal
                2006**Weighted
                  averagefair value
                  of options granted
                  during the period
            $
            0.98
            
            $
            0.99Weighted
                  average fairvalue of options vested during
                  the period
            $
            1.17
            
            $
            -





A
      summary
      of stock options outstanding and exercisable at June 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
            8.52
            462,500
            $
                0.75$1.01
                - $2.00
            3,390,000
            1.29
            9.36
            587,500
            1.48$0.75
                - $2.00
            3,977,500
            $
                1.21
            9.24
            1,050,000
            $
                1.16





The
      fair
      value of each option 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
      76%, 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.





**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 June 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 (six
      months ended June 30, 2007 - $228,750).





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 June 30, 2007, the Company recorded a total
      of
      $27,500 in stock based compensation expense related to this award in the
      consolidated statement of operations (six months ended June 30, 2007-$166,500).





F-19
 Table
          of Contents


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


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 June 30, 2007, the Company recorded a total of
      $12,100 in stock-based compensation expense related to this award in the
      consolidated statement of operations (six months ended June 30, 2007 -
      $12,100).





**Summary
      of Stock-Based Compensation Expenses**





**Three****Months En****ded**
              **June
                30, 2007**
            
            **Three****Months****Ended**
              **June
                30,****2006**
            
            **Six****Months****Ended**
              **June
                30,****2007**
            
            **Six****Months****Ended**
              **June
                30,****2006**
            
            **Cumulative**
              **from
                Inception**
              **(March
                25, 2003)**
              **through**
              **June
                30,****2007**Mineral
                propertyexploration
                expenses
            $
            244,787
            
            $
            71,011
            
            $
            459,912
            
            $
            136,560
            
            $
            673,507General
                and administrative
            
            615,793
            
            
            624,655
            
            
            966,220
            
            
            1,045,595
            
            
            2,745,782Total
                stock-based compensation
            $
            860,580
            
            $
            695,666
            
            $
            1,426,132
            
            $
            1,182,155
            
            $
            3,419,289




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





As
      at
      June 30, 2007, there was $1,125,273 of unrecognized compensation cost related
      to
      unvested stock options. The cost is expected to be recognized as follows: Fiscal
      2007 - $436,606; Fiscal 2008 - $649,569; Fiscal 2009 - $39,098.





At
      June
      30, 2007, there was $632,375 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-$265,050; Fiscal 2008 -
      $367,325.





**NOTE
      6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**





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 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
      registered in the Company’s name. Included in accounts payable and accrued
      liabilities at June 30, 2007 is $5,126,938 (December 31, 2006 - $5,609,538)
      in
      amounts owing pursuant to these agreements.





**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:




F-20
 Table
          of Contents


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




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**
                **June
                  30,
                  2007**
            
            **Six
                  Months Ended**
                **June
                  30,
                  2007**Domestic
            $
            -
            
            $
            -Foreign
            
            (537,900)
            
            
            (962,610)$
            (537,900)
            
            $
            (962,610)





For
      the
      three months ended June 30, 2007 the Company’s loss before provision for income
      taxes was generated in the following jurisdictions: Domestic $2,065,037; Foreign
      $1,692,000. For the six months ended June 30, 2007 the Company’s loss before
      provision for income taxes was generated in the following jurisdictions:
      Domestic $3,296,178; Foreign $3,389,000.





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**
                **June
                  30,
                  2007**
            
            **Six
                  Months Ended**
                **June
                  30,
                  2007**US
                federal income tax rate
            
            34.0%
            
            
            34.0%Decrease
                in Income
                tax rate resultingFrom:Losses
                not recognized for tax
                purposes
            
            (10.9%)
            
            
            (9.5%)Tax
                rate differences in foreign
                subsidiaries
            
            (0.9%)
            
            
            (2.8%)Other
                permanent differences
            
            (7.9%)
            
            
            (7.3%)Effective
                income tax rate
            
            14.3%
            
            
            14.4%





c) Component
        of deferred income tax provision:





The
      components of the temporary differences, which created the future income tax
      provision, are as follows:





**Three
                  Months Ended**
                **June
                  30,
                  2007**
            
            **Six
                  Months Ended**
                **June
                  30,
                  2007**Losses
                  carried forward
            $
            (559,693)
            
            $
            (873,729)Tax
                  depreciation less
                  than accounting
                  depreciation
            
            10,926
            
            
            54,951Foreign
                exploration costs
            
            (537,900)
            
            
            (962,610)$
            (1,086,667)
            
            $
            (1,781,388)Change
                  in valuationallowance
            
            548,767
            
            
            818,778Deferred
                income tax provision
            $
            (537,900)
            
            $
            (962,610)




F-21
 Table
          of Contents


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





d) Components
        of deferred tax asset and liability:





The
      components of the temporary differences, which have created the deferred tax
      assets, are:





**June
                30, 2007**
            
            **December
                31, 2006**Tax
                depreciation less thanDepreciation
            $
            347,088
            
            $
            402,039Losses
                carriedForward
            
            1,626,052
            
            
            752,3231,973,140
            
            
            1,154,362Valuation
                allowance
            
            (1,973,140)
            
            
            (1,154,362)Deferred
                tax asset
            $
            -
            
            $
            -





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





**June
                30, 2007**
            
            **December
                31, 2006**Tax
                  depreciation less thanAccounting
                  depreciation
            $
            -
            
            $
            -Tax
                  basis less than accountingbasis for mineral
                  concessions
            
            (10,688,474)
            
            
            (10,688,474)Foreign
                exploration costs
            
            1,891,560
            
            
            928,950Deferred
                tax liability
            $
            (8,796,914)
            
            $
            (9,759,524)





e)  The
      Company has income tax losses available for carry forward of $4,780,000 which
      expire as follows:





**Expiry
                Year**
            **Domestic**
            
            **Foreign**
            
            **Total**2023
            $
            36,500
            
            $
            -
            
            $
            36,5002024
            
            23,000
            
            
            -
            
            
            23,0002025
            
            310,500
            
            
            -
            
            
            310,5002026
            
            1,840,000
            
            
            -
            
            
            1,840,0002027
            
            2,570,000
            
            
            -
            
            
            2,570,000$
            4,780,000
            
            $
            -
            
            $
            4,780,000





**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.





F-22
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          of Contents


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




iv)
            The
                issuance and repayment of a short-term bridge-loan during the first
                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), on March 26, 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 loan of the holders in full satisfaction
                of all
                amounts owing.





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, is 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 is payable to the
                note
                holders. The note bears interest at 10% per annum, with monthly interest
                payments commencing June 30, 2007. At June 30, 2007 the entire $3,500,000
                principal obligation is outstanding. Included in accounts payable
                and
                accrued liabilities at June 30, 2007 is $92,000 in accrued interest
                and
                loan origination fees owing pursuant to the terms of the bridge loan.





During
      the three months ended June 30, 2007 the Company:




a)
            Paid
                $5,000 for board and committee meeting fees to non-management directors
                of
                the Company (six months ended June 30, 2007:$5,000) and issued 60,000
                common shares to directors in connection with the Company’s annual
                remuneration of its directors.




b)
            Paid
                $112,739 for management and consulting fees to senior officers of
                the
                Company (six months ended June 30, 2007:
                $212,325).




c)
            Paid
                $96,865 for management and consulting fees to shareholders of the
                Company
                (six months ended June 30, 2007:
                $211,479).




d)
            Paid
                $92,000 for interest and administration fees on a bridge loan from
                shareholders of the Company (six months ended June 30, 2007:
                $322,911).





During
      the three months ended June 30, 2006 the Company:





a)
            paid
                $185,350 for management and consulting fees to directors, senior
                officers
                of the Company (six months ended June 30, 2006 :
                $270,750).





b)
            paid
                $4,978 for office rent to a company related to a director of the
                Company
                (six months ended June 30,2006 :
                $10,256).





c)
            Paid
                $22,500 for administration and exploration activities to a shareholder
                of
                the Company (six months ended June 30, 2006 :
                $22,500).




F-23
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          of Contents


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


Included
      in prepaid expenses at June 30, 2007 is $10,000 related to a senior officer
      of
      the Company (December 31, 2006: $30,000). Included in accounts payable and
      accrued liabilities at June 30, 2007 is $21,000 (December 31, 2006: $49,213)
      owing to 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.





**NOTE
      11 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS**





The
      FASB
      has issued FIN 48, which prescribes rules for the financial statements
      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 the operations, or cash flows for the three and six months ended
      June
      30, 2007.





**NOTE
      12 - SUBSEQUENT EVENTS**










i)
            Subsequent to June 30, 2007 the Board of Directors
              authorized the issuance of 150,000 options to purchase the Company’s
              common stock to certain consultants in exchange for services
              rendered.




ii)
            Subsequent
                to June 30, 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 $11,876,200 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 is obligated
                to
                pay as a commission $712,572 CDN and issue additional warrants to
                its
                placing agents (the “Agent’s Warrants”) to purchase 508,980 shares of
                the Company’s common stock with each Agent’s Warrant exercisable for a
                price of $1.40 CDN per share. The Agent’s Warrants are exercisable at any
                time for 36 months following the closing of the offering.





F-24
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          of Contents
 **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. If the
      SEC
      has not issued a Notice of Effectiveness regarding the Registration Statement
      within seven months of the closing date, the Company is obligated to pay the
      subscribers to the offering a cash penalty of 1.5% per month for each month
      of
      delay, or portion thereof.




The
      Company expects to repay the short-term bridge loan described in note 8v) with
      a
      portion of the proceeds from this offering.





**NOTE
      13 - RECLASSIFICATIONS**





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




F-25
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**Item** **2.     
      Plan of Operation**




***Introduction***





This
      Mangement’s Discussion and Analysis (“MD&A”), which has been prepared as of
      July 31, 2007, is intended to supplement and complement our unaudited interim
      consolidated financial statements and notes thereto for the three and six months
      ended June 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. 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.





***Second
      Quarter Fiscal 2007 Overview***





During
      the second 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 legally registered mineral titles on the Marmato
                Mountain;




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§
            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;


§
            Commencing
                drilling and sampling programs;


§
            The
                preparation of revised resource estimates;
                and


§
            Preparing
                for a feasibility study.





In
      the
      second quarter of fiscal 2007 we advanced our business plan by:





§
            Increasing
                our mineral and exploration rights ownership to 97 of 121 legally
                registered mineral titles from existing Colombian titleholders;


§
            Continuing
                data collection for a baseline study;
                and


§
            Commencing
                drilling and sampling on the Marmato
                Mountain





As
      at
      June 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”), a 94.99% owned subsidiary of RNC (Colombia) Limited (“RNC”) which we
      presently have a 90% interest in, is seeking to purchase individually. We own
      94.99% of Caldas, with the remaining 5.01% held directly or indirectly by
      directors, officers, and senior management of the Company. Eighty-five (85)
      of
      these mines have registered titles in the Ministry of Mines in Caldas. We refer
      to these mines as Category 1. Thirty-six (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 one-hundred and twenty-one (121) properties. Approximately ninety (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 thirty (30) will be approved. Approximately
      sixty-four (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 June 30, 2007 is 97, an increase
      of 4 from March 31, 2007. Caldas is also purchasing the existing mills on the
      Zona Alta and has so far purchased 11 out of a total of approximately 26, an
      increase of 1 from March 31, 2007.


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 Table
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***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 six months ended
      June 30, 2007 and June 30, 2006.





***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


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 Table
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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 June 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 $13.6 million for the period from inception on March
      23,
      2003 to June 30, 2007, and we are not presently generating any revenue.
      Furthermore, we have used in excess of $23.3 million during this period to
      fund
      our operations and mineral acquisitions program. At June 30, 2007, we have
      a
      working capital deficiency of $6.4 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 $35.0 million. We estimate that a minimum of $7.0 million will
      be
      required over the next twelve to eighteen months to complete the initial phase
      of drilling at Marmato (8,000 meters) as well as cover our administration and
      property purchases costs. Pending the results of our initial drill program,
      the
      an additional $28 million will be required to complete the Marmato feasibility
      study, including an additional 22,000 meters of drilling at Marmato, and 12,000
      meters of drilling at Caramanta. In addition, we may require additional funds
      of
      as much as $15 million on or before May 1, 2009 to complete the acquisition
      of
      our remaining 10% equity interest in RNC from Investcol. Other than the private
      placement completed subsequent to June 30, 2007, we currently do not have
      any


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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.





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 90% interest 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. 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; and iv)
            The allocation of stock based compensation related
              to
              participants in our stock option plan.  8
 Table
            of Contents
  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.*





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 June 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


9
 Table
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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
      six
      months ended June 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.





**Three
                Months Ended**
              **June
                30, 2007**
            
            **Three
                Months Ended**
              **June
                30, 2006**
            
            **Six****Months****Ended**
              **June
                30,****2007**
            
            **Six****Months****Ended**
              **June
                30,****2006**
            
            **Cumulative**
              **from
                Inception (March 25, 2003**
              **through**
              **June
                30,****2007****Statement
                of Loss and Deficit**Total
                Expenses
            $
            3,760,840
            
            $
            1,650,498
            
            $
            6,698,710
            
            $
            2,987,289
            
            $
            15,585,168Net
                loss
            $
            (3,219,137)
            
            $
            (1,601,628)
            
            $
            (5,722,568)
            
            $
            (2,934,864)
            
            $
            (13,552,215)Loss
                per Share-basic and diluted
            $
            (0.05)
            
            $
            (0.04)
            
            $
            (0.09)
            
            $
            (0.08)
            
            
            N/A**Balance
                Sheet Data**
            **As
                at June 30, 2007**
            
            **As
                at June 30, 2006**
            
            **As
                at June****30,
                2007**
            
            **As
                at June 30, 2006**
            
            **As
                at June 30, 2007**Total
                Assets
            $
            52,942,482
            
            $
            24,042,680
            
            $
            52,942,482
            
            $
            24,042,680
            
            $
            52,942,482Total
                Long-Term Debt
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Total
                Liabilities
            $
            18,880,059
            
            $
            5,396,678
            
            $
            18,880,059
            
            $
            5,396,678
            
            $
            18,880,059Total
                Shareholders’ Equity
            $
            34,062,423
            
            $
            18,646,002
            
            $
            34,062,423
            
            $
            18,646,002
            
            $
            34,062,423


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***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 six months
      ended June 30, 2007 and June 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.





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.


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(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 wherein 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.





(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 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 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.


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**(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;





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





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RNC
                on or before May 1, 2009 for a purchase price equal to 25% of the
                fair
                value of Caldes, 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 provide 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 can be made in either cash, shares
                of our
                common stock, or any combination thereof.





**(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.




***Results
      of Operations - Second Quarter 2007 Compared With Second Quarter
      2006.***





For
      the
      three months ended June 30, 2007, we incurred a net loss of $3,219,137 (2006
      -$1,601,628). We generated interest income of $3,803 for the three months ended
      June 30, 2007 (2006-$48,870). The primary contributors to our net loss for
      the
      three months ended June 30, 2007 were mineral exploration expenses of $1,560,588
      (of which $244,787 relates to non-cash stock-based compensation expenses) and
      general and administrative expenses of $1,290,079 (of which $615,793 relates
      to
      non-cash stock-based compensation expenses), along with a foreign exchange
      loss
      of $889,408.





For
      the
      comparative period, the primary contributors to our net loss were mineral
      exploration expenses of $540,434 (of which $71,011 relates to non-cash
      stock-based compensation expenses) and general and administrative expenses
      of
      $1,059,766 (of which $624,655 relates to non-cash of stock-based compensation
      expenses) along with a foreign exchange loss of $38,107.


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Our
      exploration activities typically involve the following activities and
      expenditures:





*i)*
            *The
                acquisition of mineral concessions*:
                To June 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 six months ended
                June
                30, 2007, we did not acquire any additional 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
                June 30,
                2007, we have reached agreements with the titleholders to secure
                97 titles
                deemed desirable in our business plan (March 31, 2007 - 93), with
                44
                titles registered in the Company’s name (March 31, 2007 - 24). During the
                three months ended June 30, 2007, we expended a total of $1,451,310
                on
                mineral and exploration rights (six months ended June 30, 2007 -
                $5,191,893) and have obligations at June 30, 2007 to make payments
                of
                $5,126,938 pursuant to amounts owing under our purchase agreements;
                and





*iii)*
            *The
                evaluation 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 June 30, 2007, we expended a total of $1,315,801 on
                the
                exploration of acquired mineral properties (six months ended June
                30, 2007
                - $2,572,692).





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 June 30, 2007 to $1,560,588 (including $244,787 in stock-based
      compensation) from $540,434 (including $71,011 in stock-based compensation
      ) for
      the three months ended June 30, 2006. For the six months ended June 30, 2007
      our
      mineral property exploration expenses increased to $3,032,604 (including
      $459,912 in stock-based compensation) from $1,113,057 (including $136,560 in
      stock-based compensation) for the six months ended June 30, 2006.


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  General
      and administrative expenses also increased in the second quarter of fiscal
      2007,
      to $1,290,079 for the three months ended June 30, 2007 from $1,059,766 for
      the
      three months ended June 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 second quarter of fiscal
      2007 was allocated stock-based compensation, which totaled $615,793. The
      remainder of our second 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 second quarter of fiscal 2007, we incurred a $889,408 foreign
      exchange loss. The majority of our accounts payable and accrued liabilities
      in
      Caldas and Gavilan are denominated Colombian pesos and the weakening of the
      U.S.
      dollar against many world currencies, including a 12% decline against the
      Colombian peso during the second quarter of 2007 resulted in the aforementioned
      foreign exchange loss for the three months then ended.





The
      increase in our other operating expenses in the second quarter of fiscal 2007,
      primarily amortization expenses, related to the amortization of office
      equipment, computers, and vehicles. For the three months ended June 30, 2007,
      we
      incurred a net loss of $3,219,137 (2006- $1,601,628), and recorded a deferred
      income tax recovery of $537,900 related to deductible temporary differences
      associated with our Colombian subsidiaries.





For
      the
      six months ended June 30, 2007 we incurred a net loss of $5,722,568 compared
      to
      $2,934,864 for the six months ended June 30, 2006. The primary contributors
      to
      our year-to-date fiscal 2007 loss were $3,032,604 in mineral property
      exploration expenses, $2,691,311 in general and administrative expenses, foreign
      exchange losses of $935,216 and amortization of $39,579. We generated $13,532
      in
      interest income during the first six months of fiscal 2007 and recorded a
      deferred income tax recovery of $962,610 related to deductible temporary
      differences associated with our Colombian subsidiaries.





During
      the second quarter of fiscal 2007, we used cash of $2,914,474 in operations
      (2006-$1,556,858). 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 first quarter of fiscal 2007, we issued 50,000 shares of our common
      stock upon the exercise of 50,000 stock options for proceeds of $37,500. We
      also
      issued a total of 60,000 shares of our common stock to non-management directors
      of the Company in connection with their annual remuneration, however no cash
      was
      generated from these issuances. We also raised $3,500,000 by the issuance of
      short term bridge loans. During the second quarter of fiscal 2007, we expended
      $8,321 on the purchase of capital assets and $2,094,684 funding the acquisition
      of mineral exploration rights, resulting in a net cash decrease of $1,479,979
      for the three months ended June 30, 2007. Year-to-date, we have used
      $4,740,029


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in
      operations, raised a net $12,016,300 from debt and equity issuances, and used
      $5,697,195 in investing activities, resulting in a net increase in cash
      year-to-date of $1,579,076.





As
      at
      June 30, 2007, we held cash and cash equivalents of $2,461,989. Our working
      capital deficiency of $6,378,172 consisted of i) Cash and cash equivalents
      of
      $2,461,989; ii) Prepaid expenses and deposits of $724,984, consisting primarily
      of advances for mineral and exploration rights and prepaid Marmato exploration
      expenditures; iii) Prepaid consulting fees of $518,000, reflecting the current
      portion of unamortized stock-based compensation associated with direct stock
      awards; iv) Accounts payable and accrued liabilities of $6,583,145, consisting
      primarily of amounts owing to Marmato titleholders under our mineral and
      exploration rights purchase agreements (at June 30, 2007 $5,126,938 is owing
      pursuant to these agreements); and v) The Company’s $3,500,000 short term bridge
      loan as described elsewhere in this MD&A.





***Results
      of Operations - Second Quarter 2006 Compared With Second Quarter
      2005***





We
      incurred a net loss of $1,601,628 in the three months ended June 30, 2006,
      as
      compared to a net loss of $87,336 in the three months ended June 30, 2005.





We
      incurred operating expenses of $1,650,498 for the three month period ended
      June
      30, 2006, compared to operating expenses of $87,336 for the same three month
      period in the prior year. We incurred operating expenses of $6,698,710 for
      the
      six month period ended June 30, 2006, compared to operating expenses of
      $2,987,289 for the six month period ended June 30, 2005. The increase in our
      operating expenses for the three and six months ended June 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 June 30, 2006 consisted primarily of mineral property rights and
      exploration expenses in the amount of $540,434 (including stock-based
      compensation of $71,011), and general and administrative expenses in the amount
      of $1,059,766 (including stock-based compensation of $624,655).





We
      generated interest income of $48,870 for the three months ended June 30, 2006
      and $52,425 for the six months ended June 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
      six months ended June 30, 2005, we generated $763 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 $2,934,864 during
      the six months ended June 30, 2006 compared to a net loss of $124,760 in our
      comparative fiscal 2005 period. The increased net loss


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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:





**June
                30, 2007**
            
            **December
                31, 2006**Cash
                and cash equivalents
            $
            2,461,989
            
            $
            882,913Working
                capital deficiency
            $
            6,378,172
            
            $
            4,978,411





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 June 30, 2007, we have raised $25.8 million from the issuance of
      shares of our common stock, share purchase warrants, and short-term bridge
      loans
      (net of repayments) and used $23.3 million to fund operations and mineral
      property acquisition and exploration activities, leaving cash and cash
      equivalents of $2.5 million at June 30, 2007 and a working capital deficiency
      of
      $6.4 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, is 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 is payable to the note
      holders. The note accrues interest at 10% per annum, with monthly interest
      payments commencing June 30, 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. 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.


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Subsequent
      to June 30, 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 are obligated to pay as a
      commission $712,572 CDN and issue additional warrants to our placing
      agents (the “Agent’s Warrants”) to purchase 508,980 shares of our common
      stock, with each 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 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. If the
      SEC
      has not issued a Notice of Effectiveness regarding the Registration Statement
      within seven months of the closing date, the we are obligated to pay the
      subscribers to the offering a cash penalty of 1.5% per month for each month
      of
      delay, or portion thereof.





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.





***Off-balance
      sheet arrangements***





We
      do not
      enter into off-balance sheet arrangements and have no off-balance sheet
      obligations at June 30, 2007.





***Contractual
      obligations***





We
      have a
      two-year consulting contract with Mr. J. Randall Martin, our President and
      Chief
      Executive Officer. Under the contract, Mr. Martin is entitled to receive a
      monthly compensation of $10,000, 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. 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.


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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 $750 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.





We
      have a
      two-year consulting contract with Mr. Ian Park, the President of Caldas. Under
      the contract Mr. Park is entitled to receive monthly compensation of USD $800
      per day and may be entitled to a bonus (subject to board approval) and is
      eligible to participate in our share compensation arrangements. In addition,
      Mr.
      Park is entitled to reimbursement of all reasonable out-of-pocket expenses
      incurred in the performance of his duties. Mr. Park can terminate his contract
      with us at any time upon 30 days written notice and upon receipt of such notice;
      we have the right to accelerate the termination date. Under the contract, Mr.
      Park has disclaimed any rights to all intellectual property created by him
      or
      jointly with others while with us. In addition, following the termination of
      the
      contract, Mr. Park will be subject to a one-year non-competition
      covenant.





We
      have
      entered into a two-year contract with Mr. Thomas Lough. Mr.
      Lough
      is the President and a director of Investcol Limited. We purchased our 90%
      interest and have an option to acquire to remaining 10% interest in
      RNC  from
      Investcol. In
      exchange for management services provided by Mr. Lough in connection with our
      Colombian operations, the contract provides for compensation of $800 per day.
      Mr. Lough is also 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.





***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”.


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***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 March 21,
      2007
      private placement (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.





**We
      need to raise substantial funds in order to acquire additional exploration
      and
      mining properties or interests and commence exploration activities.**




We
      have
      incurred a net loss of $13.6 million for the period from our inception on March
      25, 2003 to June 30, 2007. As of June 30, 2007, we had a working capital
      deficiency of $6.4 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 $7.0 million will be required over the next twelve
      to
      eighteen months to complete the initial phase of drilling at Marmato (8,000
      meters) as well as cover our administration and property purchases costs.
      Pending the results of our initial drill program, an additional $28 million
      will
      be required to complete the Marmato feasibility study, including an additional
      22,000 meters of drilling at Marmato, and 12,000 meters of drilling at
      Caramanta. In addition, we may require additional funds of as much as $15
      million on or before May 1, 2009 to complete the acquisition of our remaining
      10% equity interest in RNC from Investcol.





Other
      than the private placement completed subsequent to June 30, 2007, 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.





**Because
      we have only recently commenced our exploration operations, we face a high
      risk
      of business failure due to our inability to predict the success of our
      business.**




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.


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**Because
      we presently do not carry title insurance and do not plan to secure any in
      the
      future, we are vulnerable to loss of title.**




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
      our
      expectations to currently illegal miners. Furthermore, although we believe
      that
      mechanisms exist to integrate the titles of mineral properties currently not
      owned by us, there is a risk that this process could be time consuming and
      costly. 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 we will not be able
      to
      afford resulting in the failure of our business.





**If
      we are unable to complete our plan to move the town of Marmato, our ability
      to
      advance our Marmato project could be impaired and our financial results may
      suffer.**





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.




**Because
      our property interest and exploration activities in Colombia are subject to
      political, economic and other uncertainties, situations may arise that could
      have a significantly adverse material impact on us.**




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


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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.




**Because
      we are subject to various governmental regulations and environmental risks,
      we
      may incur substantial costs to remain in compliance.**




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 that 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.





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.


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**In
      the event that we are unable to successfully compete within the mineral
      exploration business, we may not be able to achieve profitable
      operations.**




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.




**Due
      to numerous factors beyond our control which could affect the marketability
      of
      gold including the market price for gold, we may have difficulty selling any
      gold if commercially viable deposits are found to exist.**




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.




**In
      the event that commercially viable deposits are found to exist, there is a
      risk
      that we may not have to requisite resources and expertise to place the property
      into commercial production.**





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.


**Because
      our success is dependent upon a limited number of people, our business may
      fail
      if those individuals leave the company.**




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.





**Because
      we are currently dependent upon one principal mineral district, should our
      properties fail to generate sufficient revenue to support future operations,
      our
      business may fail.**





We
      are
      currently dependent upon one principal mineral region, that being the Marmato
      Mountain Gold District in Colombia. The Marmato Mountain Gold District may
      never
      develop into commercially viable ore bodies, which would have a materially
      adverse affect on our potential mineral resource production, profitability,
      financial performance, and results of operations.





**Because
      mineral exploration and mining involve a high-degree of physical and financial
      risk, we may never achieve profitable operations, and our business may
      fail.**





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, none 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, landslides 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 will be 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


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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.





**If
      we have incorrectly estimated our mineral resources and future production,
      our
      future revenues will be materially negatively affected.**





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.





**Because
      our directors and officers may serve as directors or officers of other
      companies, they may have a conflict of interest in making decisions for our
      business.**





Our
      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 we may
      participate, our directors 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 our 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, our directors are required to act honestly, in good faith and in
      our
      best interests. In determining whether or not we will participate in a
      particular program and the interest therein to be acquired by us, the directors
      will primarily consider the degree of risk to which we may be exposed and our
      financial position at that time.


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**If
      restrictions on repatriation of earnings from Columbia to foreign entities
      are
      instituted, our business may be materially negatively
      affected.**





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.





**Because
      we conduct operations in Columbia, we are subject to foreign currency
      fluctuations, which may materially affect our financial results.**





Our
      operations in Colombia make it subject to foreign currency fluctuations and
      such
      fluctuations may materially affect our 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.





**Because
      substantially all of our assets are located outside of the United States, it
      may
      be difficult or impossible to enforce judgments granted by a court in the United
      States against our assets, directors, or officers.**





Substantially
      all of our assets are located outside of the Unites States, and certain of
      our
      directors and officers 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 our assets or our directors and officers residing outside
      of the United States.





**If
      we fail to maintain an effective system of internal control, we may be able
      to
      accurately report our financial results or prevent fraud resulting in current
      and potential stockholders losing confidence in our financial
      reporting.**




Effective
      internal controls are necessary for us to provide reliable financial 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.


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**New
      legislation, including the Sarbanes-Oxley Act of 2002, may make it more
      difficult for us to retain or attract officers and
      directors.**




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
      six months ended June 30, 2007.


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***Share
      Data***





At
      July
      31, 2007, we have 65,819,849 common shares outstanding. In addition, we have
      outstanding:





i)
            3,977,500
                stock options, each of which is exercisable into one common share;
                and





ii)
            7,431,906
                common share purchase warrants, each of which is exercisable into
                one
                common share.





***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 of the numerous
      small mines that compromise the Zona Alta (Upper Zone) portion of the mountain.





**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 that 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.





**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 second quarter of fiscal
      2007, a total of 1,860 meters of drilling in six holes with depths ranging
      from
      110 to 430 meters had been completed. At the date of this MD&A, the total
      amount drilled was 2,110 meters in seven holes.


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As
      a
      result of difficulties in contracting drill rigs due to a global shortage,
      we
      ordered three portable diamond drill rigs in the second quarter of 2007. The
      first of these drill rigs arrived at Marmato in July, subsequent to the second
      quarter reporting period, and the other two are due in August. The first rig
      has
      capability to drill underground as well as on surface. Two additional rigs
      were
      also contracted, the first of which arrived in July. As a result, by August
      we
      expect to have six diamond drill rigs operating at Marmato.





A
      comprehensive underground channel sampling program was also started in the
      first
      quarter at Marmato. The program comprises continuous saw-cut channel samples
      from all cross-cuts, mine faces, and at regular intervals along the backs of
      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.





**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.





**Geotechnical
      Studies**





Golder
      Associates Ltd. of Mississagua, Ontario has 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 Micon will use this and other
      data
      to carry out data analysis and pit slope determination at a scoping study
      level.





**Environmental
      Studies**





An
      Environmental Baseline Study was started in October 2006 by LHC Consultores
      Ambientales of Colombia. The study is expected to 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 has 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.


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**Caramanta
      Project**





We
      currently control 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. There are numerous gold showings and artisanal
      mines in the district and we believe that there is good potential for discovery
      of additional gold deposits in the Marmato District. We discovered a new gold
      target at El Salto, 3.5 kilometers north of the Zona Alta of Marmato, in 2006.
      Detailed channel sampling of the main area exposed in shallow artisanal open
      pit
      mine workings was carried out in 2006 and we plan to carry out a program of
      diamond drilling in this area in the fourth quarter of 2007. Compilation of
      data
      for drill planning was carried out in the second quarter of 2007 and further
      planning will be carried out in the third quarter. In addition a field program
      of soil and rock sampling will be carried out in the third quarter in the
      surrounding areas to define the extent of gold mineralization and additional
      drill targets.





**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 June 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 June 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 June 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.


30
 Table
          of Contents


**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 are also obligated to issue
      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
      7, 2007 our Board of Directors authorized the issuance of 150,000 options to
      purchase our common stock to certain consultants in exchange for services
      rendered.




On
      June 6, 2007, we issued 60,000 shares of our
      common stock to outside members of our board of directors in consideration
      for
      services rendered as a member of the board. These shares were issued pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended. We did not engage in
      any
      general solicitation or advertising. The stock certificates issued had the
      appropriate legends affixed to the restricted stock.




On
      May 3,
      2007, we issued 50,000 shares of our common stock in exchange for the exercise
      of stock options previously issued to a consultant. We received gross proceeds
      of $37,500 upon the exercise of these warrants. These securities were issued
      pursuant to Section 4(2) of the Securities Act of 1933. We did not engage in
      any
      general solicitation or advertising. We issued the stock certificates and
      affixed the appropriate legends to the restricted stock.


31
 Table
          of Contents


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





None





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





No
      matters have been submitted to our security holders for a vote, through the
      solicitation of proxies or otherwise, during the quarterly period ended June
      30,
      2007. Our annual meeting of shareholders will be held at 3273 E. Warm Springs
      Rd., Las Vegas, NV 89120, on August 17, at 11:00 am Eastern Standard Time.





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





None.





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





**Exhibit
                Number**
            **Description**2.1
            RNC
                Stock Purchase Agreement(1)3.1
            Articles
                of Incorporation, as amended(2)3.2
            By-Laws,
                as amended(2)5.1
            Opinion
                of The Stewart Law Firm, with consent to use10.1
            Consulting
                Agreement with Stewart Redwood(3)10.2
            Assignment
                Agreement with Investcol Limited(4)10.3
            Agreement
                with Investcol Limited(4)10.4
            Assignment
                Agreement with Investcol Limited regarding Concessions 6993, 7039,
                6821,
                and 6770 and options to acquire the exclusive rights to engage in
                mining
                activities onConcessions
                HET-31, 32, 26, 27, and HETG-01(5)10.5
            Amendment
                to Agreement with Investcol Limited regarding Concessions 6993, 7039,
                6821, and 6770 and options to acquire the exclusive rights to engage
                in
                mining activities onConcessions
                HET-31, 32, 26, 27, and HETG-01(5)10.6
            Contract
                for Purchase of Concessions 6993, 7039, 6821, and 6770 and options
                to
                acquire the exclusive rights to engage in mining activities on Concessions
                HET-31, 32, 26, 27, and HETG-01(5)10.7
            Consulting
                Services Agreement with J. Randall Martin(6)10.8
            Master
                Agreement for Acquisition of properties in Caramanta(7)10.9
            Second
                Amendment to Stock Purchase Agreement(8)21.1
            Subsidiaries
                of Small Business Issuer(4)31.1
            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





(1)
            Incorporated
                by reference to Current Report on Form 8-K filed on February 26,
                2006(2)
            Incorporated
                by reference to Registration Statement on Form SB-2 filed on July
                28,
                2006(3)
            Incorporated
                by reference to Annual Report on Form 10-KSB filed on March 30,
                2007(4)
            Incorporated
                by reference to Current Report on Form 8-K filed on September 28,
                2005(5)
            Incorporated
                by reference to Annual Report on Form 10-KSB filed on April 17,
                2006


(6)
            Incorporated
                by reference to Current Report on Form 8-K filed on August 4,
                2006(7)
            Incorporated
                by reference to Current Report on Form 8-K filed on September 29,
                2006(8)
            Incorporated
                by reference to Current Report on Form 8-K filed on December 15,
                2006


32
 Table
            of Contents




**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:
            August
                14, 2007By:
            /s/
                J. Randall Martin
              J.
                Randall MartinTitle:
            **Chief
                Executive Officer and
                Director**





Date:
            August
                14, 2007By:
            /s/
                James Kopperson
              James
                KoppersonTitle:
            **Chief
                Financial
                Officer**