UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

(Mark One)

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

For the fiscal period ended December 31, 2007

OR



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------

Commission file number 000-50931

AURELIO RESOURCE CORPORATION

(Name of small business issuer in its charter)



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|Nevada                                                         |  | 33-1086828                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

Suite 200, 5554 South Prince Street

Littleton, Colorado, 80120

(Address of principal executive offices)

303.795.3030

(Issuers telephone number)

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

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  x

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

The issuer is in the exploration stage and has no
revenues for its most recent fiscal period.

The aggregate market value of the voting stock held by non-affiliates as of March 21, 2008 was
$8,181,279.

State the number of shares outstanding of each of the issuers classes of equity stock, as of the latest practicable date:

As of March 21, 2008 the Registrant had 39,879,789 common shares outstanding.

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









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PART I

Preliminary Note Regarding Forward-Looking Statements and Currency Disclosure

This annual report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases,
you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts,
potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.

Our financial statements are stated in United States dollars and are prepared in
accordance with United States Generally Accepted Accounting Principles.



|ITEM 1 | DESCRIPTION OF BUSINESS
|------ | -----------------------

As used in this annual report, the terms
we, us, Aurelio, Company and our mean Aurelio Resource Corporation, our wholly owned subsidiaries, Aurelio Resources, Inc. and Bolsa Resources, Inc., and our 98% owned subsidiary, Minera
Milenium S.A. de C.V., unless otherwise indicated.

Corporate History

We were incorporated on February 19, 2004, under the laws of the state of Nevada. Effective June 16, 2006 we changed our name to Aurelio Resource Corporation and effected a six and one-half (6.5) for
one (1) forward stock split of our authorized, issued and outstanding common stock. As a result, our authorized capital has increased from 75,000,000 shares of common stock with a par value of $0.001 to 487,500,000 shares of common stock with a
par value of $0.001. Except as otherwise stated, all references to shares and prices per share have been adjusted to give retroactive effect to the stock split.

On August 17, 2006 we completed our acquisition of all of the issued and outstanding common stock of Aurelio Resources, Inc., a privately-owned Colorado corporation engaged in mineral exploration, pursuant to an agreement we entered
into with Aurelio Resources, Inc. (ARI) and its shareholders dated April 27, 2006, as amended on June 9, 2006 and further amended on July 13, 2006 and on July 21, 2006.

Current Business

As a result of our acquisition of ARI, we
indirectly acquired all of its assets in 2006. In particular, we acquired properties in Arizona, now held through our wholly-owned Arizona subsidiary Bolsa Resources, Inc. (Bolsa), and a 98% interest in Minera Milenium S.A. de C.V.
(Minera Milenium), a company incorporated in Mexico which holds an option to acquire a 100% interest in a property in Mexico. The assets held by ARI are described below under Item 2 - Description of Properties.

We are an exploration stage company engaged in the exploration of mineral properties and we may also, from time to time, acquire additional mineral properties to
explore. Prior to the completion of the acquisition of ARI, we had a 100% interest in twenty-five mineral claims in Alaska, subject to a 3% net proceeds interest to the State of Alaska. During November 2006 we allowed our interest in the Alaska
property to lapse and we have no ongoing interest in that property.

Upon the completion of our acquisition of ARI in 2006, we had 100% rights to mineral
exploration and development on 13 unpatented mining claims in Arizona (the MAN claims), and an option to earn a 100% interest in the mineral exploration and development of 3 mining claims/concessions covering approximately 1,000 hectares, in
Durango, Mexico. Completing ARIs purchase agreement of May 16, 2006, we also acquired 30 patented claims referred to as the Courtland claims in Cochise County, Arizona on September 18, 2006 from Hope Mining and Milling Company
(Hope MMC) through our wholly-owned subsidiary, Bolsa. We also staked additional unpatented mining claims during late 2006 around the MAN and Courtland claims. We now refer to the Arizona property as the Hill Copper-Zinc Project.



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During 2007, the Company added to its property interests and data base for the Hill Copper-Zinc Project as follows:



| |  |  | An option agreement was completed with Newmont Mining Corporation to purchase two of its patented mineral claims.
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| |  |  | Aurelio, also acquired an extensive exploration file of the Turquoise Mountain Mining District, Cochise County, Arizona, where the Hill Copper-Zinc Project is
located including the logs and assay results of 274 holes, drilled by ten different companies between the 1950s to the mid-1990ss.
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| |  |  | Aurelio, through Bolsa, completed a mineral lease and option agreement with three individual owners of the 65 Gold Coin mineral claims and three Arizona State
exploration permits. The 65 unpatented Gold Coin claims along with the three Arizona mineral exploration permits cover approximately 1,272 acres. The option agreement included a down payment of $20,000 with additional staged payments spread over
four years totaling $1.5 million. In addition, there is a royalty of 1% of production of base metals and 2.5% of precious metals.
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| |  |  | Aurelio, through Bolsa, completed the acquisition of 76,780 feet of drill core from 95 holes from prior drilling campaigns around the Hill Copper-Zinc Project in
the Turquoise Mining District. The material was acquired for a nominal cost.
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| |  |  | Aurelio, through Bolsa, entered into an agreement with Gold City Inc. to lease and purchase 19 unpatented mining claims in return for annual payments increasing
from $20,000 in the first year to $35,000 in the fourth year. Aurelio also has an option to purchase these claims for a purchase price of $750,000. Under this agreement, Gold City is also entitled to a sliding scale net smelter return royalty
increasing from 1.0% to 2.0% as copper prices increase from $1.50 to $3.50 per pound. This royalty only applies to production from the Gold City properties. As of the end of the year, the final documentation to effect this agreement had not been
executed.
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| |  |  | We entered into an agreement with the Rae family to purchase 13 patented mining claims (covering approximately 213 acres) located on the north of the MAN area. As
part of the transaction, the Company has also acquired approximately 744 acres of surface rights covering the entire MAN deposit and an area to the west of the deposit, with an additional 292 acres of surface and mineral rights to the east of the
deposit. These acquisitions were concluded through Bolsa. The option agreement included a down payment of $10,000 and a further payment of $40,000 before year-end, with additional staged payments over two years for a total cost of $1.3 million.
There is no royalty payable on production from any of the patented mining claims.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In September 2007, Bolsa entered into an option agreement to acquire surface rights, being town sites on part of the Courtland area from Kay B. Graham.
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| |  |  | The Company, through Bolsa, also staked an additional five unpatented BLM lode mining claims to the north and northeast of the MAN deposit. These claims are
adjacent to, as well as to the east of the patented Hope claims purchased in September of 2006 covering the Courtland area.
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| |  |  | The Company, through Bolsa, also applied for three Arizona State mineral exploration permits covering an estimated 1,320 acres. These State exploration permits are
located to the south and southeast of the MAN deposit, and cover projected extensions along strike of high-grade, copper-zinc-silver-gold mineralization.
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| |  |  | An independent review of its in-house estimate of the mineralized material in the MAN area was completed in October 2007.
| | - |  | -------------------------------------------------------------------------------------------------------------------------

Also, during 2007, Aurelio drilled a total of 44 holes on the Arizona properties, totalling 21,489 feet, to obtain core and reverse circulation samples. The total amount
spent in 2007 for drilling was approximately $1,023,000. Aurelio at the Hill Copper-Zinc Project now owns or has options to acquire a total of 45 patented claims, 119 unpatented claims; we have six Arizona State mineral exploration permits, and
control approximately 5,041 acres of land in Arizona. We intend to explore our Arizona properties and hope to develop and exploit any mineral deposits we discover. Alternatively, we may in the future joint venture or sell an interest in or otherwise
assign the rights to develop or exploit the properties.

During 2007, Aurelio also prepared seven drill pads and approximately 3 kilometers of road at the
Gavilanes Gold Project in Mexico, at a cost of $50,045. We intend to explore our Mexican property as funds permit with a view to exploiting any mineral deposits we discover or selling or otherwise assigning the rights to do so.

Since we are an exploration stage company, there is no assurance that a commercially viable mineral deposit exists on any of our properties, and a great deal of further
exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined. We have no known reserves of any type of mineral. To date, we have not discovered an economically viable
mineral deposit on the mineral property, and there is no assurance that we will discover one.



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Mineral property exploration is typically conducted in phases. Before it is carried out, each subsequent phase of
exploration work is recommended by our professional geologists based on the results from the most recent phase of exploration. We have only recently commenced the initial phase of exploration on the properties held by Bolsa and Minera Milenium. Once
we complete a phase of exploration, we will make a decision as to whether or not we proceed with each successive phase based upon the analysis of the results of that program. Our directors will make these decisions subject to available finance and
based upon the recommendations of the independent geologist who oversees the program and records the results.

Our plan of operation is to conduct
exploration work on each of our properties in order to ascertain whether any possess commercially exploitable quantities of minerals. There can be no assurance that such mineral deposits exist on any of our properties.

Even if we complete our proposed exploration programs on our properties and we are successful in identifying a mineral deposit, we will have to spend substantial funds
on further drilling and engineering studies before we will know whether we have a commercially viable mineral deposit.

We are interested in exploring for
minerals such as copper, gold, silver, lead and zinc on our properties but we are not restricting our exploration to any one type or select types of minerals. We may also seek to acquire other properties for mineral exploration in the United States,
Mexico, Latin America or elsewhere.

Our objective is to pursue deposits of any type of mineral and to develop, sell or otherwise assign the rights to
develop the properties if and when any commercially viable deposits of minerals are found on our properties.

Employees

We have no employees on the payroll, but as of the date of this annual report, we have five officers who are also directors and two officers who all provide services for
a portion of their time under consulting contracts. We also have three part-time contract support staff providing various services in our corporate office. We have retained and intend in the future to retain independent geologists and consultants on
a contract basis to conduct the work programs on the mineral properties.

Offices

We maintain an executive office in Littleton, Colorado and field offices in Elfrida, Arizona and in Culiacan, Mexico. We believe these spaces are adequate for our current needs and that suitable space will be
available to accommodate our future needs.

Risk Factors

Shares of our common stock are speculative, especially since we are in the exploration-stage of our new business. We operate in a volatile sector of business that involves numerous risks and uncertainties. The risks and uncertainties
described below are not the only ones we face. Other risks and uncertainties, including those that we do not currently consider material, may impair our business. If any of the risks discussed below actually occur, our business, financial condition,
operating results or cash flows could be materially adversely affected. This could cause the trading price of our securities to decline, and you may lose all or part of your investment. Prospective investors should consider carefully the risk
factors set out below.

Risks related to our business

Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.

Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems,
expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to
exploration, environmental permitting difficulties and delays and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineable
mineral deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial
mineralization, we may decide to abandon our claims. If this happens, our business will likely fail.

Because of the speculative nature of
exploration of mineral properties, we may never discover a commercially exploitable quantity of minerals, our business may fail and investors may lose their entire investment.

We have been conducting and plan to conduct mineral exploration on our mineral properties. The search for valuable minerals as a business is extremely risky. We can provide investors with no assurance that additional
exploration on our properties will establish that commercially exploitable reserves of minerals exist on our property. Additional potential problems that may prevent us from



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discovering any reserves of minerals on our property include, but are not limited to, unanticipated problems relating to exploration, environmental
permitting difficulties and delays and additional costs and expenses that may exceed current estimates. If we are unable to establish the presence of commercially exploitable reserves of minerals on our property our ability to fund future
exploration activities will be impeded, we will not be able to operate profitably and investors decline and investors may lose all of their investment in our company.

Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.

The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other
hazards against which we cannot insure or against which we may elect not to insure. At the present time we have no coverage to insure against these hazards. The payment of such liabilities may have a material adverse effect on our financial
position.

The potential profitability of mineral ventures depends in part upon factors beyond the control of our company and even if we discover and
exploit mineral deposits, we may never become commercially viable and we may be forced to cease operations.

The commercial feasibility of mineral
properties is dependent upon many factors beyond our control, including the existence and size of mineral deposits in the properties we explore, the proximity and capacity of processing equipment, market fluctuations of prices, taxes, royalties,
land tenure, allowable production and environmental regulation. These factors cannot be accurately predicted and any one or a combination of these factors may result in our company not receiving an adequate return on invested capital. These factors
may have material and negative effects on our financial performance and our ability to continue operations.

Exploration and exploitation activities
are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.

Exploration and exploitation activities are subject to federal, state and local laws, regulations and policies, including laws regulating the removal of natural resources from the ground and the discharge of materials
into the environment. Exploration and exploitation activities are also subject to federal, state and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment.

Various permits from government bodies are required for drilling operations to be conducted, and no assurance can be given that such permits will be
received. Environmental and other legal standards imposed by federal, state, or local authorities may be changed and any such changes may prevent us from conducting planned activities or increase our costs of doing so, which would have material
adverse effects on our business. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for
pollution or other environmental damages which we may not be able to or elect not to insure against due to prohibitive premium costs and other reasons. Any laws, regulations or policies of any government body or regulatory agency may be changed,
applied or interpreted in a manner which will alter and negatively affect our ability to carry on our business.

As we face intense competition in
the mineral exploration industry, we will have to compete with our competitors for financing and for qualified managerial and technical employees.

Our mineral properties are in Arizona and Mexico and our competition there includes large, established mining companies with substantial capabilities and with greater financial and technical resources than we have. As a result of this
competition, we may have to compete for financing and be unable to acquire financing on terms we consider acceptable. We may also have to compete with the other mining companies in the recruitment and retention of qualified managerial and technical
employees. If we are unable to successfully compete for financing or qualified employees, our exploration programs may be slowed down or suspended, which may cause us to cease operations as a company.

Government regulation may adversely affect our business and planned operations.

We believe our exploration projects currently comply with existing environmental and mining laws and regulations affecting its operations. Our mineral exploration and development activities are subject to various laws
governing prospecting, development, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people and other matters. We cannot assure you that new rules and regulations will not be
enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail further exploration or development.

Legislation has been proposed that could significantly affect the mining industry in the United States of America.

Members of the
U.S. Congress have repeatedly introduced bills which would supplant or alter the provisions of the Mining Law of 1872. If enacted, such legislation could change the cost of holding unpatented mining claims and could significantly impact our ability
to develop mineralized material on unpatented mining claims.



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A portion of the present Hill Copper-Zinc Projects land position is located on unpatented mining claims located on
U.S. federal public lands. The rights to use such claims are granted under the Mining Law of 1872. Unpatented mining claims are unique property interests in the United States, and are generally considered to be subject to greater title risk than
other real property interests because the validity of unpatented mining claims is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations under the 1872 Mining Law and the interaction of the 1872
Mining Law and other federal and state laws, such as those enacted for the protection of the environment.

In recent years, the U.S. Congress has
considered a number of proposed amendments to the 1872 Mining Law. If adopted, such legislation could, among other things:



| |  |  | impose a royalty on the production of metals or minerals from unpatented mining claims;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | reduce or prohibit the ability of a mining company to expand its operations; and,
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| |  |  | require a material change in the method of exploiting the reserves located on unpatented mining claims.
| | - |  | -------------------------------------------------------------------------------------------------------

All of the foregoing could adversely affect the economic and financial viability of future mining operations at the Hill Copper-Zinc Project. Although it is impossible
to predict at this point what any legislated royalties might be, enactment could adversely affect the potential for development of such federal unpatented mining claims.

Amendments to current laws, regulations and permits governing operations and activities of mining and exploration companies, or more stringent implementation thereof, could have a material adverse impact on our
business and cause increases in exploration expenses, capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

Our operating costs could be adversely affected by inflationary pressures especially to labor, equipment and fuel costs.

The global economy is currently in a period of high commodity prices and as a result the mining industry is attempting to increase production at new and existing
projects, while also seeking to discover, explore and develop new projects. This has caused significant upward price pressures in the costs of mineral exploration companies, especially in the areas of skilled labor and drilling equipment, both of
which are in tight supply and whose costs are increasing. Continued upward price pressures in our exploration costs may have an adverse impact to our business.

We may be adversely affected by fluctuations in copper, zinc, silver and gold prices.

The value and price of our common shares, our
financial results, and our exploration, development and mining, if any, activities may be significantly adversely affected by declines in the price of copper, zinc, silver and gold. Mineral prices fluctuate widely and are affected by numerous
factors beyond our control such as interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, and the political and economic conditions
of mineral producing countries throughout the world.

The prices used in making resource estimates for mineral projects are disclosed, and generally use
significantly lower metal prices than daily metals prices quoted in the news media. The percentage change in the price of a metal cannot be directly related to the estimated resource quantities, which are affected by a number of additional factors.
For example, a 10 percent change in price may have little impact on the estimated resource quantities, or it may result in a significant change in the amount of resources.

Estimates of mineralized materials are subject to geologic uncertainty and inherent sample variability.

Although the estimated resources at our Hill Copper-Zinc Project have been delineated with appropriately spaced drilling, there is inherent variability between duplicate samples taken adjacent to each other and between sampling points that
cannot be reasonably eliminated. There also may be unknown geologic details that have not been identified or correctly appreciated at the current level of delineation. This results in uncertainties that cannot be reasonably eliminated from the
estimation process. Some of the resulting variances can have a positive effect and others can have a negative effect on mining and processing operations. Acceptance of these uncertainties is part of any mining operation.

Mineral resources and proven and probable reserves are estimates.

Although the mineralized material figures included in this document have been carefully prepared by independent engineers, these amounts are estimates only, and we cannot be certain that specific quantities of copper, zinc, silver, gold or
other mineral will in fact be realized. Any material change in the quantity of mineralization, grade or stripping ratio, or mineral prices may affect the economic viability of our properties. In addition, we cannot be certain that metal recoveries
in small-scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production. Until an un-mined deposit is actually mined and processed the quantity of mineral resources and reserves and grades must be
considered as estimates only.



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Risks associated with our Company

We have a history of losses and have a deficit, which raises substantial doubt about our ability to continue as a going concern.

We have not generated any revenues since our incorporation and we will continue to incur operating expenses without revenues until we are in commercial deployment. Our net loss from inception February 19, 2004 to
December 31, 2007 was $4,449,263. We had cash in the amount of $268,410 as of December 31, 2007, although we have since raised $2.5 million in two separate financings during February 2008. We currently are in the exploration stage and have
not found any commercially viable mineral deposits on our properties. We estimate our average monthly operating expenses to be approximately $220,000, before meeting our commitments for ongoing property acquisition and option payments. We cannot
provide assurances that we will be able to successfully explore our properties and develop our business. These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our
independent auditors report on our audited financial statements, dated March 31, 2008. If we are unable to continue as a going concern, investors will likely lose all of their investments in our company.

Our future is dependent upon our ability to obtain financing. If we do not obtain such financing, we may have to cease our exploration activities and investors
could lose their entire investment.

There is no assurance that we will operate profitably or generate positive cash flow in the future. We will
require additional financing in order to proceed beyond the first few months of our exploration program. We will also require additional financing for the fees we must pay to maintain our status in relation to the rights to our properties and to pay
the fees and expenses necessary to become and operate as a public company. We will also need more funds if the costs of the exploration of our mineral claims are greater than we have anticipated. We will also require additional financing to sustain
our business operations if we are not successful in earning revenues. Beyond our recently completed financings, we currently do not have any arrangements for further financing and we may not be able to obtain financing on commercially reasonable
terms or terms that are acceptable to us when it is required. Our future is dependent upon our ability to obtain financing. If we do not obtain such financing, our business could fail and investors could lose their entire investment.

Because we may never earn revenues from our operations, our business may fail and then investors may lose all of their investment in our company.

We have no history of revenues from operations. We have never had significant operations and have no significant assets. We have yet to generate
positive earnings and there can be no assurance that we will ever operate profitably. Our company has a limited operating history and is in the exploration stage. The success of our company is significantly dependent on the uncertain events of the
discovery and exploitation of mineral reserves on our properties or selling the rights to exploit those mineral reserves. If our business plan is not successful and we are not able to operate profitably, then our stock may become worthless and
investors may lose all of their investment in our company.

Prior to completion of the exploration and pre-feasibility and feasibility stages, we
anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the
exploration of our mineral claims in the future, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide no assurance
that we will generate any revenues or ever achieve profitability. If we are unsuccessful in addressing these risks, our business will fail and investors may lose all of their investment in our company.

Risks associated with our common stock

We do not intend to pay
dividends on any investment in the shares of stock of our company.

We have never paid any cash dividends and currently do not intend to pay any
dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any
gain on an investment in our company will need to come through an increase in the stocks price. This may never happen and investors may lose all of their investment in our company.

Our stock is a penny stock. Trading of our stock may be restricted by the SECs penny stock regulations which may limit a stockholders ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission (SEC) has adopted Rule 15g-9 which generally defines penny stock to be any
equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or
individuals with a net worth in excess of



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$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standard risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each
penny stock held in the customers account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to
the customer in writing before or with the customers confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in
and limit the marketability of our common stock.

The exercise of options, warrants, and conversion of our existing debentures and the future
issuances of common stock will dilute current shareholders and may reduce the market price of our common stock.

As of December 31, 2007 we
have a substantial amount of outstanding options and warrants, which, combined with other shares and the convertible debentures and warrants issued subsequent to year-end, if completely exercised, would dilute existing stockholders ownership
by approximately 46%. While some of our outstanding warrants and options are exercisable at prices in excess of the current market price of our common stock, if our share price increases substantially and these securities are exercised, then
shareholders may experience substantial dilution of book value per share of our common stock. The issuance of additional securities may also reduce the market price of our common stock. Based on the need for additional capital to fund further
exploration of our properties, it is likely that we will issue additional securities to provide such capital, and that such additional issuances may involve a significant number of shares, some of which may be offered at a discount to the current
market price.

The price of our common stock has a history of volatility, which may prevent shareholders from realizing a profit from their
investment during particular time frames.

The market price for shares of our common stock may be highly volatile depending on news announcements or
changes in general market conditions. In recent years, the stock market has experienced extreme price and volume fluctuations. From January 1, 2005 to December 31, 2007, our stock closed in a range from a high of $1.75 to a low of $0.06
per share. Such volatility may cause large swings in the value of a shareholders investment in us.

We have change in control provisions that
discourage a corporate takeover and could deprive shareholders of opportunities to sell at temporarily higher prices.

On January 18, 2008, our
Board adopted a Shareholder Rights Agreement (subject to ratification by shareholders at the next Annual General Meeting) designed to protect and maximize the value of our outstanding equity interest in the event of an unsolicited attempt by an
acquirer to take us over, in a manner or on terms not approved by the Board. Takeover attempts frequently include coercive tactics to deprive a corporations Board of Directors the opportunity to negotiate or otherwise act in the best interest
of its stockholders. Our Board believes these tactics often deprive stockholders of the full value of their shares. The Shareholder Rights Agreement, however, may have the effect of rendering more difficult or discouraging any acquisition of us
deemed undesirable by the Board. The Shareholder Rights Agreement will cause substantial dilution to a person or group that attempts to acquire us on terms or in a manner not approved by the Board, except pursuant to an offer conditioned upon the
elimination, purchase or redemption of the rights provided for in the Shareholder Rights Agreement which expires on January 17, 2013.

Glossary of
Geologic and Mining Terms

airborne geophysical surveys  the search for mineral deposits by measuring the physical property of
near-surface rocks through the use of an airplane or helicopter in order to detect unusual responses caused by the presence of mineralization. Electrical, magnetic, gravitational, seismic and radioactive properties are the ones most commonly
measured;

alteration  decomposition of a rock by hydrothermal solutions or weathering;

anomalous  either a geophysical response or a rock, stream silt, or soil sample assay value that is greater than the average background value;

argillization  turning into clay;

assay  a measure of valuable mineral content;



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azurite  a blue oxide copper mineral, Cu3(CO3)2(OH)2; 55% copper

batholith  a great irregular mass of coarse-grained igneous rock with an exposed surface of more than 100 square kilometers, which has either intruded the country rock or been derived from it
through metamorphism;

biotite  a very common mineral of the mica group, occurring in black, dark-brown, or dark-green sheets and
flakes; an important constituent of igneous and metamorphic rocks;

breccia  a coarse-grained rock, composed of rounded to angular
rock fragments held together by a finer-grained matrix;

chalcocite  a sulfide mineral of copper confined to the zone of secondary
enrichment, 80% copper;

chalcocite blanket  a flat-lying, blanket-shaped
deposit of secondary chalcocite (Cu2S), moving downward and precipitating at the ancient water table;

chalcopyrite  a brassy-colored copper iron sulfide, CuFeS2, 33% copper;

claim  a portion of land
held either by a prospector or mining company;

concession  something conceded by a government or a controlling authority, as a
grant of land, a privilege, or a franchise;

core drilling  involves extracting a long cylinder of rock from the ground to
determine amounts of metals at different depths. Pieces of the rock obtained, known as drill core, are analyzed for mineral content;

Cretaceous  noting or pertaining to a period of the Mesozoic Era, from 140 million to 65 million years ago, characterized by the greatest development and subsequent extinction of dinosaurs and the advent
of flowering plants and modern insects;

dacite  a type of fine-grained extrusive rock;

development drilling  drilling to establish accurate estimates of mineral reserves;

dike  a long, narrow, cross-cutting mass of igneous rock intruded into a fissure in older rock;

Dirección General de Minas  Department of Mines, Mexico;

drill indicated resources  the size and quality of a potential orebody as suggested by widely spaced drill-holes; more work is required before resources can be classified as probable or proven
reserves;

Eocene  the Eocene epoch is part of the Tertiary Period in the Cenozoic Era, and lasted from about 54.8 to
33.7 million years ago;

extrusive  noting or pertaining to a class of igneous rocks that has been forced out in a molten or
plastic condition upon the surface of the earth;

fault  a break in the Earths crust caused by tectonic forces; a surface or
zone of rock fracture along which there has been displacement; movement of rock on one side with respect to the other;

felsic  a
term used to describe light-colored rocks containing feldspar, feldspathoids and silica;

geophysics  the study of physical
properties of rocks and minerals;

geochemistry  the study of chemical properties of rocks;

gossan  a rust-colored deposit of mineral matter at the outcrop of a vein or orebody containing iron-bearing materials;

granodiorite  a coarse-grained igneous rock consisting primarily of quartz, plagioclase, and potassium feldspar, and also containing biotite,
hornblende, or pyroxene. It is the coarse-grained equivalent of dacite;

greenschist  a metamorphic schist containing chlorite and
epidote (which are green) and formed by low-temperature, low-pressure metamorphism;

heap leaching  recovery of metals in a
surface pad; copper recovered by dilute sulfuric acid solution;

hectares  a metric unit of area equal to 100 acres (2.471 acres);

hemimorphite  a mineral chiefly associated with smithsonite, containing up to 54.2% zinc;

hornblende  a dark-green to black mineral of the amphibole group, calcium magnesium iron and hydroxyl aluminosilicate;

hydrothermal  any process involving high-temperature groundwaters, especially the alteration and emplacement of minerals and the formation of
hot springs and geysers;

hydrozincite  is a white carbonate mineral
consisting of Zn5(CO3)2(OH)6;

igneous rock  a rock formed by the cooling of molten rock either underground or at the surface of the earth;

intrusive rock  a hot, fluid igneous rock which penetrated other rocks, but cooled beneath the surface;

kilometer  a metric unit of length equal to 1,000 meters (0.62 mile);



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leachability  to dissolve out soluble constituents from material by percolation;

limestone  a sedimentary rock composed of calcium carbonate (CaCO3);

lode  a mineral deposit in solid
rock;

mafic  a dark-colored mineral rich in iron and magnesium, especially a pyroxene, amphibole, or olivine.

magnetic survey  involves searching for changes in the magnetic field over property areas. Magnetic anomalies may be a result of accumulations
of certain magnetic minerals such as pyrrhotite, hematite and magnetite, which are often found alongside base metals such as copper, zinc and nickel, or precious metals such as gold and silver;

malachite  a green oxide copper mineral; Cu2CO3(OH)2; 58% copper;

matrix  the fine-grained portion of a rock in which coarser crystals or rock
fragments are embedded;

melaconite  a mineral consisting of cupric oxide, CuO;

Mesozoic  noting or pertaining to an era occurring between 230 and 65 million years ago, characterized by the appearance of flowering
plants and by the appearance and extinction of dinosaurs;

meta-arkoses  a later alteration of arkose (a usually pinkish or red
sandstone consisting primarily of quartz and feldspar. Arkose usually forms as the result of the rapid disintegration of granite in areas of vigorous erosion. Its grains are usually angular and poorly sorted (mixed randomly in differing sizes));

metamorphism  the changes of mineralogy and texture imposed on a rock by pressure and temperature in the Earths interior;

metasediment  metamorphosed sedimentary rock;

meter  the fundamental unit of length in the metric system, equivalent to 39.37 U.S. inches;

mica  any of a group of chemically and physically related aluminum silicate minerals, common in igneous and metamorphic rocks, characteristically splitting into flexible sheets;

mine waste  overburden or non-ore waste rock from a mine pit or workings;

Miocene  noting or pertaining to an epoch of the Tertiary Period, occurring from 25 to 10 million years ago, when grazing mammals became widespread;

open pit or open cut  surface mining in which the ore is extracted from a pit or quarry;

ore  a mixture of minerals from which at least one metal can be extracted at a profit; a mineral which can be mined at a profit;

orebody  a continuous well-defined mass of material containing enough ore to make extraction economically feasible;

oxide  a compound in which oxygen is bonded to one or more electropositive atoms;

Paleocene  noting or pertaining to an epoch of the Tertiary Period, from 65 to 55 million years ago, and characterized by a proliferation of mammals;

patent  the ultimate stage of holding a mineral claim, after which no more assessment work is necessary because all the mineral rights have been
earned;

phyllites  a green, gray, or red metamorphic rock, similar to slate but often having a wavy surface and a distinctive
micaceous luster;

porphyry  an igneous rock of any composition that contains conspicuously large mineral crystals set in a
finer-grained groundmass;

potassium-argon or K-Ar dating  a
geochronological method used in many geoscience disciplines. It is based on measuring the products of the radioactive decay of potassium (K), which is a common element found in materials; the radioactive isotope40K decays to40Ar and40Ca with a half-life of 1.26x109years;

primary mineralization  originally formed, prior to leaching and oxidation at the surface to form secondary mineralization

pyrite  an iron sulfide (FeS2);

pyritization  a rock impregnated with pyrite;

quartzite  (1) a very hard, clean, white metamorphic rock formed from a quartz arenite (consolidated sedimentary rocks of sand-sized fragments)
sandstone; (2) a quartz arenite containing so much cement that it resembles (1);

replacement  the process where a mineral
replaces another mineral volume for volume;

reserve  that part of a mineral resource that can be mined profitably;

royalty  a compensation or portion of the proceeds paid to the owner of a right, as a patent or oil or mineral right, for the use of it;

schist  a metamorphic rock characterized by strong foliation or schistosity;



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secondary enrichment  enrichment of a vein or mineral deposit by minerals that have been taken
into solution from one part of the vein or adjacent rocks and redeposited in another;

sericitization  a hydrothermal or
metamorphic process involving the introduction of or replacement by sericite (a fine-grained variety of muscovite produced by the alteration of feldspar);

shale  a rock of fissile or laminated structure formed by the consolidation of clay or fine-grained sediments;

silicification  to become converted into, or impregnated with, silica;

skarn  a coarse-grained
metamorphic rock formed by the contact metamorphism of carbonate rocks;

smelter  an industrial plant for smelting (to melt or
fuse (ores) in order to separate the metallic constituents);

smithsonite  an oxidized zinc mineral; 52% zinc;

sphalerite  zinc sulfide (ZnS), 67% zinc;

stake  to mark the location or limits of with or as if with stakes;

stockwork  a metalliferous
deposit characterized by the impregnation of the mass of rock with many small veins (veinlets), irregularly grouped;

strike  the
direction or trend of a mineralized structural feature; the direction or trend taken by a structural surface, e.g. a bedding or fault plane, as it intersects the horizontal;

sulphide  refers to several types of chemical compounds containing sulfur in its lowest oxidation number of 2;

supergene  formed by descending waters, as mineral or ore deposits;

SX/EW
recovery  Solvent Extraction ElectroWinning; a relatively inexpensive method of copper recovery, cheaper than milling;

tenorite  a copper oxide mineral with the simple formula CuO, it occurs in the weathered or oxidized zone associated with deeper primary copper sulfide orebodies;

turquoise  a blue to green phosphate copper mineral, in the near-surface zone, prized as a gemstone;

unpatented claim  usual lode, placer or mill site claim located under the mining laws;

vein  a mineral filling of a fault or fracture in the host rock, typically in tabular or sheet-like form;

volcanic  resulting from a volcano (any opening through the crust that has allowed magma to reach the surface, including the deposits
immediately surrounding this vent); and

weathering  near-surface alteration and oxidation of minerals and rocks by exposure to
the atmosphere or ground water.



|ITEM 2 | DESCRIPTION OF OUR MINERAL PROPERTIES
|------ | -------------------------------------

Hill Copper-Zinc Project,
Arizona

Location, Access and Property Overview

The Hill Copper-Zinc Project is located on the eastern flank of the southern Dragoon Mountains, approximately 80 miles southeast of Tucson, Arizona. Access to the Hill Copper-Zinc Project from Tucson is via the Dragoon turnoff on I-10
freeway, 12 miles east of Benson, then east to Arizona Highway 191, then south through Sunsites Village and the nearby town of Pearce. The property is in the Turquoise Mountain Quadrangle, Courtland-Gleeson Mining District, Cochise County, Arizona.
We are not aware of any particular environmental, political or regulatory problems that would adversely affect mineral exploration of the property.

The
topography in the project area varies from flat to rolling hills with an average elevation of 4,600 feet above sea level. Vegetation in the area is sparse and is typical of a desert climate.



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LOGO

General Overview of our Arizona Mining Claims at the Hill Copper-Zinc Property

We are the registered owner of a 100% interest in 35 MAN unpatented mining claims, part of the 119 unpatented
mining claims and 45 patented claims located on the Hill Copper-Zinc Project, as described in the table below. The unpatented claims are staked on federal lands administered by the U.S. Bureau of Land Management. In addition to the 13 claims
acquired with the purchase of ARI, staked on two earlier occasions and all contiguous with one another, we also staked an additional 17 MAN unpatented mining claims during late 2006 which were recorded at the Bureau of Land Management (BLM) on
January 24, 2007 and January 25, 2007. An additional five claims were staked and recorded with the BLM on August 17, 2007. These claims are contiguous with the 13 initial MAN claims. The mining claims are in good standing with all
regulatory authorities, and the mining claims are properly registered at Cochise County in Bisbee and with the U.S. Bureau of Land Management in Phoenix, Arizona. The current annual maintenance fees on unpatented mining claims are $125 per claim due
on or before August 31 of each year.

The claims staked or otherwise acquired, exploration permits and leases obtained, and other property
acquisitions are listed chronologically:



|                   |  |                                                                                        |  |                |     |  |                  |  |              |     |  |              |    
|------------------ |  | -------------------------------------------------------------------------------------- |  | -------------- | --- |  | ---------------- |  | ------------ | --- |  | ------------ | ---
|Date               |  | Property Name                                                                          |  | ClaimsPatented |     |  | ClaimsUnpatented |  | AcresMineral |     |  | AcresSurface |    
|March 7, 2005      |  | BLM filing date  MAN claims; quitclaim deed to Aurelio recorded January 19, 2007      |  |                |     |  | 6                |  | (see below   | )   |  |              |    
|November 8, 2005   |  | BLM filing date  MAN claims; quitclaim deed to Aurelio recorded January 19, 2007      |  |                |     |  | 7                |  | (see below   | )   |  |              |    
|September 15, 2006 |  | Hope Mining claims                                                                     |  | 30             |     |  |                  |  | 550          |     |  | 550          |    
|January 24, 2007   |  | BLM filing date  MAN claims                                                           |  |                |     |  | 9                |  | (see below   | )   |  |              |    
|January 25, 2007   |  | BLM filing date  MAN claims                                                           |  |                |     |  | 8                |  | (see below   | )   |  |              |    
|March 27, 2007     |  | Newmont Mining  claims                                                                |  | 2              | (2) |  |                  |  | 24           |     |  | 24           |    
|March 28, 2007     |  | Gold City Inc. option(3)                                                               |  |                |     |  | 19               |  | 242          |     |  |              |    
|April 15, 2007     |  | Gold Coin  claims                                                                     |  |                |     |  | 65               |  | 1021         |     |  |              |    
|April 15, 2007     |  | Gold Coin  3 AZ state mineral exploration permits                                     |  |                |     |  |                  |  | 251          |     |  |              |    
|August 6, 2007     |  | Rae Family  claims                                                                    |  | 13             |     |  |                  |  | 213          |     |  | 213          |    
|                   |  | Rae Family  2 surface rights parcels                                                  |  |                |     |  |                  |  |              |     |  | 744          |    
|                   |  | Rae Family  surface & mineral rights (homestead patented)                             |  |                |     |  |                  |  | 292          |     |  | 292          |    
|August 17, 2007    |  | BLM filing date  MAN claims                                                           |  |                |     |  | 5                |  | (see below   | )   |  |              |    
|August 28, 2007    |  | Bolsa received 3 AZ state mineral exploration permits, Sections 33, 34, 35, T19S, R25E |  |                |     |  |                  |  | 1320         |     |  |              |    
|September 24, 2007 |  | Graham  531 Courtland Townsite Lots (overlaps other surface rights)                   |  |                |     |  |                  |  |              |     |  |              |    
|                   |  |                                                                                        |  |                |     |  |                  |  |              |     |  |              |    
|TOTALS:            |  | Total patented claims                                                                  |  | 45             |     |  |                  |  |              |     |  |              |    
|                   |  | Total unpatented claims                                                                |  |                |     |  | 119              |  |              |     |  |              |    
|                   |  | Total acres MAN Area claims                                                            |  |                |     |  |                  |  | 384          |     |  |              |    
|                   |  |                                                                                        |  |                |     |  |                  |  |              |     |  |              |    
|                   |  | Total acres mineral rights                                                             |  |                |     |  |                  |  | 4297         | (1) |  |              |    
|                   |  | Total acres surface rights                                                             |  |                |     |  |                  |  |              |     |  | 1823         | (1)
|                   |  |                                                                                        |  |                |     |  |                  |  |              |     |  |              |    
|                   |  | Total acres mineral and surface                                                        |  |                |     |  |                  |  |              |     |  | 5041         | (1)



|(1) |  The total acreages are approximate due to the complexity of overlapping claims as well as incomplete surveys for Gold Coin, MAN Claims and Gold City properties.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  Newmont held 50% of one of the two claims.
|--- | --------------------------------------------



|(3) | The Gold City transaction is in the form of a signed letter agreement and formal documentation has not yet been executed.
|--- | -------------------------------------------------------------------------------------------------------------------------



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ARI entered into a purchase and sale agreement, dated May 16, 2006, with Hope Mining and Milling Company, for the
acquisition of 30 patented mining claims known as the Courtland claims, located in the Turquoise Mountain Quadrangle, Courtland-Gleeson Mining District, Cochise County, in south eastern Arizona. On September 15, 2006, ARI assigned its rights
under the agreement to Bolsa and, on September 18, 2006, Bolsa closed the acquisition and paid the balance of the initial installment of $250,000. The remainder of the overall purchase price of $1.2 million is financed over four years with only
monthly interest payments at 6% being payable over this period with the balance of the purchase price payable on September 15, 2010.

In January 2007,
the Company staked 17 new unpatented claims around the initial 13 MAN claims, including the area between the recently purchased Courtland claims and the MAN claims.

In March 2007, the Company entered into an exploration lease and option to purchase letter agreement with Gold City Inc. (Al Conti) for 19 unpatented mining claims to the north of as well as overlapping the initial 13
MAN claims. Gold City agreed to an initial lease payment of $20,000, with subsequent payments over four years of $90,000. The purchase price agreed to is $750,000 should the Company exercise the purchase option, which includes a net smelter royalty
of 1% to 2% depending upon the net sales price per pound of copper. As of December 31, 2007, the final documentation to effect this agreement has not been executed.

During April 2007, an option agreement (signed in March 2007) was completed with Newmont Mining Corporation to purchase two of its patented mineral claims. These claims, known as the Banner claim and the Australia
claim, are adjacent to Aurelios initial 13 MAN claims. Newmont agreed to a purchase price of $100,000 paid in stages over a one year period and with the final payment in March 2008 this option will be exercised and the title to the two claims
transferred to Bolsa. Aurelio agreed to give Newmont a 1% Net Smelter Returns Royalty on the patented claims and on any properties Aurelio currently owns or acquires within a designated Area of Interest. In addition, Aurelio has given Newmont a
Right of First Offer with respect to any option, joint venture, sale or any other disposition of property by Aurelio to a third party. The acquisition was concluded through our subsidiary, Bolsa.

Aurelio also acquired an extensive exploration file of the Turquoise Mountain Mining District, Cochise County, Arizona, where the Hill Copper-Zinc Project is located
including the logs and assay results of 274 holes, drilled by ten different companies between the 1950s to the mid-1990s. These companies include Santa Fe Mining, Asarco Mining, Kennecott Copper, Union Oil, and Great Gray Resources. This database
provides confirmation of Aurelios calculated mineral resources as well as identifies at least eight additional copper and zinc rich exploration targets within the companys Hill Copper-Zinc Project.

Also in April 2007, Aurelio completed a mineral lease and option agreement with three individual owners of 65 Gold Coin mineral claims and three Arizona State mineral
exploration permits. These acquisitions were also concluded through Bolsa. The 65 unpatented Gold Coin claims along with the three Arizona mineral exploration permits cover 1272 acres. These new properties are all located to the south and southeast
of the MAN claims. The group of claims contains multiple additional copper and zinc targets and three known gold prospects. The option agreement included a down payment of $20,000 with additional annual staged payments totaling $1.5 million until
April 15, 2018. In addition, there is a royalty of 1% of production of base metals and 2.5% of precious metals from these claims and permits.

In July
2007, Aurelio completed the acquisition of 76,780 feet of drill core from 95 holes in the Turquoise Mining District. These holes were drilled by Santa Fe Minerals, Inc. (now part of Newmont Mining) and Great Gray Resources Co. between 1987 and 1995,
as well as core from eight holes (over 7,200 feet) drilled by Bear Creek Exploration during the 1960s in the Courtland and South Courtland areas. Much of this core was only assayed for copper at the time it was drilled. Aurelio has been
systematically re-logging, re-sampling and re-assaying this core for gold, silver, lead and zinc, and adding the results to the companys exploration database. Aurelios land position encompasses virtually all the ground previously drilled
by these companies. The material was acquired for a nominal cost.



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During August 2007, Aurelio entered into an agreement with the Rae family to purchase 13 patented mining claims (covering
approximately 213 acres) located on the north of the MAN area that is part of the Companys wholly-owned Hill Copper-Zinc Project. As part of the transaction, the Company has also acquired approximately 744 acres of surface rights covering the
entire MAN deposit and an area to the west, with an additional 292 acres of surface and mineral rights to the east of the deposit. These acquisitions were concluded through Bolsa. The option agreement included a down payment of $10,000 and a further
payment of $40,000 before year-end, with additional staged payments over two years for a total cost of $1.3 million. There is no royalty payable on production from any of the patented mining claims.

Also in August 2007, the Company staked an additional five unpatented BLM lode mining claims to the north and northeast of the MAN deposit. These claims are adjacent to
and to the east of the patented Hope claims purchased in September of 2006 covering the Courtland area. The Company also applied for and was granted three Arizona State mineral exploration permits covering an estimated 1,320 acres. The Arizona
exploration permits are located to the south and southeast of the MAN deposit, and cover projected extensions along strike of high-grade, copper-zinc-silver-gold mineralization.

During September 2007, we entered into an option agreement to acquire surface rights being town sites on part of the Courtland area from Kay B. Graham with payment of a non-refundable option payment of $25,000.

Mining and Exploration History of the Courtland-Gleeson (Turquoise) Mining District

Native Americans mined small amounts of turquoise, used as a medicine stone, from Turquoise Mountain on the extreme north end of the district, for an unknown number of
years.

The first mining claims were staked on silver-lead deposits near Gleeson, on the south end of the district, in 1877. Exploration and development by
the Calumet, Phelps Dodge and Great Western companies started a boom in the area in 1907, and copper production peaked in 1912. Mostly in the northern Courtland area, there was small-scale mining for shallow, oxidized high-value copper or lead-zinc
replacement deposits in limestone, with by-product gold-silver. The larger underground mines closed by 1920, although small operators continued production until about 1932. There are at least 52 old mine workings in the Turquoise Mining District.

The district was explored prior to Aurelios consolidation of the land and commencement of the current exploration program with four large and seven
small drilling programs since 1952, totalling 274 drill holes. In 1957, Minerals Exploration Company (MEXCO, a division of Union Oil Company) discovered the Star Hill replacement copper deposit in the MAN area with their first hole, based on an
airborne magnetic geophysical anomaly. MEXCO then drilled 51 additional holes on an approximate 200-foot grid, but later abandoned the property.

Intense
hydrothermal alteration, pyritization and fracturing in an area of approximately eleven square miles have long attracted the attention of several companies searching for a large porphyry copper deposit. In 1960 through 1967, Bear Creek Mining
Company drilled 42 holes, totalling about 57,000 feet, in an area of approximately four square miles west of the old Courtland town site.

Beginning in
1986, Santa Fe Mining Company drilled 108 holes in three main areas: Maude Hill (1986) with 14 holes; an expansion of the MEXCO grid at Star Hill (1989 through 1990) with 52 holes, concentrating only on high-grade mineralization; and
enlargement of the Courtland bulk-tonnage replacement copper deposit (1990) with 42 holes. Newmont Mining Company had previously drilled four bulk-tonnage discovery holes at Courtland in 1988.

Mineralization

The Hill Copper-Zinc Project contains two
known types of mineralization: primary and secondary. Primary mineralization is at depth and secondary mineralization is closer to the surface.

(1)
Primary mineralization (milling required, not amenable to heap leaching):

Massive pyrite plus chalcopyrite (copper) plus sphalerite (zinc) plus or minus
magnetite/hematite(iron oxide), with some gold silver and lead, occurs in replacement deposits and skarn primarily within Abrigo limestone. This mineralization was the focus of historic underground mining operations. Lower grade, disseminated
sulphide mineralization occurs in skarns and intrusive porphyries. Some primary mineralization is present in other sedimentary formations such as Bolsa Quartzite and Martin Limestone.

Hydrothermal alteration in the wall rock typically consists of intense stockwork and pervasive silicification, along with strong sericitization and argillization, to the extent that drill core is often unidentifiable.



14



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(2) Secondary mineralization (amenable to heap leaching and SX/EW recovery):

Secondary mineralization occurs where near-surface primary mineralization has been oxidized and leached. Limestone areas contain copper oxide minerals (tenorite,
malachite, azurite, chrysocolla, melaconite and neotocite) or zinc oxide minerals (such as hemimorphite, smithsonite and hydrozincite). This mineralization varies from iron-stained skarn and leached limestone to heavy gossanous material.

Underlying the oxide zone in some places, is an extensive supergene enrichment blanket, that contains chalcocite, a copper-rich secondary mineral. It
occurs primarily in the MAN zone in the porphyritic intrusives.

All types of mineralization have been offset by numerous steep, closely spaced faults
making lateral projection difficult in some cases.

The oxide mineralization is probably the most economically attractive in the Hill Copper-Zinc area
because it is close to the surface, and might be mined with lower cost open-pit mining methods. The chalcocite blanket is very extensive and contains significant tonnages of potentially leachable copper mineralization. Together, these secondary
types of mineralization make the Hill project an attractive exploration target.

In 2006 and 2007, Aurelio drilled 21,489 feet of core and reverse
circulation drilling. This drilling has confirmed previous drilling results by Newmont, Santa Fe, Bear Creek, Great Gray and MEXCO. In 2007, follow-up drilling was begun to outline an oxide resource in the South Courtland zone.

Our Current Drilling Program

Beginning in late 2005, ARI
increased the potential for discovering bulk-tonnage mineral resources at Star Hill, now named the Hill Copper-Zinc Project, by re-evaluating the data from earlier drilling programs and by confirmatory drilling. Two principal zones were recognized,
the Courtland Zone and the MAN Zone.

Phase 1 drilling started in the Fall of 2006. This work was confirmational in nature, attempting to verify the
presence and grade of previously drilled mineralization by twinning Newmont and Santa Fe holes. Five holes were drilled on the Courtland zone, which was well-defined by previous drilling, and five more holes were drilled in the area between
Courtland and MAN which had some scattered mineralized intervals.

The results of this early phase of drilling were that the Courtland mineralization was
confirmed, and the other five holes began to show the presence of a continuation of mineralization between the Courtland and MAN zones. This new target has since been named South Courtland.

Phase 2 drilling started in the middle of 2007. The primary objective of this phase was to pursue the oxide mineralization at South Courtland. A total of 29 holes were
drilled in the central part of the zone to expand on previous drilling. Most holes were extended into the sulphide mineralization in order to test the geological model for the zone. In addition, five confirmation holes were drilled in the MAN zone
to confirm the Santa Fe and MEXCO results.

The results of Phase 2 drilling show that the South Courtland zone consists of a thin (approximately 125 feet)
surface layer of oxidized ledges leading down-dip into sulphide mineralization. At present, only about one third of the South Courtland zone has been drill-tested. Two holes were drilled between the South Courtland and MAN zones and those intercepts
suggest possible continuity of the two zones. Drilling shows that there is significant zinc mineralization in some areas that are distinct from the copper mineralization. Further work will address the significance and economics of this
mineralization.

The drill holes that Bolsa competed during 2007 on the MAN zone were successful in duplicating previous drilling and confirmed the
presence of a thick chalcocite blanket overlying high-grade sulphide mineralization, including copper, zinc, silver, and gold, with scattered lead values. Samples are currently being submitted for leachability analysis, after which a metallurgical
scoping study will be carried out.

Future Drill Plans

Future drilling will focus on outlining this new near-surface copper oxide zone with the objective to define a heap-leachable deposit that could possibly be fast-tracked to early production.

Resource Evaluation  Hill Copper-Zinc Project

In
October 2007 an independent review of its in-house estimate of the mineralized material in the MAN area was completed. The report was prepared by Chlumsky, Armbrust & Meyers, LLC (CAM), an independent mining engineering
consulting firm located in Lakewood, Colorado. CAMs report, entitled Technical Report: Hill Copper-Zinc Project - MAN Area Arizona dated October 23, 2007, was authored by Mr. Robert L. Sandefur, P.E., Senior
Geostatistician/Ore Reserve Analyst. Estimated in-place mineralized material in the MAN Area is 63,757,000 tons grading 0.43% copper and 0.15% zinc (plus gold, silver and lead credits) based on cut-off grades of 0.20% copper for sulfide material and
0.10% copper for leachable (oxide and chalcocite) mineralized material. Based on the trailing average monthly metal prices for the past three years through October 2007, the copper-equivalent grade of the MAN deposit would be 0.56%
copper-equivalent. It appears that all of this material can be mined by open pit with low (less than 2:1) stripping ratios. CAMs calculations were based on geologic and assay information from 87 historical drill holes totaling 64,252 feet of
core and 10,737 assay records. (Aurelio has a total historical database of 274 drill holes for the Hill Copper-Zinc Project.)



15



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The CAM report analyzed the MAN area only. Subsequently, we prepared an in-house analysis of all three zones (MAN, South
Courtland and Courtland) which estimated mineralized material at 167.9 million tons (which our management believes could all be mined using open-pit methods) with an approximate copper equivalent grade of 0.52% (copper plus gold, silver and
zinc at current values). We expect to enlarge the area of mineralized material in due course with step-out drilling into previously untested areas.

Gavilanes Property

Through Minera Milenium, we hold an option to earn a 100% undivided interest in certain mining claims/concessions
situated in the Tamazula District, Durango, Mexico known as the Gavilanes Property. The Gavilanes Property consisted initially of mining claims/concessions covering approximately 100 hectares, identified as title number 185397, expediente (brief)
321.1/24569 and granted by the Dirección General de Minas and inscribed with number 577, on page 145 of Volume number 251 of the General book of Mining Concessions of the Public Mines register in Mexico City, D.F. Subsequently, 900 hectares
of exploration concessions were staked around the initial Gavilanes property.

Option Terms

Pursuant to the terms of the option agreement dated August 18, 2005, between ARI and Minera Holmex, S.A. de C.V., a company incorporated under the laws of the State
of Sinaloa, Republic of Mexico, and wholly-owned by Dr. Frederik Warnaars, ARI acquired the right to earn up to a 100% free and clear interest in the mineral exploration and development in the three mining claims/concessions, covering
approximately 1,000 hectares. ARI assigned all of its interest in this option to its 98% owned subsidiary, Minera Milenium. In consideration for the option we paid Minera Holmex an amount equal to the taxes in arrears for the years 2001 and 2002 and
the aggregate sum of P63,536 (Mexican Pesos) plus late payment penalties (approximately $6,100).

To maintain the option in good standing, we will need to
make the following payments to Mr. Modesto Rivas Beltran no later than the dates provided below:



|                                           |  |      |        
|------------------------------------------ |  | ---- | -------
|Payment Due Date                           |  | Cash
|February 1, 2006 (paid in 2006)            |  | $    | 5,000  
|August 1, 2006 (paid in 2006)              |  |      | 10,000 
|February 1, 2007 (paid in 2007)            |  |      | 15,000 
|August 1, 2007 (paid in 2007)              |  |      | 15,000 
|February 1, 2008 (paid in 2008)            |  |      | 20,000 
|August 1, 2008                             |  |      | 20,000 
|February 1, 2009                           |  |      | 25,000 
|August 1, 2009                             |  |      | 25,000 
|February 1, 2010                           |  |      | 30,000 
|August 1, 2010                             |  |      | 30,000 
|February 1, 2011                           |  |      | 305,000
|                                           |  |      |        
|Payments Remaining as of December 31, 2007 |  | $    | 455,000
|                                           |  |      |        

The Gavilanes Property is subject to a 3% net smelter royalty in favor of Mr. Modesto Rivas Beltran of
Culiacan, Sinaloa, Mexico. There are no provisions in the option whereby we can purchase all or a portion of the smelter royalty from Mr. Modesto Rivas Beltran.

The smelter royalty will be payable only from the actual proceeds received by our company from any future mint, smelter, refinery or other purchaser from the sale of any ore, metals (including bullion) or concentrates
we may produce and sell from the Gavilanes Property, or proceeds we may receive from an insurer in respect of our mineral products, after deducting certain expenses related to certain costs to our company of the extraction, preparation and sale of
our mineral products. The smelter royalty shall be paid to Mr. Modesto Rivas Beltran on a quarterly basis within 45 days of the end of each fiscal quarter.

Location and Access

The Gavilanes Property is located approximately 70 km east of Culiacan, near the hamlet of Chiqueritos and can
be reached by small fixed wing aircraft or a five-hour drive from Culiacan via Tamazula. Less than 100 people reside in Chiqueritos. In the map below, the area subject to our Option is identified as Los Gavilanes, an area directly south of
Chiqueritos village. Reconnaissance mapping and sampling was completed over an area of about 5 square kilometers from the area near the airport, about 2.5 kilometers northwest of Chiqueritos, to the San Andres area in the south.



16



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We carried out road building for roads to access possible drill platforms in the spring of 2005 and late 2006. These
roads have provided access to many rock exposures on both the northern and southern flanks of the Gavilanes ridge. To date, we have completed approximately 7.9 kilometers of roadway.

Location of Gavilanes Property

LOGO

Geology

The area
near the Gavilanes Property is underlain by a metasedimentary sequence of possible early Mesozoic age rocks consisting of schists, shales, phyllites, quartzites and meta-arkoses that reach low-grade greenschist metamorphism.

The sequence is intruded by fine-grained dacite porphyries with variable amounts of biotite and/or hornblende and/or magnetite with different porphyritic textures.
Various porphyry intrusions may be present, or possibly one intrusive with many local variations. Hydrothermal alterations and surface weathering are often intense and pervasive, so it is difficult at this stage to separate and map the various
intrusions or different phases. At one location in the San Andres area, an unaltered porphyry was found. A hornblende concentrate separated from this porphyry was dated by the potassium-argon (K-Ar) age method and gave an age of 62.5 million
years (early Paleocene). Porphyry intrusions are exposed over an area of two km in a north-south direction and about one km in an east-west direction. To the east and south they are covered by post-mineral volcanics. A weakly mineralized and weakly
altered hydrothermal system was dated as a whole rock specimen and gave an age of 42.3 million years (mid-Eocene).

An unbrecciated
contact of dacite porphyry with various types of metasediments is exposed in the creek west of Chiqueritos village. This contact is diffuse and consists of a hybrid zone with assimilated sediments and contaminated intrusives, suggesting a slow
process of emplacement.

Strike and dip of metasediments to the northeast, north and west and in upper reaches of Arroyo del Oso in the south suggest a
doming effect caused by the dacite porphyry complex.

An equigranular medium-grained granodiorite is exposed along the road between the airport and
Chiqueritos. This is probably part of a batholith exposed further west. It is unmineralized and intrudes the metasediments. A K-Ar age determination of hornblendes separated from granodiorite resulted in an age of 81.2 million years (upper
Cretaceous).

Many post-mineral felsic and mafic dikes cut the area. Their widths vary between 30 cm to 9 meters and are mostly steeply dipping. At various
places, they can be followed over a distance of more than 1,000 meters.



17



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The youngest rocks are Miocene volcanics covering the area to the east and south. They are flat-lying and cover the
mountains above the 1,200 to 1,300 meter elevation. Part of the prospect may have oxidized prior to the deposition of the volcanic sequence. Oxidized and mineralized porphyries are therefore anticipated to exist below the volcanics to the east.
Gavilanes ridge is undergoing, at present, a second stage of oxidation superimposed on an earlier oxidation stage.

Exploration Program 
Gavilanes Property

The exploration program for our Gavilanes Property will evaluate the mineral potential of mine waste from historic mining
operations, together with surface and near-surface mineralization, as well as deep mineralization.

Phase I: We conducted a due diligence phase, evaluating
all the pertinent data in Culiacan, followed by a field visit in 2006. This Phase took about six days to complete and improved our existing information regarding the geology, alteration and gold/silver/molybdenum distribution at the Gavilanes
Property. Phase I helped to identify and mark various drill hole locations and plan the initial drilling phase. The total cost for Phase I was $20,000

Phase II: In 2006, Phase II consisted of trenching and access road building over 3.5 kilometers on the north end of the property to expose a newly discovered gold-bearing hydrothermal breccia (called San José) near the headwaters of
Las Cuevas Creek. The terrain is extremely steep and progress was slow in the narrow canyon.

The breccia is about 150 meters wide in a northwest to
southeast direction and over 750 meters long in a northeast to southwest direction. A total of 83 trench and road cut samples were taken with mixed results, including erratic gold values up to 0.4 parts per million. The matrix is very gossanous
after massive sulphides, probably pyrite. The breccia fragments consist of either metasediments or porphyries, or a mixture of both. Part of the breccia is well silicified. Gold assay results of the San Jose breccia received in 2007 are weakly
anomalous ranging between 0.01 and 0.13 parts per million, averaging 0.045 parts per million. The gold average of all 83 samples taken is 0.077 parts per million.

At this stage it is not clear if the San José breccia constitutes a drilling target.

In 2007, Phase II consisted of preparation of seven
additional drill pads and approximately 1.9 miles (3 kilometers) on or around Gavilanes Ridge. The total cost for exploration in 2007 was $50,045.

The
next phase (which will proceed when funding is available) will include, together with necessary permitting, a drilling program of seven holes for a total of approximately 2,000 meters. The estimated cost would be $373,000 and should take three to
four months to complete.

Estimated 2008 Gavilanes Property Exploration Budget



|                                            |  |                |        
|------------------------------------------- |  | -------------- | -------
|Phase III                                   |  | Estimated Cost
|Drilling                                    |  | $              | 269,500
|Transportation                              |  |                | 21,000 
|Lodging and Food                            |  |                | 7,500  
|Professional Fees and Labour                |  |                | 19,000 
|Contingency                                 |  |                | 10,000 
|Property Payment plus Value Added Tax (VAT) |  |                | 46,000 
|                                            |  |                |        
|Phase III Total                             |  | $              | 373,000
|                                            |  |                |        

Lake Iliamna Property, Alaska

By mineral staking in March 2004, we acquired a 100% interest in twenty-five mineral claims located in the State of Alaska, approximately 7.5 miles northwest of Lake Iliamna which is 215 miles south-west of Anchorage,
Alaska. During November 2006, we allowed our interest in the Alaska property to lapse and we have no ongoing interest in that property.

Subsidiaries

On August 17, 2006 we completed our acquisition of all of the issued and outstanding common stock of Aurelio Resources, Inc., a privately-owned
Colorado corporation engaged in mineral exploration, pursuant to an agreement we entered into with ARI and its shareholders dated April 27, 2006, as amended on June 9, 2006 and further amended July 13, 2006 and on July 21, 2006.
As a result of the share purchase transaction, ARI is now a wholly-owned subsidiary of our company and we indirectly acquired all of its assets. In particular, we acquired properties in southeastern Arizona, now held through our wholly-owned
subsidiary Bolsa Resources, Inc., an Arizona corporation. We also own 98% of the issued and outstanding common shares of Minera Milenium, a Mexican incorporated company which holds an option to earn a 100% interest in 3 mining claims/concessions in
Durango, Mexico, known as the Gavilanes Property.



18



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|ITEM 3 | LEGAL PROCEEDINGS
|------ | -----------------

We are not currently a party to any legal
proceedings that have been or are currently being undertaken for or against us, and we are not aware of any being contemplated.



|ITEM 4 | SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------ | ----------------------------------------------------

There were no
matters submitted to a vote of security holders during the fourth quarter of 2007.

PART II



|ITEM 5 | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------ | --------------------------------------------------------

Market
Information

Our shares are currently trading on the OTC Bulletin Board under the symbol AULO. Our shares commenced trading on the OTC Bulletin Board on
November 16, 2004 under the symbol FURR. On June 16, 2006, we changed our name to Aurelio Resource Corporation and affected a six and one-half for one (6.5:1) forward stock split resulting in the new symbol.

The high and the low bid prices for our common shares reported for the OTC Bulletin Board for each of the quarters during the year ended May 31, 2006, for the two
quarters and the month of December in the seven months ended December 31, 2006 and the year ended December 31, 2007 are set forth in the table below.



|          |  |                            |  |      |      |     |   |     
|--------- |  | -------------------------- |  | ---- | ---- | --- | - | ----
|          |  |                            |  | High |      | Low
|2005      |  | June to August             |  | $    | 0.06 |     | $ | 0.06
|          |  | September to November      |  |      | 0.06 |     |   | 0.06
|2005/2006 |  | December to February       |  |      | 0.06 |     |   | 0.06
|2006      |  | March to May               |  |      | 0.06 |     |   | 0.06
|          |  | June to August             |  |      | 1.01 |     |   | 0.06
|          |  | September to November      |  |      | 1.25 |     |   | 0.73
|          |  | December                   |  |      | 0.94 |     |   | 0.75
|2007      |  | January through March      |  |      | 1.43 |     |   | 0.70
|          |  | April through June         |  |      | 1.75 |     |   | 0.85
|          |  | July through August        |  |      | 1.29 |     |   | 0.76
|          |  | September through December |  |      | 0.82 |     |   | 0.26

These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not
represent actual transactions.

Holders of our Common Stock

As of March 21, 2008, there were 53 shareholders of record of our common stock.

Dividends

Since our inception, we have not declared nor paid any cash dividends on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future.
Our current policy is to retain any earnings in order to finance the expansion of our operations. Our board of directors will determine future declarations and payments of dividends, if any, in light of the then-current conditions they deem relevant
and in accordance with applicable corporate law.

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring
dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:



| | 1. | We would not be able to pay our debts as they become due in the usual course of business; or
| | -- | --------------------------------------------------------------------------------------------



| | 2. | Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior
to those receiving the distribution.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Equity Compensation Plan Information

On September 15, 2006, the directors adopted the 2006 Stock Option Plan (the Option Plan) and reserved two million eight hundred thousand
(2,800,000) common shares to be made available for grant. On December 6, 2007, the board of directors amended the Plan by increasing the total shares reserved under the Plan to three million two hundred thousand (3,200,000) common
shares available for grant. The Option Plan is administered by the Compensation Committee of the board of directors. The shareholders ratified and approved the adoption of the Option Plan at the Annual General Meeting of Stockholders held on
May 18, 2007.



19



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The board of directors adopted the 2006 Incentive Stock Compensation Plan (the Compensation Plan) on
October 12, 2006 and reserved two million two hundred thousand (2,200,000) common shares to be made available for grant. On December 6, 2007, the Compensation Plan was amended by increasing the total shares reserved under the
Compensation Plan to three million two hundred thousand (3,200,000) common shares. The Compensation Plan is administered by the board of directors.



|                                                           |  |                                                                                           |  |                                                                              |      |                                                                                                                                         |          
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------- | ---- | --------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Plan Category                                              |  | No. of securities to be issuedupon exercise of outstandingoptions, warrants and
rights(a) |  | Weighted- averageexercise price ofoutstanding options,warrants and rights(b) |      | No. of securities remainingavailable for future issuanceunder equity compensationplans
(excluding securitiesreflected in column (a)(c))
|Equity compensation plans approved by security holders     |  | 2,175,000                                                                                 |  | $                                                                            | 1.01 |                                                                                                                                         | 875,000  
|Equity compensation plans not approved by security holders |  | 254,100                                                                                   |  | $                                                                            | 0.97 |                                                                                                                                         | 2,945,900

Recent Sales of Unregistered Securities

On September 12, 2007, we issued 30,000 common shares at a deemed price of $1.05/share in consideration for strategic planning and consulting services to one accredited investor pursuant to exemptions from
registration as set out in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

On October 11, 2007 we issued
150,000 common shares at a deemed price of $0.63/share in consideration for investor relations and marketing service to one accredited investor pursuant to exemptions from registration as set out in Rule 506 of Regulation D and/or Section 4(2)
of the Securities Act of 1933, as amended.

On October 29, 2007 and December 26, 2007, we issued a total of 150,000 common shares to an
officer/director and an officer at an exercise price of $0.79/share upon the exercise of stock options issued under the Option Plan.

On December 13,
2007, we issued 150,000 common shares at a deemed price of $0.60/share in consideration for investor relations services to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction
relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended.



|ITEM 6 | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
|------ | ----------------------------------------------------------

You should read the following discussion of our financial condition and results of operations together with our audited financial statements and the related notes for the year ended December 31, 2007 which appear elsewhere in this
annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in Item 1  Description of Business  Risk Factors of this annual report.

Overview

We were incorporated in the State of Nevada on
February 19, 2004 under the name Furio Resources, Inc. We are an exploration stage company engaged in the exploration of mineral properties and we may also, from time to time, acquire additional mineral properties to explore. We have focused
our efforts since incorporation acquiring mineral properties and carrying out exploration activities on those mineral properties.

We changed our name to
Aurelio Resource Corporation effective June 16, 2006 and implemented a six and one-half (6.5) for one (1) forward stock split of our authorized, issued and outstanding common stock. As a result, our authorized capital has increased
from 75,000,000 shares of common stock with a par value of $0.001 to 487,500,000 shares of common stock with a par value of $0.001.

On August 17,
2006 we completed our acquisition of all of the issued and outstanding common stock of Aurelio Resources, Inc., a privately-owned Colorado corporation engaged in mineral exploration, pursuant to an agreement we entered into with Aurelio Resources,
Inc. (ARI) and its shareholders dated April 27, 2006, as amended on June 9, 2006 and further amended on July 13, 2006 and on July 21, 2006. As a result of our acquisition of ARI, we indirectly acquired all of its
assets. In particular, we acquired unpatented mining claims in Arizona (which form the basis of the property we now refer to as our Hill Copper-Zinc Project) and held through our wholly-owned subsidiary Bolsa Resources, Inc. (Bolsa), and
a 98% interest in Minera Milenium S.A. de C.V. (Minera Milenium), a company incorporated in Mexico which holds an option to acquire a 100% interest in the Gavilanes Property.



20



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We continue to focus our efforts on the acquisition and exploration of mineral properties. To date, we have not
discovered an economically viable mineral deposit on the mineral claims, and there is no assurance that we will discover one. A great deal of further exploration will be required before a final evaluation as to the economic and legal feasibility for
our future development is determined.

We have no revenues, have experienced losses since inception, have no operations, have been issued a going concern
opinion by our auditors and rely upon the sale of our securities to fund operations.

Change of Year-end

The Company changed its year-end from May 31 to December 31 on September 28, 2006. For the year prior to May 31, 2006 and up to the acquisition of ARI
in August 2006, the Company had essentially been dormant. As a result of the change in year-end and given the lack of materiality of the prior periods compared to the current operations and the lack of seasonality in the Companys business, the
quarters in the current year have been compared with the most relevant period from the reported quarters in prior periods as follows:



|   |  |                       |  |                     
|-- |  | --------------------- |  | --------------------
|   |  | For the period ending |  | Comparative period  
|   |  |                      
|Q1 |  | March 31, 2007        |  | February 28, 2006   
|   |  |                      
|Q2 |  | June 30, 2007         |  | May 31, 2006        
|   |  |                      
|Q3 |  | September 30, 2007    |  | August 31, 2006     
|   |  |                      
|Q4 |  | December 31, 2007     |  | December 31, 2006(1)



|(1) | Four months and seven months, respectively, when compared with the quarter and year ended December 31, 2007.
|--- | ------------------------------------------------------------------------------------------------------------

Plan of Operations

Our plan of operations for the next twelve months
involves the implementation of phased exploration programs and additional property acquisitions for our Hill Copper-Zinc Project in Arizona and, subject to available funding, also on our Gavilanes Property in Mexico. We will undertake these
operations with our existing management and field personnel and will contract for additional labor on a project basis as required. We do not anticipate any major purchases or sales of plant and equipment as we intend to sub-contract the drilling
programs and outsource the assaying, resource estimation, engineering and metallurgical studies.

We wish to complete the following objectives within the
time periods specified, subject to our obtaining the funding necessary for the continued exploration of our mineral properties:

Hill Copper-Zinc
Project, Arizona

During 2008, we plan to continue to selectively acquire additional land adjoining our Hill Copper-Zinc Project through negotiations
with private landholders.

We anticipate that the next phase of the work program at the Project will cost approximately $0.6 million over the next six
months and approximately $1.4 million over the next twelve months, for exploration, engineering, environmental and metallurgical studies, property payments and land acquisition. These costs, however, do not include any drilling at the project and,
if we are to commence a drilling program within six months this would add at least another $0.75 million to the above total over this period. Within the next year, we would expect total costs at the project level to increase to approximately $4.5
million (including the above) if we have the funds available and are able to do the additional drilling and subsequent metallurgical and engineering work to maintain the momentum on the project that is warranted by our successes to date.

We will need to raise additional funds in order to conduct these exploration programs and for the land acquisitions.

The planned six month exploration program will include detailed metallurgical test-work by an independent engineering firm on the chalcocite blanket and oxide- and
sulfide-mineralized zones of the Project. The Company will also continue to re-log, re-sample and re-assay the historic drill core from prior exploration programs, acquired during 2007. Upon completion of these phases of work, we plan to prepare
resource estimates by an independent engineering firm (in accordance with Canadas National Instrument 43-101) for the Courtland, South Courtland and MAN areas of the Project.

The Company has filed and received approval for a Plan of Operations for additional drilling on the MAN area mining claims, which are administered by the Bureau of Land Management. Based on availability of funds and
equipment, the Company plans on drilling up to 40,000 feet of core, a portion of which would be drilled exclusively for metallurgical test-work (column tests and flow sheet design); the majority of the proposed drilling would be to test additional
exploration targets with the goal of increasing the MAN area resource.



21



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We anticipate that this drill program will cost approximately $3.3 million and take most of the twelve months to
complete. We have also prepared a budget for additional diamond drilling in the South Courtland and Courtland area as part of the twelve month program, as well as for preliminary scoping and pre-feasibility studies, which will all proceed subject to
available funding.

Gavilanes Property

We plan to make
the option payments due in 2008 in order to keep the Gavilanes option in good standing. These two payments will total $40,000. We may need to raise additional funds in order to make these option payments.

Our planned six month exploration program includes 7,000 feet of diamond drilling to test the seven best targets identified to date on the Gavilanes Property. Based on
our review of all the pertinent data available on the property, we are pursuing our goal of identifying a bulk mineable, open pittable deposit at Gavilanes. The budget for this drill program is approximately $327,000 (not including land costs) and
we expect that to be completed well within the six months. If this program shows the expected results, we will then undertake a larger program of up to 15,000 feet of diamond drilling on the property, which is budgeted to cost approximately $600,000
and, as long as funding is available, we would anticipate completing this within the next twelve months.

General Operating Expenses

We anticipate spending approximately $115,000 in ongoing general and administrative expenses per month for the next six months, while our total general and administrative
expense over the whole of the next twelve months is expected to total approximately $1.4 million. In addition, we plan to make property payments on new and existing property agreements of approximately $0.6 million over the six months and
approximately $1.4 million over the next twelve months, and some of these payments will be expensed. We plan to spend approximately $0.6 million for exploration and engineering studies over the next six months and approximately $4.8 million for
exploration programs (which includes the drilling program at the Hill Copper-Zinc Project discussed above), land payments and property acquisitions and engineering studies during the twelve months. The general and administrative expenses for the
year will consist primarily of professional fees for the our management and field personnel, accounting and reporting expenses, audit and legal work relating to our regulatory filings, as well as transfer agent fees, promotion and investor relations
activities and the costs of maintaining our executive office in Littleton, Colorado and our field offices in Arizona and in Culiacan, Mexico.

The
following discussion should be read in conjunction with the consolidated financial statements accompanying this Form 10-KSB. At December 31, 2007, we had cash on hand of $268,410 and a working capital deficit of $(881,903). In February 2008 we
did raise $2.5 million in two separate financings, but our cash and working capital will not be sufficient to enable us to pay for the costs of our exploration and general and administrative expenses. We will have to raise additional capital in
order to pay for our exploration and anticipated general and administrative expenses. Our ability to complete the next phases of our recommended work programs will be subject to us obtaining additional financing as these expenditures will exceed our
cash reserves.

During the next twelve-month period, we anticipate that we will not generate any revenue. Accordingly, we will be required to obtain
additional financing in order to continue our plan of operations. Although we have just concluded a convertible debt financing, we believe that debt financing will not be an alternative for funding additional phases of exploration as we do not have
tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any
assurance that we will be able to raise sufficient funding from the sale of our common stock to fund the next phase of our exploration program. In the absence of such financing, we will not be able to continue exploration of our mineral claims and
our business plan might not succeed. Even if we are successful in obtaining equity financing to fund the next phase of our exploration program, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of our
mineral claims following the completion of the work program. If we do not continue to obtain additional financing, we will be forced to abandon our mineral claims and our plan of operations.

We may consider entering into a joint venture arrangement to provide the required funding to develop the mineral claims. We have not undertaken any efforts to locate a
joint venture partner for the mineral claims. Even if we determined to pursue a joint venture partner, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of our mineral claims.
If we entered into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral claims to the joint venture partner.



22



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Cash Requirements

For the next 12 months we plan to continue to explore for base metals on our Hill Copper-Zinc Project in Arizona, and to explore for precious metals on our Gavilanes Property in Mexico. Our budget for the next six months is approximately
$2.0 million and for the full 12 months (which includes the anticipated drilling programs and additional property payments) our budget is approximately $6.0 million.

We will require additional funds to implement our exploration and development programs. These funds will need to be raised through equity financing, although debt financing or other sources may be available, which may
result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may
continue to be unprofitable. We need to raise additional funds in the immediate future in order to proceed with our exploration program.

In order to
proceed with our plans, we plan to raise additional funds by way of private placements of equity securities in our company.

Results of Operations

We have had no operating revenues since our inception on February 19, 2004, through December 31, 2007.

Following the acquisition of ARI we have focused most of our attention during the seven months ended December 31, 2006 and the year ended December 31, 2007 on
the Hill Copper-Zinc Project in Arizona. There we have expanded our property position with the acquisition of patented and unpatented mining claims, with purchase, lease and option agreements on additional property (mining claims and surface rights)
such that we now hold the following: 45 patented claims on approximately 787 acres; 119 unpatented mining claims on 1647 acres; surface rights to 1822 acres; six Arizona State mineral exploration permits on approximately 1571 acres. We acquired a
data base that includes assay results from 274 holes drilled from the 1950s to the mid-1990s and were able to develop preliminary in-house copper resource estimates. We also acquired 76,780 feet of drill core from 95 holes that had been assayed for
copper, and is to be re-assayed for gold, silver, lead and zinc in order to add to the companys exploration database. An independent review of its in-house estimate of the mineralized material of the MAN area was completed which estimated
in-place mineralized material in the MAN area is 63,757,000 tons grading 0.43% copper and 0.15% zinc, plus gold, silver and lead credits).

Also, during
2007, Aurelio drilled a total of 44 holes, on the Arizona properties, totalling 21,489 feet to obtain core and reverse circulation samples. The total amount spent in 2007 for drilling was approximately $1,023,000. Aurelio at the Hill Copper-Zinc
Project now owns or has options to acquire a total of 45 patented claims, 119 unpatented claims, we have six Arizona State mineral exploration permits, and control approximately 5,041 acres of land in Arizona. We intend to explore our Arizona
properties and hope to develop and exploit any mineral deposits we discover. Alternatively, we may in the future joint venture or sell an interest in or otherwise assign the rights to develop or exploit the properties.

Phase 1 drilling started in 2006. This work was confirmational in nature, attempting to verify the presence and grade of previously drilled mineralization by twinning
Newmont and Santa Fe holes. Five holes were drilled on the Courtland zone which was well-defined by previous drilling, and five more holes were drilled in the area between Courtland and MAN which had some scattered mineralized intervals. This
drilling confirmed previous drilling results by Newmont, Santa Fe, Bear Creek, Great Gray and MEXCO. In 2007, follow-up drilling was begun to outline an oxide resource in the South Courtland zone. The results of this phase of drilling were that the
Courtland mineralization was confirmed; and the other five holes began to show the presence of continuation of mineralization between the Courtland and MAN zones. This new target has since been named South Courtland.

Phase 2 drilling started in 2007. The primary objective of this phase was to pursue the oxide mineralization at South Courtland. A total of 29 holes were drilled in the
central part of the zone to expand on previous drilling. Most holes were extended into the sulphide mineralization in order to test the geological model for the zone. In addition, five confirmation holes were drilled in the MAN zone to confirm the
Santa Fe and MEXCO results.

The results of Phase 2 drilling show that the South Courtland zone consists of a thin (~125 feet) surface layer of oxidized
ledges leading down-dip into sulphide mineralization. At present, only about one third of the South Courtland zone has been drill-tested. Two of the holes were drilled between the South Courtland and MAN zones and those intercepts suggest possible
continuity of the two zones. Drilling shows that there is significant zinc mineralization in some areas that are distinct from the copper mineralization. Further work will address the significance and economics of this mineralization.

The drill holes that Bolsa competed during 2007 on the MAN zone were successful in duplicating previous drilling and confirmed the presence of a thick chalcocite blanket
overlying high-grade sulphide mineralization including copper, zinc, silver, and gold, with scattered lead values. Samples are currently being submitted for leachability analysis, after which a metallurgical scoping study will be carried out.



23



---

Our loss for the year ended December 31, 2007 was $3,379,987, and this included the expensing of all our exploration
programs and overhead costs, including some non-cash compensation expense under the Stock Compensation Plan and for stock options issued to our directors and officers who worked for many months during the year without cash compensation. This loss
compared with a loss of $957,221 in the seven months ended December 31, 2006. Our cash used in operations, which was primarily focused on exploring the Hill Copper-Zinc Project, was $1,712,837 for the year ended December 31, 2007, which
compared with cash used in operations of $851,290 during the seven months ended December 31, 2006. We used $170,102 in the year ended December 31, 2007 for investing activities, and this compares with $285,130 used during the seven months
ended December 31, 2006 for the deposit and the purchase of the Courtland area patented mining claims and for some fixed asset purchases.

Liquidity and Capital Resources

At December 31, 2007, we had cash on hand of $268,410 and a working capital deficit of $(881,903),
compared with cash of $464,521 and working capital of $350,463 at December 31, 2006.

While we raised $2.5 million in February 2008 in two separate
financings, we anticipate that our cash and working capital will only be sufficient to enable us to pay for the costs of a limited exploration programs and general and administrative expenses for approximately the next three months. Accordingly, our
ability to complete our ongoing exploration activities and the next phase of our recommended work programs will be subject to us obtaining additional financing as these expenditures will exceed our cash reserves.

During the next twelve-month period, we anticipate that we will not generate any revenue. Therefore, we must obtain additional financing in order to continue our plan of
operations. While one of our recent financings was a convertible debt offering, we believe that debt financing will not be an alternative for funding additional phases of exploration as we do not have tangible assets to secure any debt financing. We
anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient
funding from the sale of our common stock to fund the next phase of our exploration program. In the absence of such financing, we will not be able to continue exploration of our mineral claims and our business plan will fail. Even if we are
successful in obtaining equity financing to fund the next phase of our exploration programs, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of our mineral claims following the completion of the
work program. If we do not continue to obtain additional financing, we will be forced to abandon our mineral claims and our plan of operations.

We may
consider entering into a joint venture arrangement to provide the required funding to develop our patented and unpatented mineral claims. We have not undertaken any efforts to locate a joint venture partner for this to date. Even if we determined to
pursue a joint venture partner, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of our properties. If we entered into a joint venture arrangement, we would likely have to
assign a percentage of our interest in our properties to the joint venture partner. Our requirements for additional financing are discussed in further detail above under the heading Plan of Operation.

Cash used in operating activities was $1,712,837 for the year ended December 31, 2007 ($851,290 for the seven months ended December 31, 2006), which reflects
the costs of our operations for the period. The difference in the amount of cash used in the periods reflects the active exploration program we initiated in September 2006 on the Hill Copper-Zinc Project in Arizona and which proceeded for a full
year during 2007.

We have funded our business to date from sales of our common stock. Gross cash proceeds from the sale of our common shares during the
period from inception, on February 19, 2004, through December 31, 2007, totaled $2,991,669 (after adjustments when we acquired ARI), with $1,328,655 of that coming from the private placement we closed in June 2007.

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuance of additional shares will result in
dilution to our existing shareholders. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of
operations, then we will not be able to continue our exploration of our properties.

Subsequent Events

On January 25, 2008, David Stafford Johnson, Esq. was appointed Executive Chairman of the Company, replacing Dr. Frederik W. Warnaars. Dr. Warnaars,
one of the Companys founders, has stepped down as Chairman, but remains a Director.

On January 25, 2008, the Board cancelled unexercisable and
unvested stock options held by directors (which would have vested over the next 18 months) to acquire 1,000,000 shares at an average price of $1.08/share.

On February 15, 2008, the Company entered into and closed a $1,000,000 equity financing agreement with European institutional investors. In this financing the Company issued 3,333,334 units, with each Unit equal to one common share and
one-half warrant; each warrant entitles the holder to purchase 1,666,667 additional common shares at $0.50 per share at any time up to February 15, 2013.



24



---

The Company also closed a $1.5 million convertible debenture financing with three U.S.-based institutional investors on
February 26, 2008. At the option of the Company, the debentures can be redeemed for cash or exchanged for common shares at a floor price of $0.30 per share. The investors will also receive 3,750,000 Series A Warrants, priced at $0.35 per share
that can be exercised in six months after closing and have a term of five years to February 26, 2013, and the 4,999,997 Series B warrants are immediately exercisable at $0.35 per share and have a term of eighteen months to August 26, 2009.

On March 26, 2008, the Company announced that Bolsa had entered into an agreement to acquire 20 patented mining claims (the Viewsites
claims) in the Turquoise Mining District of Cochise County, Arizona. The Viewsites claims are located to the west and southwest of the MAN Area that is part of the Hill Copper-Zinc Project. These claims encompass an estimated 363 acres (survey
pending) and incorporate projected extensions of the MAN Area mineralization. Bolsa will acquire the Viewsites claims with staged payments totaling $950,000 over thirty months. Closing is scheduled to occur by August 1, 2008 following
completion of a detailed survey of the 20 patented mining claims.

Contractual Obligations, Contingent Liabilities and Commitments



|                                                |  |       |           |                 |   |             |  |             |         |                  |   |         |  |   |        
|----------------------------------------------- |  | ----- | --------- | --------------- | - | ----------- |  | ----------- | ------- | ---------------- | - | ------- |  | - | -------
|Contractual Obligations as of December 31, 2007 |  | Total |           | Less then1 year |   | 1 to 3Years |  | 3 to 5years |         | More than5 years
|Long-term debt(1)                               |  | $     | 17,909    |                 | $ | 9,819       |  | $           | 8,090   |                  | $ |        |  | $ |       
|Note payable  Courtland Claims(2)              |  |       |           |                 |   |             |  |             |         |                  |   |         |  |   |        
|Interest                                        |  |       | 156,750   |                 |   | 57,000      |  |             | 99,750  |                  |   |        |  |   |       
|Principal                                       |  |       | 950,000   |                 |   |            |  |             | 950,000 |                  |   |        |  |   |       
|Unpatented Claims  annual renewal fees(3)      |  |       | 74,375    |                 |   | 14,875      |  |             | 29,750  |                  |   | 29,750  |  |   |       
|Gavilanes option payments(4)                    |  |       | 455,000   |                 |   | 40,000      |  |             | 110,000 |                  |   | 305,000 |  |   |       
|Newmont Claims payments(5)                      |  |       | 25,000    |                 |   | 25,000      |  |             |        |                  |   |        |  |   |       
|Gold Coin payments(6)                           |  |       | 1,480,000 |                 |   | 55,000      |  |             | 225,000 |                  |   | 300,000 |  |   | 900,000
|Rae Family payments(7)                          |  |       | 1,250,000 |                 |   | 470,000     |  |             | 780,000 |                  |   |        |  |   |       
|Graham payments(8)                              |  |       | 100,000   |                 |   |            |  |             | 100,000 |                  |   |        |  |   |       
|Lease of Littleton, CO office(9)                |  |       | 12,348    |                 |   | 12,348      |  |             |        |                  |   |        |  |   |       
|Lease of Sun Sites, AZ office(10)               |  |       | 500       |                 |   | 500         |  |             |        |                  |   |        |  |   |       
|Lease of Elfrida, AZ field office(11)           |  |       | 211,500   |                 |   | 14,100      |  |             | 28,200  |                  |   | 28,200  |  |   | 141,000
|Lease of Arizona storage space(12)              |  |       | 2,052     |                 |   | 2.052       |  |             |        |                  |   |        |  |   |       
|Lease of Culiacan, MX office(13)                |  |       | 1,400     |                 |   | 1,400       |  |             |        |                  |   |        |  |   |       



|(1) | The long-term debt was to finance the purchase of office equipment and is a 36-month note payable under a business installment loan from JPMorgan Chase Bank, NA. The interest rate
is 12.25% simple interest and the loan is cash collateralized.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The purchase of the 30 patented Courtland Claims (which form part of the Hill Copper-Zinc Project) from Hope Mining and Milling Company was closed on September 15, 2006 with
the payment of the deposit of $250,000. In addition to the acquisition price, the seller is entitled to receive a net smelter return royalty, up to a cumulative total of $3 million, of 3% for precious metals, and 1.5% for base metals produced from
the property. At any time prior to the commencement of commercial production, we can buy this royalty for $2 million.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | For each of our 119 unpatented mining claims on the Hill Copper-Zinc Project there is an annual renewal fee of $125 per claim payable to the Bureau of Land Management, an agency of
the U.S. Department of the Interior. These claim fees are payable annually, as long as we are actively exploring on this land.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | In addition to the total of the option payments for the purchase price of the three mining claims (covering approximately 1,000 hectares) making up the Gavilanes property, the
property is subject to a 3% net smelter return royalty in favor of Mr. Modesto Rivas Beltran of Culiacan, Sinaloa, Mexico.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | A purchase agreement was entered into March 27, 2007 with Newmont Realty Company to purchase 2 patented claims, the Banner (100%) and the Australia (50%). The terms of the
agreement include the payment of $25,000 upon execution of the agreement, and $25,000 six, nine and twelve months after the effective date. In 2007, a total of $75,000 was paid to Newmont. The twelve month payment remains due on March 27, 2008.
A net smelter return royalty on mineral production of the Property equal to one percent (1%) of Net Smelter Returns from the disposition of all mineral produced.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | A lease with option to purchase agreement for 65 unpatented claims and three Arizona Mineral Exploration Permits was entered into on April 15, 2007 for $1,500,000. The terms of
the agreement were a $20,000 payment upon execution of the agreement, plus $55,000 on April 15, 2008, a $75,000 payment on April 15, 2009, and $150,000 annually thereafter, until payment is complete, which is to be on or before
April 15, 2018.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



25



---

|(7) | The purchase price for the 13 patented claims and surface rights on the Rae property is $1,300,000 payable as follows: $10,000 primary earnest money payment and $40,000 for a
secondary earnest money payment, with both payments made in 2007. Upon acceptance of a satisfactory survey on the property, Bolsa is to pay $210,000 plus a $1,040,000 promissory note that provides for four semi-annual payments of principal, each
$260,000, together with semi-annual payments of interest on the unpaid balance of the promissory note, the first semi-annual payment due six months following date of closing and subsequent payments each six months
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) | A purchase options agreement for 531 Courtland and Center Courtland Townsite Lots was effective September 24, 2007 and the $25,000 earnest and option payment was paid in 2007,
with a further $100,000 due on exercise of the option during the year following January 31, 2010.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) | Lease of the Littleton, Colorado office for $2,058 per month, including utilities, with a commitment through June 2008.
|--- | -----------------------------------------------------------------------------------------------------------------------



|(10) | Lease of an office in Sun Sites, Arizona for $500 per month with a commitment through January 2008.
|---- | ---------------------------------------------------------------------------------------------------



|(11) | Lease of a field office with housing in Elfrida, Arizona for $1175 per month, not including utilities, with a commitment for fifteen years to 2022, although Bolsa can acquire the
property at any time for the amount of the debt on the property ($140,079 at December 31, 2007).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(12) | Lease of storage space near our Arizona properties for $171 per month through 2008.
|---- | -----------------------------------------------------------------------------------



|(13) | Lease of office space in Culiacan, Sinaloa, Mexico for approximately $140 per month with a commitment through October 2008.
|---- | ---------------------------------------------------------------------------------------------------------------------------

Off-Balance Sheet Arrangements

We have no off-balance sheet
arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is
material to stockholders.

Related Party Transactions

During the year ended December 31, 2007 we maintained consulting contracts with our president, company officers, directors and their wholly-owned companies, through which they provided services to our company. During the year we paid
or accrued consulting fees in lieu of salaries to our president, company officers and directors of $433,890 in total (for the seven months ended December 31, 2006: $129,159). As cash was unavailable to pay consulting fees to directors and
officers during the last four months of 2007, the Company issued stock in January 2008 under the Stock Compensation Plan with a total value of $100,739 in payment of the consulting fees for this period. Fees charged for consulting services were in
the normal course of business and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

The Board decided in February 2007 to compensate directors for previous board, meeting and committee fees for fiscal 2006 totaling $230,000. These payments were made under the Companys Stock Compensation Plan. In January 2008, the
Company paid fees in stock to its directors for board, meeting and committee fees for the 2007 year totaling $399,000. These payments were accrued as directors fees for 2007 and were made under the Companys Stock Compensation Plan.

As of December 31, 2007 the Company owed a total of $561,103 to the related parties for consulting fees and expenses and for directors fees
(December 31, 2006: $15,319).

In November 2007, the Company entered into a lease and option agreement with a director and officer for a property in
Elfrida, Arizona. Bolsa is using the house for a field office and for temporary field accommodation and pays a market rent ($1,175/month) for the property. The Company also has an option to acquire the property for the amount of the mortgage debt
outstanding on the property ($140,079 at December 31, 2007).

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our 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 amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. The most significant policy we have implemented is to capitalize the cost of acquiring
patented mining claims and surface rights to properties, although costs for acquiring and maintaining unpatented mining claims are expensed as incurred. Our significant accounting policies are disclosed in Note 3 to the audited consolidated
financial statements included in this Annual Report on Form 10-KSB. These financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going
concern.



26



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|ITEM 7 | FINANCIAL STATEMENTS
|------ | --------------------

Our audited financial statements for year
ended December 31, 2007, are described below:



|(a) | Report of Independent Registered Public Accounting Firm
|--- | -------------------------------------------------------



|(b) | Consolidated Balance Sheets as at December 31, 2007 and 2006
|--- | ------------------------------------------------------------



|(c) | Consolidated Statements of Operations for the year ended December 31, 2007, the seven months ended December 31, 2006 and the period from inception (February 19, 2004) to
December 31, 2007
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(d) | Consolidated Statements of Stockholders Equity (Deficit) for the period from inception (February 19, 2004) to December 31, 2007
|--- | --------------------------------------------------------------------------------------------------------------------------------



|(e) | Consolidated Statements of Cash Flows for the year ended December 31, 2007, the seven months ended December 31, 2006 and the period from inception (February 19, 2004) to
December 31, 2007
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(f) | Notes to the Consolidated Financial Statements
|--- | ----------------------------------------------



27



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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Aurelio Resource Corporation

We have audited the accompanying consolidated balance sheets of Aurelio Resource Corporation (formerly Furio Resources, Inc.) as of December 31, 2007
and December 31, 2006, and the related consolidated statements of operations, stockholders equity and cash flows for the year ended December 31, 2007 and the seven months ended December 31, 2006 and for the period from inception
(February 19, 2004) to December 31, 2007. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements
of Aurelio Resource Corporation as of May 31, 2005 were audited by other auditors whose report dated July 19, 2005 on those statements included an explanatory paragraph describing conditions that raised substantial doubt about the
Companys ability to continue as a going concern.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Aurelio Resource Corporation as of December 31, 2007 and December 31, 2006 and the results of operations and cash flows for the year ended December 31, 2007 and the seven months ended December 31, 2006 and
for the period from inception (February 19, 2004) to December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company incurred a net loss of $3,379,987 for the year
ended December 31, 2007, and has an accumulated deficit of $4,449,263 at December 31, 2007. These factors, and others discussed in Note 3, raise substantial doubt about the Companys ability to continue as a going concern. The
financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.



|                                                 
|-------------------------------------------------
|/s/ Haynie & Company Littleton,
CO March 31, 2008



28



---

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS



|                                                 |  |               |            |   |               |   |            |  
|------------------------------------------------ |  | ------------- | ---------- | - | ------------- | - | ---------- | -
|                                                 |  | Dec. 31, 2007 |            |   | Dec. 31, 2006 |  
|ASSETS                                           |  |               |            |   |               |   |            |  
|Current assets                                   |  |               |            |   |               |   |            |  
|Cash                                             |  | $             | 268,410    |   |               | $ | 464,521    |  
|Advances                                         |  |               | 3,478      |   |               |   |           |  
|Security deposits                                |  |               | 4,765      |   |               |   | 2,255      |  
|Prepaid expenses                                 |  |               | 3,233      |   |               |   |           |  
|Reclamation bond - MAN claims drilling           |  |               | 36,714     |   |               |   |            |  
|Deposit for core drilling                        |  |               |           |   |               |   | 150,000    |  
|                                                 |  |               |            |   |               |   |            |  
|Total current assets                             |  |               | 316,600    |   |               |   | 616,776    |  
|                                                 |  |               |            |   |               |   |            |  
|Mining claims                                    |  |               | 1,353,614  |   |               |   | 1,203,614  |  
|Property and equipment, net                      |  |               | 62,570     |   |               |   | 55,489     |  
|                                                 |  |               |            |   |               |   |            |  
|                                                 |  |               | 1,416,184  |   |               |   | 1,259,103  |  
|                                                 |  |               |            |   |               |   |            |  
|Total Assets                                     |  | $             | 1,732,784  |   |               | $ | 1,875,879  |  
|                                                 |  |               |            |   |               |   |            |  
|LIABILITIES & STOCKHOLDERS EQUITY               |  |               |            |   |               |   |            |  
|Current liabilities                              |  |               |            |   |               |   |            |  
|Accounts payable                                 |  | $             | 373,745    |   |               | $ | 242,301    |  
|Accounts payable - related parties               |  |               | 561,103    |   |               |   | 15,319     |  
|Short term note payable                          |  |               | 253,836    |   |               |   |           |  
|Current portion of long - term debt              |  |               | 9,819      |   |               |   | 8,693      |  
|                                                 |  |               |            |   |               |   |            |  
|Total current liabilities                        |  |               | 1,198,503  |   |               |   | 266,313    |  
|                                                 |  |               |            |   |               |   |            |  
|Long - term debt                                 |  |               | 8,130      |   |               |   | 17,908     |  
|Note payable - Courtland Claims                  |  |               | 950,000    |   |               |   | 950,000    |  
|                                                 |  |               |            |   |               |   |            |  
|                                                 |  |               | 958,130    |   |               |   | 967,908    |  
|                                                 |  |               |            |   |               |   |            |  
|Total Liabilities                                |  |               | 2,156,633  |   |               |   | 1,234,221  |  
|                                                 |  |               |            |   |               |   |            |  
|Stockholders Equity                             |  |               |            |   |               |   |            |  
|Common stock, $.001 par value;                   |  |               |            |   |               |   |            |  
|487,500,000 shares authorized;                   |  |               |            |   |               |   |            |  
|34,647,155 issued and outstanding                |  |               | 34,648     |   |               |   | 32,437     |  
|Additional paid in capital                       |  |               | 3,994,021  |   |               |   | 1,680,077  |  
|Accumulated deficit during the exploration stage |  |               | (4,449,263 | ) |               |   | (1,069,276 | )
|Cumulative effect of currency translation        |  |               | (3,255     | ) |               |   | (1,580     | )
|                                                 |  |               |            |   |               |   |            |  
|Total Stockholders Equity                       |  |               | (423,849   | ) |               |   | 641,658    |  
|                                                 |  |               |            |   |               |   |            |  
|Total Liabilities and Stockholders Equity       |  | $             | 1,732,784  |   |               | $ | 1,875,879  |  
|                                                 |  |               |            |   |               |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



29



---

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|---------------------------------------------------- |  | ------------------------------- | ---------- | - | ------------------------------ | - | ---------- | -------------------------------------------- |  | - | ---------- | -
|                                                     |  | Twelve MonthsEndedDec. 31, 2007 |            |   | Seven MonthsEndedDec. 31, 2006 |   |            | Feb. 19, 2004(Inception)ThroughDec. 31,
2007 | 
|Revenue                                              |  | $                               |           |   |                                | $ |           |                                              |  | $ |           |  
|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Expenses:                                            |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Depreciation                                         |  |                                 | 13,021     |   |                                |   | 2,628      |                                              |  |   | 15,649     |  
|Directors fees                                      |  |                                 | 896,000    |   |                                |   |           |                                              |  |   | 896,000    |  
|General and administrative                           |  |                                 | 633,464    |   |                                |   | 308,553    |                                              |  |   | 945,457    |  
|Mineral property expenditures                        |  |                                 | 1,279,875  |   |                                |   | 459,835    |                                              |  |   | 1,789,834  |  
|Professional fees                                    |  |                                 | 549,454    |   |                                |   | 193,326    |                                              |  |   | 801,586    |  
|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|                                                     |  |                                 | 3,371,814  |   |                                |   | 964,342    |                                              |  |   | 4,448,526  |  
|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Loss from operations                                 |  |                                 | (3,371,814 | ) |                                |   | (964,342   | )                                            |  |   | (4,448,526 | )
|Other income (expense)                               |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Other income                                         |  |                                 | 50,395     |   |                                |   |           |                                              |  |   | 50,395     |  
|Interest income                                      |  |                                 | 8,688      |   |                                |   | 8,154      |                                              |  |   | 17,157     |  
|Interest expense                                     |  |                                 | (67,256    | ) |                                |   | (1,033     | )                                            |  |   | (68,289    | )
|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Income (loss) before provision for income tax        |  |                                 | (3,379,987 | ) |                                |   | (957,221   | )                                            |  |   | (4,449,263 | )
|Provision for income tax                             |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Net income (loss)                                    |  |                                 | (3,379,987 | ) |                                |   | (957,221   | )                                            |  |   | (4,449,263 | )
|Other comprehensive income (loss) - net of tax       |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Foreign currency translation gains (losses)          |  |                                 | (1,675     | ) |                                |   | (1,580     | )                                            |  |   | (3,255     | )
|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Comprehensive income (loss)                          |  | $                               | (3,381,662 | ) |                                | $ | (958,801   | )                                            |  | $ | (4,452,518 | )
|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Net income (loss) per share                          |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|(Basic and fully diluted)                            |  | $                               | (0.10      | ) |                                | $ | (0.03      | )                                            |  |   |            |  
|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  
|Weighted average number of common shares outstanding |  |                                 | 33,572,482 |   |                                |   | 31,260,355 |                                              |  |   |            |  
|                                                     |  |                                 |            |   |                                |   |            |                                              |  |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



30



---

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY (DEFICIT)



|                                                                |        |              |   |        |                          |         |   |                                         |   |           |                                       |  |   |                                   |   |  |   |        |   |  |   |           |  
|--------------------------------------------------------------- | ------ | ------------ | - | ------ | ------------------------ | ------- | - | --------------------------------------- | - | --------- | ------------------------------------- |  | - | --------------------------------- | - |  | - | ------ | - |  | - | --------- | -
|                                                                |        | Common Stock |   |        | AdditionalPaid-inCapital |         |   | DeficitAccumulateDuringExplorationStage |   |           | CumulativeEffectofCurrencyTranslation |  |   | TotalStockholdersEquity(Deficit) |  
|                                                                | Shares |              |   | Amount |                          |         |   |                                         |  
|Balance, February 19, 2004 (date of inception)                  |        |             |   |        | $                        |        |   |                                         | $ |          |                                       |  | $ |                                  |   |  | $ |       |   |  | $ |          |  
|Common stock issued for cash at $0.002 per share, March 2004    |        | 13,000,000   |   |        |                          | 13,000  |   |                                         |   | 7,000     |                                       |  |   |                                  |   |  |   |       |   |  |   | 20,000    |  
|Common stock issued for cash at $0.004 per share, April 2004    |        | 18,200,000   |   |        |                          | 18,200  |   |                                         |   | 51,800    |                                       |  |   |                                  |   |  |   |       |   |  |   | 70,000    |  
|Common stock issued for cash at $0.03 per share, May 2004       |        | 201,500      |   |        |                          | 202     |   |                                         |   | 5,998     |                                       |  |   |                                  |   |  |   |       |   |  |   | 6,200     |  
|Net loss                                                        |        |             |   |        |                          |        |   |                                         |   |          |                                       |  |   | (14,607                           | ) |  |   |       |   |  |   | (14,607   | )
|                                                                |        |              |   |        |                          |         |   |                                         |   |           |                                       |  |   |                                   |   |  |   |        |   |  |   |           |  
|Balance,May 31, 2004                                            |        | 31,401,500   |   |        |                          | 31,402  |   |                                         |   | 64,798    |                                       |  |   | (14,607                           | ) |  |   |       |   |  |   | 81,593    |  
|Net loss                                                        |        |             |   |        |                          |        |   |                                         |   |          |                                       |  |   | (60,698                           | ) |  |   |       |   |  |   | (60,698   | )
|                                                                |        |              |   |        |                          |         |   |                                         |   |           |                                       |  |   |                                   |   |  |   |        |   |  |   |           |  
|Balance, May 31, 2005                                           |        | 31,401,500   |   |        |                          | 31,402  |   |                                         |   | 64,798    |                                       |  |   | (75,305                           | ) |  |   |       |   |  |   | 20,895    |  
|Net loss                                                        |        |             |   |        |                          |        |   |                                         |   |          |                                       |  |   | (36,750                           | ) |  |   |       |   |  |   | (36,750   | )
|                                                                |        |              |   |        |                          |         |   |                                         |   |           |                                       |  |   |                                   |   |  |   |        |   |  |   |           |  
|Balance, May 31, 2006                                           |        | 31,401,500   |   |        |                          | 31,402  |   |                                         |   | 64,798    |                                       |  |   | (112,055                          | ) |  |   |       |   |  |   | (15,855   | )
|Common stock returned for cancellation                          |        | (12,965,000  | ) |        |                          | (12,965 | ) |                                         |   | 12,965    |                                       |  |   |                                  |   |  |   |       |   |  |   |          |  
|Common stock issued for acquisition of Subsidiaries             |        | 10,000,000   |   |        |                          | 10,000  |   |                                         |   | (161,686  | )                                     |  |   |                                  |   |  |   |       |   |  |   | (151,686  | )
|Common stock issued for cash at $0.40 per share, September 2006 |        | 4,000,000    |   |        |                          | 4,000   |   |                                         |   | 1,596,000 |                                       |  |   |                                  |   |  |   |       |   |  |   | 1,600,000 |  
|Common stock options issued                                     |        |             |   |        |                          |        |   |                                         |   | 168,000   |                                       |  |   |                                  |   |  |   |       |   |  |   | 168,000   |  
|Net loss                                                        |        |             |   |        |                          |        |   |                                         |   |          |                                       |  |   | (957,221                          | ) |  |   | (1,580 | ) |  |   | (958,801  | )
|                                                                |        |              |   |        |                          |         |   |                                         |   |           |                                       |  |   |                                   |   |  |   |        |   |  |   |           |  
|Balance, December 31, 2006                                      |        | 32,436,500   |   |        |                          | 32,437  |   |                                         |   | 1,680,077 |                                       |  |   | (1,069,276                        | ) |  |   | (1,580 | ) |  |   | 641,658   |  

(Continued On Following Page)

The accompanying notes are an integral part of the consolidated financial statements.



31



---

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY (DEFICIT)

(Continued From Previous Page)



|                                                                     |        |              |        |                          |        |                                         |   |           |                                       |   |            |                                   |  |   |        |   |  |   |            |  
|-------------------------------------------------------------------- | ------ | ------------ | ------ | ------------------------ | ------ | --------------------------------------- | - | --------- | ------------------------------------- | - | ---------- | --------------------------------- |  | - | ------ | - |  | - | ---------- | -
|                                                                     |        | Common Stock |        | AdditionalPaid-inCapital |        | DeficitAccumulateDuringExplorationStage |   |           | CumulativeEffectofCurrencyTranslation |   |            | TotalStockholdersEquity(Deficit) | 
|                                                                     | Shares |              | Amount |                          |        |                                         |  
|Balance, December 31, 2006                                           |        | 32,436,500   |        |                          | 32,437 |                                         |   | 1,680,077 |                                       |   | (1,069,276 | )                                 |  |   | (1,580 | ) |  |   | 641,658    |  
|Common stock options issued First quarter 2007                       |        |             |        |                          |       |                                         |   | 117,000   |                                       |   |           |                                   |  |   |       |   |  |   | 117,000    |  
|Common stock issued under Incentive Compensation Plan, February 2007 |        | 237,110      |        |                          | 237    |                                         |   | 229,763   |                                       |   |           |                                   |  |   |       |   |  |   | 230,000    |  
|Common stock issued under Incentive Compensation Plan, March 2007    |        | 16,990       |        |                          | 17     |                                         |   | 17,483    |                                       |   |           |                                   |  |   |       |   |  |   | 17,500     |  
|Common stock options issued Second quarter 2007                      |        |             |        |                          |       |                                         |   | 288,500   |                                       |   |           |                                   |  |   |       |   |  |   | 288,500    |  
|Common stock issued for cash at $0.90 per share, June 2007           |        | 1,476,555    |        |                          | 1,477  |                                         |   | 1,327,178 |                                       |   |           |                                   |  |   |       |   |  |   | 1,328,655  |  
|Common stock issued for services at $1.05 per share, October 2007    |        | 30,000       |        |                          | 30     |                                         |   | 31,470    |                                       |   |           |                                   |  |   |       |   |  |   | 31,500     |  
|Common stock issued for services at $0.63 per share, October 2007    |        | 150,000      |        |                          | 150    |                                         |   | 94,350    |                                       |   |           |                                   |  |   |       |   |  |   | 94,500     |  
|Common stock issued for cash at $0.79 per share, October 2007        |        | 100,000      |        |                          | 100    |                                         |   | 78,900    |                                       |   |           |                                   |  |   |       |   |  |   | 79,000     |  
|Common stock issued for services at $0.60 per share, December 2007   |        | 150,000      |        |                          | 150    |                                         |   | 89,850    |                                       |   |           |                                   |  |   |       |   |  |   | 90,000     |  
|Common stock issued for cash at $0.79 per share, December 2007       |        | 50,000       |        |                          | 50     |                                         |   | 39,450    |                                       |   |           |                                   |  |   |       |   |  |   | 39,500     |  
|Net loss                                                             |        |             |        |                          |       |                                         |   |          |                                       |   | (3,379,987 | )                                 |  |   | (1,675 | ) |  |   | (3,381,662 | )
|                                                                     |        |              |        |                          |        |                                         |   |           |                                       |   |            |                                   |  |   |        |   |  |   |            |  
|Balance, December 31, 2007                                           |        | 34,647,155   |        | $                        | 34,648 |                                         | $ | 3,994,021 |                                       | $ | (4,449,263 | )                                 |  | $ | (3,255 | ) |  | $ | (423,849   | )
|                                                                     |        |              |        |                          |        |                                         |   |           |                                       |   |            |                                   |  |   |        |   |  |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



32



---

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                     |  |                                 |            |   |                                |   |          |                                              |  |   |            |  
|---------------------------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ------------------------------ | - | -------- | -------------------------------------------- |  | - | ---------- | -
|                                                                                                     |  | Twelve MonthsEndedDec. 31, 2007 |            |   | Seven MonthsEndedDec. 31, 2006 |   |          | Feb. 19, 2004(Inception)ThroughDec. 31,
2007 | 
|Cash Flows From Operating Activities:                                                                |  |                                 |            |   |                                |   |          |                                              |  |   |            |  
|Net loss                                                                                             |  | $                               | (3,379,987 | ) |                                | $ | (957,221 | )                                            |  | $ | (4,449,263 | )
|Adjustments to reconcile comprehensive loss to net cash provided by (used for) operating activities: |  |                                 |            |   |                                |   |          |                                              |  |   |            |  
|Depreciation                                                                                         |  |                                 | 13,021     |   |                                |   | 2,628    |                                              |  |   | 15,649     |  
|Stock/stock option compensation                                                                      |  |                                 | 869,000    |   |                                |   | 168,000  |                                              |  |   | 1,037,000  |  
|Interest accrued on S/T note                                                                         |  |                                 | 3,836      |   |                                |   |         |                                              |  |   | 3,836      |  
|Changes in current assets and liabilities:                                                           |  |                                 |            |   |                                |   |          |                                              |  |   |            |  
|Advances                                                                                             |  |                                 | (3,478     | ) |                                |   |         |                                              |  |   | (3,478     | )
|Security deposits                                                                                    |  |                                 | (2,510     | ) |                                |   | (2,255   | )                                            |  |   | (4,765     | )
|Prepaid expense                                                                                      |  |                                 | (3,233     | ) |                                |   |         |                                              |  |   | (3,233     | )
|Reclamation bond - MAN claims drilling                                                               |  |                                 | (36,714    | ) |                                |   |         |                                              |  |   | (36,714    | )
|Deposit for core drilling                                                                            |  |                                 | 150,000    |   |                                |   | (150,000 | )                                            |  |   |           |  
|Accounts payable and accrued liabilities                                                             |  |                                 | 131,444    |   |                                |   | 72,239   |                                              |  |   | 373,745    |  
|Accounts payable - related parties                                                                   |  |                                 | 545,784    |   |                                |   | 15,319   |                                              |  |   | 561,103    |  
|                                                                                                     |  |                                 |            |   |                                |   |          |                                              |  |   |            |  
|Net cash provided by (used for) operating activities                                                 |  |                                 | (1,712,837 | ) |                                |   | (851,290 | )                                            |  |   | (2,506,120 | )
|                                                                                                     |  |                                 |            |   |                                |   |          |                                              |  |   |            |  
|Cash Flows From Investing Activities:                                                                |  |                                 |            |   |                                |   |          |                                              |  |   |            |  
|Purchase of mining claims - net                                                                      |  |                                 | (150,000   | ) |                                |   | (253,614 | )                                            |  |   | (403,614   | )
|Purchase of fixed assets - net                                                                       |  |                                 | (20,102    | ) |                                |   | (31,516  | )                                            |  |   | (51,618    | )
|                                                                                                     |  |                                 |            |   |                                |   |          |                                              |  |   |            |  
|Net cash provided by (used for) investing activities                                                 |  |                                 | (170,102   | ) |                                |   | (285,130 | )                                            |  |   | (455,232   | )
|                                                                                                     |  |                                 |            |   |                                |   |          |                                              |  |   |            |  

(Continued On Following Page)

The accompanying notes are an integral part of the consolidated financial statements.



33



---

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Continued From Previous Page)



|                                                        |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|------------------------------------------------------- |  | ------------------------------- | --------- | - | ------------------------------ | - | --------- | -------------------------------------------- |  | - | --------- | -
|                                                        |  | Twelve MonthsEndedDec. 31, 2007 |           |   | Seven MonthsEndedDec. 31, 2006 |   |           | Feb. 19, 2004(Inception)ThroughDec. 31, 2007 | 
|Cash Flows From Financing Activities:                   |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|Short term note payable                                 |  |                                 | 250,000   |   |                                |   |          |                                              |  |   | 250,000   |  
|L/T debt principal repayment                            |  |                                 | (8,652    | ) |                                |   |          |                                              |  |   | (8,652    | )
|Proceeds from exercise of stock options                 |  |                                 | 118,500   |   |                                |   |          |                                              |  |   | 118,500   |  
|Issuance of common stock                                |  |                                 | 1,328,655 |   |                                |   | 1,600,000 |                                              |  |   | 2,873,169 |  
|                                                        |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|Net cash provided by (used for) financing activities    |  |                                 | 1,688,503 |   |                                |   | 1,600,000 |                                              |  |   | 3,233,017 |  
|                                                        |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|Effect of exchange rate changes on cash                 |  |                                 | (1,675    | ) |                                |   | (1,580    | )                                            |  |   | (3,255    | )
|                                                        |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|Net Increase (Decrease) In Cash                         |  |                                 | (196,111  | ) |                                |   | 462,000   |                                              |  |   | 268,410   |  
|Cash At The Beginning Of The Period                     |  |                                 | 464,521   |   |                                |   | 2,521     |                                              |  |   |          |  
|                                                        |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|Cash At The End Of The Period                           |  | $                               | 268,410   |   |                                | $ | 464,521   |                                              |  | $ | 268,410   |  
|                                                        |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|Schedule Of Non-Cash Investing And Financing Activities |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|Acquisition of Minera Milenium, S.A. de C.V.            |  | $                               |          |   |                                | $ | (46       | )                                            |  | $ | (46       | )
|Acquisition of Aurelio Resources, Inc.                  |  |                                 |          |   |                                |   | (151,640  | )                                            |  |   | (151,640  | )
|Mineral properties                                      |  | $                               |          |   |                                | $ | 1,203,614 |                                              |  | $ | 1,353,614 |  
|Less note payable                                       |  |                                 |          |   |                                |   | (950,000  | )                                            |  |   | (950,000  | )
|Fixed assets                                            |  | $                               |          |   |                                | $ | 58,117    |                                              |  | $ | 78,219    |  
|Less long-term debt                                     |  |                                 |          |   |                                |   | (26,601   | )                                            |  |   | (26,601   | )
|Supplemental Disclosure                                 |  |                                 |           |   |                                |   |           |                                              |  |   |           |  
|Cash paid for interest                                  |  | $                               | (63,420   | ) |                                | $ | (1,033    | )                                            |  | $ | (64,453   | )
|Cash paid for income taxes                              |  |                                 |          |   |                                |   |          |                                              |  |   |          |  

The accompanying notes are an integral part of the consolidated financial statements.



34



---

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

February 19, 2004 (Inception) through December 31, 2007

NOTE 1    HISTORY AND ORGANIZATION OF THE COMPANY

The Company was incorporated on
February 19, 2004, under the Laws of the State of Nevada and is in the business of exploring mineral properties. The Company has not yet determined whether its properties contain mineral resources that may be economically recoverable.
Therefore, the Company has not reached the development stage and is considered to be an exploration stage company.

The recoverability of mineral property
costs is dependent upon the existence of economically recoverable reserves, confirmation of the Companys interest in the underlying mineral claims, the ability of the Company to obtain necessary financing to complete the exploration and upon
future profitable production.

On August 17, 2006, we completed our acquisition of all of the issued and outstanding common stock of Aurelio
Resources, Inc. (ARI), a privately-owned Colorado corporation engaged in mineral exploration, pursuant to an agreement we entered into with ARI and its shareholders dated April 27, 2006, as amended on June 9, 2006 and further
amended on July 13, 2006 and on July 21, 2006. As a result of our acquisition of ARI, we indirectly acquired all of its assets. In particular, we acquired properties in Arizona, now held through ARI and our wholly-owned subsidiary Bolsa
Resources, Inc. (Bolsa), and a 98% interest in Minera Milenium S.A. de C.V. (Minera Milenium), a company incorporated in Mexico which holds an option to acquire a 100% interest in a property in Mexico.

NOTE 2    CHANGE OF YEAR-END

The Company changed
its year-end from May 31 to December 31 on September 28, 2006. For the year prior to May 31, 2006 and up to the acquisition of ARI in August 2006, the Company had essentially been dormant. As a result of the change in year-end
and given the lack of materiality of the prior periods compared to the current operations and the lack of seasonality in the Companys business, the quarters in the current year have been compared with the most relevant period from the reported
quarters in prior periods as follows:



|   |  |                      |  |                     
|-- |  | -------------------- |  | --------------------
|   |  | For the period ended |  | Comparative period  
|   |  |                     
|Q1 |  | March 31, 2007       |  | February 28, 2006   
|   |  |                     
|Q2 |  | June 30, 2007        |  | May 31, 2006        
|   |  |                     
|Q3 |  | September 30, 2007   |  | August 31, 2006     
|   |  |                     
|Q4 |  | December 31, 2007    |  | December 31, 2006(i)



|(i) | Four months and seven months, respectively, when compared with the quarter and year ended December 31, 2007.
|--- | ------------------------------------------------------------------------------------------------------------

NOTE 3    GOING CONCERN

These financial
statements have been prepared with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions noted below currently exist which raise
substantial doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be
unable to continue as a going concern.

The operations of the Company have primarily been funded by the sale of common stock. Continued operations of the
Company are dependent on the Companys ability to complete additional equity financings or generate profitable operations in the future. Managements plan in this regard is to secure additional funds through future equity financings. Such
financings may not be available or may not be available on reasonable terms.



|                                                 |  |   |            |  
|------------------------------------------------ |  | - | ---------- | -
|December 31, 2007                                |  |   |           
|Deficit accumulated during the exploration stage |  | $ | (4,449,263 | )
|Working capital deficit                          |  | $ | (881,903   | )



35



---

|NOTE 4 | SIGNIFICANT ACCOUNTING POLICIES
|------ | -------------------------------

Significant accounting policies
adopted by the Company are as follows:

Basis of consolidation and the preparation of financial statements

These consolidated financial statements are prepared and reported in United States (U.S.) dollars and in accordance with U.S. generally accepted accounting principles.
The consolidated financial statements include the accounts of the company and its subsidiaries. All inter-company balances and transactions have been eliminated. The company does not have any special purpose entities.

Cash and cash equivalents

The Company considers cash held at banks
and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents.

Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Foreign Currency Translation

The U.S. dollar is the functional
currency of the Company. Transactions involving foreign currencies for items included in operations are translated into U.S. dollars using the monthly average exchange rate; monetary assets and liabilities are translated at the exchange rate
prevailing at the balance sheet date and all other balance sheet items are translated at the historical rates applicable to the transactions that comprise the amounts. The cumulative effect of the translation of non-realized gains and losses are
included in Stockholders Equity.

Mineral properties and exploration expenditures

The costs of acquiring mineral properties which have patented claims or surface rights are capitalized and will be amortized over their estimated useful lives following
the commencement of commercial production or written-off if the properties are sold or abandoned. If it is determined that a property is not economically viable based on scoping or feasibility studies the capitalized costs of patented claims and
surface rights are written off. If the studies show the carrying value to be in excess of their economic value, then the properties will be considered impaired and will be written down to their current economic value. Exploration expenses and the
costs for carrying and retaining mineral properties are expensed as incurred.

The costs of acquiring mineral properties that have unpatented claims,
leases or exploration permits are not capitalized. Ongoing costs for exploration and the costs for carrying and retaining these mineral properties are also expensed as incurred.

When it is determined that a mineral deposit can be economically and legally extracted or produced based on established proven and probable reserves based on an independent feasibility study that shows the economic
viability of the deposit as confirmed by a Competent Person, further exploration costs and the costs of development incurred after such determination will be capitalized. Upon the commencement of commercial production, capitalized costs will be
amortized on the units of production basis using the estimated proven and probable reserves as the depletion basis.

Equipment and depreciation

Equipment is recorded at cost, and depreciation is provided on a straight line basis over the estimated useful lives of the equipment of between three and
seven years.

Investments

Investments are considered
to be held to maturity and are carried at cost. Investments are continually reviewed to determine whether any events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. The Company bases its
evaluation on such impairment indicators as the nature of the investments, the future economic benefit of the investments, any historical or future profitability measurements as well as other external market values, conditions or factors that may be
present. If it is determined that the value of the investment is permanently impaired, it is written down to its estimated net realizable value.

Environmental remediation

At the report date, environmental requirements related to mineral claims acquired are unknown and therefore an
estimate of any future cost cannot be made.



36



---

Income taxes

A
deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry-forwards. Deferred tax expenses (benefit) result from the net change during the period of deferred tax assets
and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net loss per share

Basic net loss per share is computed by dividing the net loss for the period by the weighted
average number of shares of common stock outstanding during the period. Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic net loss per share) and potentially dilutive shares of common stock.
Diluted net loss per share is not presented separately from net loss per share since there are no potentially dilutive shares of common stock outstanding.

Recent Accounting Pronouncements

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes, (FIN 48) an interpretation of FASB Statement No. 109, Accounting for Income Taxes on January 1, 2007. FIN 48 clarifies the accounting and reporting for uncertainties in the application of the
income tax laws to the Companys operations. The interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in
income tax returns. There was no impact to the consolidated results of operations and financial position as a result of adopting FIN 48.

In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which is effective for fiscal years beginning after November 15, 2007. SFAS No. 157 establishes a single definition of fair value and a
framework for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurements and requires new disclosures about fair value measurements for future transactions. In
February 2008, the FASB issued Staff Positions No. 157-1 and No. 157-2, which partially defer the effective date of SFAS No. 157 for one year for certain nonfinancial assets and liabilities and remove certain leasing transactions
from its scope. The Company is currently evaluating the impact of the adoption of SFAS No. 157 on its consolidated results of operations and financial position.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. Under SFAS No. 159, entities may irrevocably elect fair value for
the initial and subsequent measurement of certain financial instruments and certain other items. Subsequent measurements for the financial instruments and certain other items that an entity elects to record at fair value will be recognized in
earnings. SFAS No. 159 also establishes additional disclosure requirements. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. At the effective date, an entity may elect the fair value option
for eligible items that exist at that date. The entity shall report the effect of the first re-measurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. The Company is currently determining
whether fair value accounting is appropriate for any of its eligible items and cannot estimate the impact, if any, which SFAS No. 159 will have on its consolidated results of operations and financial position.

In December 2007, the FASB issued FASB Statement No. 141R, Business Combinations (SFAS No. 141R) and FASB Statement No. 160, Non-controlling Interests in
Consolidated Financial Statements an amendment to ARB No. 51 (SFAS No. 160). SFAS No. 141R and No. 160 require most identifiable assets, liabilities, non-controlling interests, and goodwill acquired in a business combination to
be recorded at full fair value and require non-controlling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with non-controlling interest
holders. Both Statements are effective for periods beginning on or after December 15, 2008, and earlier adoption is prohibited. SFAS No. 141R will be applied to business combinations occurring after the effective date. SFAS No. 160
will be applied prospectively to all non-controlling interests, including any that arose before the effective date. The Company is currently evaluating the impact of adopting SFAS No. 141R and SFAS No. 160 on its consolidated results of
operations and financial position.



|NOTE 5    MANAGEMENT | OF FINANCIAL RISK
|-------------------- | -----------------

The Company is subject to a concentration of
credit risk with all of its cash at December 31, 2007 on deposit with JPMorgan Chase Bank, NA. The cash balance at year-end exceeded the FDIC limit of $100,000 by $162,288. Management considers that in view of the financial standing and nature
of the operations of JPMorgan Chase Bank, NA the risk of loss is small.



37



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|NOTE 6 | RELATED PARTY TRANSACTIONS
|------ | --------------------------

During the year ended December 31,
2007 we maintained consulting contracts with our president, company officers, directors and their wholly-owned companies, through which they provided services to our company. During the year we paid or accrued consulting fees in lieu of salaries to
our president, company officers and directors of $433,890 in total (for the seven months ended December 31, 2006: $129,159). As cash was unavailable to pay consulting fees to directors and officers during the last four months of 2007, the
Company issued stock in January 2008 under the Stock Compensation Plan with a total value of $100,739 in payment of the consulting fees for this period. Fees charged for consulting services were in the normal course of business and were measured at
the exchange amount, which is the amount of consideration established and agreed to by the related parties.

The Board decided in February 2007 to
compensate directors for previous board, meeting and committee fees for fiscal 2006 totaling $230,000. These payments were made under the Companys Stock Compensation Plan. In January 2008, the Company paid fees in stock to its directors for
board, meeting and committee fees for the 2007 year totaling $399,000. These payments were accrued as directors fees for 2007 and were made under the Companys Stock Compensation Plan.

As of December 31, 2007 the Company owed a total of $561,103 to the related parties for consulting fees and expenses and for directors fees (December 31,
2006: $15,319).

In November 2007, the Company entered into a lease and option agreement with a director and officer for a property in Elfrida, Arizona.
Bolsa is using the house for a field office and for temporary field accommodation and pays a market rent ($1,175/month) for the property. The Company also has an option to acquire the property for the amount of the mortgage debt outstanding on the
property ($140,079 at December 31, 2007).



|NOTE 7 | FINANCIAL INSTRUMENTS
|------ | ---------------------

The Companys financial instruments
consist of cash and cash equivalents, notes payable and accounts payable and accrued liabilities. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from
these financial instruments. In each case, the fair value of these financial instruments approximate their carrying values, unless otherwise noted.



|NOTE 8 | SEGMENT INFORMATION
|------ | -------------------

The Company operated in two reportable
segments, these being the exploration for copper and zinc on its Hill Copper Project in Arizona and the exploration for gold on its Gavilanes Property in Mexico. Prior to June 2006, the Company was an exploration company with a property in Alaska.
Following is the segment information for the periods ending December 31, 2007.



|                                                         |  |         |           |        |   |           |  |       |           |  |   |          
|-------------------------------------------------------- |  | ------- | --------- | ------ | - | --------- |  | ----- | --------- |  | - | ---------
|                                                         |  | Arizona |           | Mexico |   | Corporate |  | Total
|As of and for the twelve months ended December 31, 2007: |  |         |           |        |   |           |  |       |           |  |   |          
|Revenue                                                  |  | $       |          |        | $ |          |  | $     |          |  | $ |         
|Depreciation expense                                     |  |         | 1,500     |        |   | 2,592     |  |       | 8,929     |  |   | 13,021   
|Mineral property expenditures                            |  |         | 1,112,773 |        |   | 107,102   |  |       | 60,000    |  |   | 1,279,875
|Operating loss                                           |  |         | 1,276,455 |        |   | 137,054   |  |       | 1,958,305 |  |   | 3,371,814
|Other income                                             |  |         | 135       |        |   |          |  |       | 58,948    |  |   | 59,083   
|Interest expense                                         |  |         | 60,599    |        |   |          |  |       | 6,657     |  |   | 67,256   
|Net loss                                                 |  |         | 1,336,919 |        |   | 137,054   |  |       | 1,906,014 |  |   | 3,379,987
|Additions to fixed assets                                |  |         | 15,000    |        |   | 402       |  |       | 4,700     |  |   | 20,102   
|Total assets                                             |  |         | 1,417,225 |        |   | 18,204    |  |       | 297,355   |  |   | 1,732,784
|As of and for the seven months ended December 31, 2006:  |  |         |           |        |   |           |  |       |           |  |   |          
|Revenue                                                  |  |         |          |        |   |          |  |       |          |  |   |         
|Depreciation expense                                     |  |         |          |        |   | 421       |  |       | 2,207     |  |   | 2,628    
|Mineral property expenditures                            |  |         | 437,658   |        |   | 22,177    |  |       |          |  |   | 459,835  
|Operating loss                                           |  |         | 527,300   |        |   | 60,656    |  |       | 376,386   |  |   | 964,342  
|Other income                                             |  |         | 10        |        |   |          |  |       | 8,144     |  |   | 8,154    
|Interest expense                                         |  |         |          |        |   |          |  |       | 1,033     |  |   | 1,033    
|Net loss                                                 |  |         | 527,290   |        |   | 60,656    |  |       | 369,275   |  |   | 957,221  
|Additions to fixed assets                                |  |         |          |        |   | 13,485    |  |       | 44,632    |  |   | 58,117   
|Total assets                                             |  |         | 1,391,261 |        |   | 42,829    |  |       | 441,789   |  |   | 1,875,879



38



---

|                                                     |  |           |  |         |  |           |  |          
|---------------------------------------------------- |  | --------- |  | ------- |  | --------- |  | ---------
|As of and since inception through December 31, 2007: |  |           |  |         |  |           |  |          
|Revenue                                              |  |          |  |        |  |          |  |         
|Depreciation expense                                 |  | 1,500     |  | 3,013   |  | 11,136    |  | 15,649   
|Mineral property expenditures                        |  | 1,550,431 |  | 129,279 |  | 110,124   |  | 1,789,834
|Operating loss                                       |  | 1,803,755 |  | 197,710 |  | 2,447,061 |  | 4,448,526
|Other income                                         |  | 145       |  |        |  | 67,407    |  | 67,552   
|Interest expense                                     |  | 60,799    |  |        |  | 7,490     |  | 68,289   
|Net loss                                             |  | 1,864,409 |  | 197,710 |  | 2,387,144 |  | 4,449,263
|Additions to fixed assets                            |  | 15,000    |  | 13,887  |  | 49,332    |  | 78,219   
|Total assets                                         |  | 1,417,225 |  | 18,204  |  | 297,355   |  | 1,732,784



|NOTE 9    BUSINESS | ACQUISITIONS
|------------------ | ------------

On July 5, 2006 the Company acquired 98% of the
outstanding stock Minera Milenium in a transfer of benefit from ARI in a transaction accounted for as a business purchase. ARI was not a related party at the date of transfer. The net worth of Minera Milenium at fair value on July 5, 2006 was
$(46). The primary reason for this acquisition was to acquire the rights to the option to earn a 100% interest in three mining claims/concessions in Durango, Mexico.

On August 17, 2006 the Company acquired 100% of ARI in a transaction accounted for as a business purchase, by issuing 10,000,000 shares for 100% of the outstanding stock of ARI. The net worth of ARI measured at
fair value on August 17, 2006 was $(151,640). The primary reason for the acquisition was to acquire the 100% interest in thirteen mining claims on a property located in southeastern Arizona. The business objective of the company is now to
progress the discovery, acquisition and exploration of advanced stage mineral properties with the potential to be expanded.

The purchase cost and the
allocation of the purchase costs to ARIs assets and liabilities (unaudited) are as follows:

Purchase cost



|                                                      |  |            |  |       |          |  
|----------------------------------------------------- |  | ---------- |  | ----- | -------- | -
|                                                      |  | Amount     |  | Value |         
|Issuance of Aurelio Resource Corporation common stock |  | 10,000,000 |  | $     | (151,640 | )

Allocation of Purchase Cost



|                                   |  |   |          |  
|---------------------------------- |  | - | -------- | -
|Current assets                     |  | $ | 10,875   |  
|Equipments, net                    |  |   | 1,239    |  
|Accounts payable                   |  |   | (40,741  | )
|Advance on investment              |  |   | (103,150 | )
|Accounts payable  related parties |  |   | (19,863  | )
|                                   |  |   |          |  
|Net Asset Value                    |  | $ | (151,640 | )
|                                   |  |   |          |  

We note that while the Company was cognizant of the value to be gained from the unpatented mining claims being
acquired in the acquisition of ARI, no arbitrary monetary value was established as part of the purchase price because the Company has no methodology or accounting policy for establishing or retaining such a value in its financial statements.

We calculated unaudited proforma results of operations for the seven months ended December 31, 2006, presented as if the acquisition of ARI had taken
place on June 1, 2006. The results would have shown a net loss for the seven months ended December 31, 2006 of $969,863 or $(0.03) per share.



|NOTE 10    PROPERTY | ACQUISITIONS
|------------------- | ------------



|                   |  |                                                                                                     |  |            |           |             |   |        
|------------------ |  | --------------------------------------------------------------------------------------------------- |  | ---------- | --------- | ----------- | - | -------
|Date               |  | Property Name                                                                                       |  | Asset Cost |           | Liabilities
|September 15, 2006 |  | Hope Mining claims                                                                                  |  | $          | 1,203,614 |             | $ | 950,000
|March 27, 2007     |  | Newmont Mining  claims (option payments  option exercised in March 2008)                          |  |            | 75,000    |             |   |       
|August 6, 2007     |  | Rae Family  claims, surface and mineral rights (option payments  expected to close in April 2008) |  |            | 50,000    |             |   |       
|September 24, 2007 |  | Graham  524 Courtland Townsite lots (overlap other surface rights) (option payment)                |  |            | 25,000    |             |   |       
|                   |  |                                                                                                     |  |            |           |             |   |        
|TOTAL              |  |                                                                                                     |  | $          | 1,353,614 |             | $ | 950,000



39



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On May 15, 2006 our subsidiary, ARI, entered into a purchase and sale agreement with Hope Mining and Milling Company
(Hope MMC), an Arizona corporation, concerning the acquisition by ARI of 30 patented mining claims known as the Courtland Claims and located in the Turquoise Mining District, Cochise County, Arizona. The purchase price for the subject
property was $1,200,000 with a $250,000 down payment. The remaining balance of $950,000 is being carried on an interest-only four year term 6% straight line annual interest-only promissory note, secured by a deed of trust, with a balloon payment at
the end of year four. On September 15, 2006, ARI, Bolsa and Hope MMC entered into an agreement amending the terms of the purchase agreement and, pursuant to the amending agreement, Bolsa accepted the assignment and completed the acquisition of
the 30 patented mining claims from Hope MMC by making the down payment of $250,000.

In April 2007, we executed and made the initial payment under a
purchase agreement with a subsidiary of Newmont Mining Corporation, whereby the Company is acquiring two patented mining claims covering 24 acres adjacent to our MAN claims in Cochise County, Arizona. The purchase price is $100,000, payable in four
equal installments of $25,000 upon each of signing and six, nine and 12 months after the signing of the purchase agreement, whereupon the option will be exercised and the properties purchased. Newmont will also receive a 1% Net Smelter Returns
Royalty on the patented claims and on any properties Aurelio currently owns or acquires within a designated Area of Interest. As the purchase price is for patented claims, the cost of the option payments is capitalized as incurred.

In April 2007, we also completed a mineral lease and option agreement with three individual owners of 65 Gold Coin mineral claims and three Arizona State
Mineral Exploration Permits on the Hill Copper-Zinc Project in Cochise County, Arizona. The Gold Coin claims and the three Exploration Permits cover 1272 acres. These new properties are all located to the south and southeast of the MAN
claims. The option agreement includes an initial payment of $20,000 with additional staged payments for a total cost of $1.5 million. In addition, there is a royalty of 1% of production of base metals and 2.5% of precious metals. As these payments
are for unpatented claims and permits, the option payments will be expensed as incurred.

Effective August 6, 2007, through Bolsa, we executed and
made a $10,000 down payment into escrow under an agreement to purchase 13 patented mining claims covering approximately 213 acres located on the northern edge of the MAN area, that is part of the Companys Hill Copper-Zinc Project in Cochise
County, Arizona. As part of the transaction, we also acquired approximately 744 acres of surface rights and an area to the west of the deposit and 292 acres of surface with mineral rights, known as the Rae Property. The purchase price is $1.3
million payable in five equal amounts over two years. We made a second earnest money payment of $40,000 into escrow on September 14, 2007, following the completion of inspection and further due diligence. Upon the closing of the acquisition
following the completion and acceptance of a survey on the property, expected to be completed early in April 2008, Bolsa will pay the balance of the initial payment of $210,000. The balance of $1,040,000 will be paid in four equal installments
together with simple interest at 7% per annum on the outstanding balance evidenced by a promissory note secured by a purchase money first deed of trust on the property. There is no royalty payable on production from any of the 13 patented
mining claims.

On September 24, 2007 Bolsa entered into a purchase option agreement with Mrs. Kay B. Graham for the purchase of
approximately 90% of the Courtland Townsite lots. These lots are real property interests held by fee simple in the Courtland Townsite area. Bolsa paid $25,000 as an option payment for the option which extends until January 31, 2010. The full
purchase price of $125,000 is payable within 30 days of Bolsa giving notice and the option payment will be deducted from the purchase price. As the purchase price is for townsites, the cost of the option payment has been capitalized.

During 2007, the Company staked 17 new unpatented claims around the initial 13 MAN claims, including the area between the recently purchased Courtland claims and the MAN
claims The Company also staked an additional five unpatented BLM lode mining claims to the north and northeast of the MAN deposit. These claims are adjacent to, as well as to the east of the patented Hope claims purchased in September of 2006
covering the Courtland area. The Company also applied for three Arizona State Mineral Exploration Permits covering an estimated 1,320 acres. The Exploration Permits are located to the south and southeast of the MAN deposit. As these payments are for
unpatented claims and permits, the payments will be expensed as incurred.



|NOTE 11 | LONG-TERM DEBT
|------- | --------------



|                                               |  |      |         |      |   |        
|---------------------------------------------- |  | ---- | ------- | ---- | - | -------
|As of December 31,                             |  | 2007 |         | 2006
|Current debt:                                  |  |      |         |      |   |        
|Bank debt  portion payable within one year(1) |  | $    | 9,819   |      | $ | 8,693  
|                                               |  |      |         |      |   |        
|                                               |  | $    | 9,819   |      | $ | 8,693  
|                                               |  |      |         |      |   |        
|Long-term debt:                                |  |      |         |      |   |        
|Bank debt  portion payable after one year(1)  |  | $    | 8,090   |      | $ | 17,908 
|Note payable  Courtland Claims(2)             |  |      | 950,000 |      |   | 950,000
|                                               |  |      |         |      |   |        
|                                               |  | $    | 958,090 |      | $ | 967,908
|                                               |  |      |         |      |   |        



40



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|(1) | The bank debt was to finance the purchase of office equipment and is a 36-month note payable under a business installment loan from JPMorgan Chase Bank, NA, with the final payment
due on or before September 20, 2009. The interest rate is 12.25% simple interest and the loan is cash collateralized.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | When we purchased the 30 patented Courtland Claims (which form part of the Hill Copper-Zinc Project) from Hope Mining and Milling Company we paid a deposit of $250,000, and the
remaining balance of $950,000 is being carried on an interest-only, four-year term 6% straight line annual interest-only promissory note due on or before September 15, 2010, secured by a deed of trust, with a balloon payment at the end of year
four.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 12    CONTRACTUAL OBLIGATIONS, CONTINGENT LIABILITIES AND COMMITMENTS

Contractual Obligations, Contingent Liabilities and Commitments



|                                                |  |       |           |                 |   |             |  |             |         |                  |   |         |  |   |        
|----------------------------------------------- |  | ----- | --------- | --------------- | - | ----------- |  | ----------- | ------- | ---------------- | - | ------- |  | - | -------
|Contractual Obligations as of December 31, 2007 |  | Total |           | Less then1 year |   | 1 to 3Years |  | 3 to 5years |         | More than5 years
|Long-term debt(1)                               |  | $     | 17,909    |                 | $ | 9,819       |  | $           | 8,090   |                  | $ |        |  | $ |       
|Note payable  Courtland Claims(2)              |  |       |           |                 |   |             |  |             |         |                  |   |         |  |   |        
|Interest                                        |  |       | 156,750   |                 |   | 57,000      |  |             | 99,750  |                  |   |        |  |   |       
|Principal                                       |  |       | 950,000   |                 |   |            |  |             | 950,000 |                  |   |        |  |   |       
|Unpatented Claims  annual renewal fees(3)      |  |       | 74,375    |                 |   | 14,875      |  |             | 29,750  |                  |   | 29,750  |  |   |       
|Gavilanes option payments(4)                    |  |       | 455,000   |                 |   | 40,000      |  |             | 110,000 |                  |   | 305,000 |  |   |       
|Newmont Claims payments(5)                      |  |       | 25,000    |                 |   | 25,000      |  |             |        |                  |   |        |  |   |       
|Gold Coin payments(6)                           |  |       | 1,480,000 |                 |   | 55,000      |  |             | 225,000 |                  |   | 300,000 |  |   | 900,000
|Rae Family payments(7)                          |  |       | 1,250,000 |                 |   | 470,000     |  |             | 780,000 |                  |   |        |  |   |       
|Graham payments(8)                              |  |       | 100,000   |                 |   |            |  |             | 100,000 |                  |   |        |  |   |       
|Lease of Littleton, CO office(9)                |  |       | 12,348    |                 |   | 12,348      |  |             |        |                  |   |        |  |   |       
|Lease of Sun Sites, AZ office(10)               |  |       | 500       |                 |   | 500         |  |             |        |                  |   |        |  |   |       
|Lease of Elfrida, AZ field office(11)           |  |       | 211,500   |                 |   | 14,100      |  |             | 28,200  |                  |   | 28,200  |  |   | 141,000
|Lease of Arizona storage space(12)              |  |       | 2,052     |                 |   | 2.052       |  |             |        |                  |   |        |  |   |       
|Lease of Culiacan, MX office(13)                |  |       | 1,400     |                 |   | 1,400       |  |             |        |                  |   |        |  |   |       



|(1) | The long-term debt was to finance the purchase of office equipment and is a 36-month note payable under a business installment loan from JPMorgan Chase Bank, NA. The interest rate
is 12.25% simple interest and the loan is cash collateralized.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The purchase of the 30 patented Courtland Claims (which form part of the Hill Copper-Zinc Project) from Hope Mining and Milling Company was closed on September 15, 2006 with
the payment of the deposit of $250,000. In addition to the acquisition price, the seller is entitled to receive a net smelter return royalty, up to a cumulative total of $3 million, of 3% for precious metals, and 1.5% for base metals produced from
the property. At any time prior to the commencement of commercial production, we can buy this royalty for $2 million.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | For each of our 119 unpatented mining claims on the Hill Copper-Zinc Project there is an annual renewal fee of $125 per claim payable to the Bureau of Land Management, an agency of
the U.S. Department of the Interior. These claim fees are payable annually, as long as we are actively exploring on this land.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | In addition to the total of the option payments for the purchase price of the three mining claims (covering approximately 1,000 hectares) making up the Gavilanes property, the
property is subject to a 3% net smelter return royalty in favor of Mr. Modesto Rivas Beltran of Culiacan, Sinaloa, Mexico.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | A purchase agreement was entered into March 27, 2007 with Newmont Realty Company to purchase 2 patented claims, the Banner (100%) and the Australia (50%). The terms of the
agreement include the payment of $25,000 upon execution of the agreement, and $25,000 six, nine and twelve months after the effective date. In 2007, a total of $75,000 was paid to Newmont. The twelve month payment remains due on March 27, 2008.
A net smelter return royalty on mineral production of the Property equal to one percent (1%) of Net Smelter Returns from the disposition of all mineral produced.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | A lease with option to purchase agreement for 65 unpatented claims and three Arizona Mineral Exploration Permits was entered into on April 15, 2007 for $1,500,000. The terms of
the agreement were a $20,000 payment upon execution of the agreement, plus $55,000 on April 15, 2008, a $75,000 payment on April 15, 2009, and $150,000 annually thereafter, until payment is complete, which is to be on or before
April 15, 2018.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | The purchase price for the 13 patented claims and surface rights on the Rae property is $1,300,000 payable as follows: $10,000 primary earnest money payment and
$40,000 for a secondary earnest money payment, with both payments made in 2007. Upon
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



41



---

| | acceptance of a satisfactory survey on the property, Bolsa is to pay $210,000 plus a $1,040,000 promissory note that provides for four semi-annual payments
of principal, each $260,000, together with semi-annual payments of interest on the unpaid balance of the promissory note, the first semi-annual payment due six months following date of closing and subsequent payments each six months.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) | A purchase options agreement for 531 Courtland and Center Courtland Townsite Lots was effective September 24, 2007 and the $25,000 earnest and option payment was paid in 2007,
with a further $100,000 due on exercise of the option during the year following January 31, 2010.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) | Lease of the Littleton, Colorado office for $2,058 per month, including utilities, with a commitment through June 2008.
|--- | -----------------------------------------------------------------------------------------------------------------------



|(10) | Lease of an office in Sun Sites, Arizona for $500 per month with a commitment through January 2008.
|---- | ---------------------------------------------------------------------------------------------------



|(11) | Lease of a field office with housing in Elfrida, Arizona for $1175 per month, not including utilities, with a commitment for fifteen years to 2022, although Bolsa can acquire the
property at any time for the amount of the debt on the property ($140,079 at December 31, 2007).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(12) | Lease of storage space near our Arizona properties for $171 per month through 2008.
|---- | -----------------------------------------------------------------------------------



|(13) | Lease of office space in Culiacan, Sinaloa, Mexico for approximately $140 per month with a commitment through October 2008.
|---- | ---------------------------------------------------------------------------------------------------------------------------

Property related Commitments

As described and set out in the table
above, we have commitments for the interest on the Note Payable for the purchase of the Courtland Claims, annual renewal fees on our unpatented claims, option payments to retain the Gavilanes option, payments on the purchase of the Newmont, Gold
Coin, Rae family and Graham properties, as well as lease commitments. Meeting these obligations is fundamental to our being able to retain and explore our mineral properties.

In addition, should we produce precious or base metals on our properties, we would have to pay net smelter return royalties, also as described above.

Office and Other Rental Commitments

We rent office space in Littleton, Colorado for $2,058 per month, including
utilities, with a commitment through June 2008. We rented office space in Arizona, near our Hill Copper-Zinc Project, for $500 per month with a commitment through January 2008. We also rented various storage space near the Arizona property and we
currently have an ongoing monthly commitment of $171 for storage space through 2008. We rented housing from June through November 2007 for a total of $7,950, not including utilities. We currently rent housing and office space in Elfrida, Arizona for
$1,175 per month, not including utilities, with a commitment through 2022. We rent office space in Culiacan, Sinaloa, Mexico for P1,700 (approximately $140) per month, with a commitment through October 2008.

Our total rent expense for the year ended December 31, 2007 was $46,796.



|NOTE 13    PROPERTY | AND EQUIPMENT
|------------------- | -------------



|                        |  |                           |        |                         |        |               |   |       |        |   |       
|----------------------- |  | ------------------------- | ------ | ----------------------- | ------ | ------------- | - | ----- | ------ | - | ------
|As at December 31, 2007 |  | Cost                      |        | AccumulatedDepreciation |        | Net BookValue
|Littleton               |  |  office furniture        |        | $                       | 11,416 |               | $ | 1,918 |        | $ | 9,498 
|                        |  |  office equipment        |        |                         | 37,916 |               |   | 9,218 |        |   | 28,698
|Mexico                  |  |  truck                   |        |                         | 10,744 |               |   | 2,396 |        |   | 8,348 
|                        |  |  furniture and equipment |        |                         | 3,143  |               |   | 617   |        |   | 2,526 
|Elfrida                 |  |  truck                   |        |                         | 15,000 |               |   | 1,500 |        |   | 13,500
|                        |  |                           |        |                         |        |               |   |       |        |   |       
|Total                   |  | $                         | 78,219 |                         | $      | 15,649        |   | $     | 62,570
|                        |  |                           |       
|As at December 31, 2006 |  | Cost                      |        | AccumulatedDepreciation |        | Net BookValue
|Littleton               |  |  office furniture        |        | $                       | 10,099 |               | $ | 348   |        | $ | 9,751 
|                        |  |  office equipment        |        |                         | 35,188 |               |   | 1,859 |        |   | 33,329
|Mexico                  |  |  truck                   |        |                         | 10,267 |               |   | 342   |        |   | 9,925 
|                        |  |  furniture and equipment |        |                         | 2,563  |               |   | 79    |        |   | 2,484 
|                        |  |                           |        |                         |        |               |   |       |        |   |       
|Total                   |  | $                         | 58,117 |                         | $      | 2,628         |   | $     | 55,489



42



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|NOTE 14 | STOCKHOLDERS EQUITY
|------- | --------------------



|a. | Authorized
|-- | ----------

On June 16, 2006 we changed our
name to Aurelio Resource Corporation and implemented a six and one-half (6.5) for one (1) forward stock split of our authorized, issued and outstanding common stock. As a result, our authorized capital has increased from 75,000,000 shares
of common stock with a par value of $0.001 to 487,500,000 shares of common stock with a par value of $0.001.



|b. | Issued and outstanding
|-- | ----------------------

On August 16, 2006 we
cancelled 12,965,000 shares of our common stock as part of the transaction for the acquisition of ARI. On August 17, 2006 we completed our acquisition of all of the issued and outstanding common stock of ARI, a privately-owned Colorado
corporation, pursuant to an agreement we entered into with ARI and its shareholders dated April 27, 2006, as amended on June 9, 2006 and further amended on July 13, 2006 and on July 21, 2006. On August 17, 2006 we issued
10,000,000 shares of our common stock to the shareholders of ARI, in exchange for all of the issued and outstanding common shares of ARI.

On September 29, 2006, we completed a private placement of four million shares of common stock at $0.40 per share for total gross proceeds of $1,600,000.

The Board decided in February 2007 to compensate directors for previous board, meeting and committee fees for the fiscal 2006 and for the period through February 1, 2007 and issued 237,110 shares of our stock at
a market value of $0.97 per share for a non-cash cost totaling $230,000. These payments were made under the Companys Stock Compensation Plan. On March 2, 2007 we issued a further 16,990 shares to consultants at $1.03 per share for a total
non-cash cost of $17,500.

In January 2008, the Company paid fees in stock to its directors for board, meeting and committee fees for the
2007 year totaling $399,000. These payments were accrued as directors fees for 2007 and were made under the Companys Stock Compensation Plan.

On June 7, 2007 we completed a private placement of 1,476,555 units at $0.90 per unit for total gross proceeds of $1,328,900. Each unit was comprised of one share of common stock and one half of a warrant. We
issued 738,280 warrants and each warrant entitles the holder to acquire a further share of common stock at a price of $1.60 per share at any time on or before June 5, 2009.

On September 12, 2007, we issued 30,000 common shares at a deemed price of $1.05/share in consideration for strategic planning and consulting
services to one accredited investor pursuant to exemptions from registration as set out in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

On October 11, 2007 we issued 150,000 common shares at a deemed price of $0.63/share in consideration for investor relations and marketing service to
one accredited investor pursuant to exemptions from registration as set out in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

On October 29, 2007 and December 26, 2007, we issued a total of 150,000 common shares to an officer/director and an officer at an exercise price of $0.79/share upon the exercise of stock options issued under
the Option Plan.

On December 13, 2007, we issued 150,000 common shares at a deemed price of $0.60/share in consideration for investor
relations services to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended.

As at December 31, 2007 the Company had 34,647,155 common shares outstanding.

NOTE 15    STOCK OPTIONS

The board of directors adopted the 2006 Stock Option Plan (the
Plan) on September 15, 2006 and reserved two million eight hundred thousand (2,800,000) common shares to be made available for grant under the Plan. On December 6, 2007, the board of directors amended the Plan by
increasing the total shares reserved under the Plan to three million two hundred thousand (3,200,000) common shares available for grant. The purpose of the Plan is to afford the persons who provide services to our company or any of its
subsidiaries or affiliates, whether directors, officers, consultants or employees of our company or its subsidiaries or affiliates, an opportunity to obtain a proprietary interest in our company by permitting them to purchase common shares of our
stock and to aid in attracting, as well as retaining and encouraging the continued involvement of such persons with us. Under the terms of the Plan, the board of directors has full authority to administer the Plan in accordance with the terms of the
Plan and at any time amend or revise the terms of the Plan provided, however, that no amendment or revision shall alter the terms of options already granted. The shareholders ratified and approved the adoption of the 2006 Stock Option Plan at the
Annual General Meeting of Stockholders held on May 18, 2007.



43



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Under the Plan, the exercise price of the shares covered by each option shall be determined by the directors and shall be
not less than the closing price of our common shares on the stock exchange, quotation system or stock exchanges on which the shares are listed on the date of the grant or the day the fair market value is to be determined or the immediately preceding
the day on which the stock is reported. If granted to an employee or director the per share exercise price shall be not less than the fair market value of the share on the date of the grant, unless the grant is to an employee who holds more than 10%
of the voting power of our stock, in which case the per share exercise price shall be not less than 110% of the fair market value on the date of the grant. Options granted under the Plan vest immediately for non-employee directors and the vesting
schedule for all others granted options under the Plan will be established by the Board or a committee appointed by the Board to administer the Plan on behalf of the Board. Our company has not established a separate committee to this date. Options
granted under the Plan will not be transferable and, if they are not exercised, will expire thirty (30) days following the date the optionee ceases to be director, officer, employee or consultant of our company unless by death, in which case
the option may be exercised within 12 months following the date of death.

At December 31, 2007, 875,000 options were available for grant under the
Plan.

A summary of the status of the Plan as of December 31, 2007 and 2006, showing the grants made and options exercised during the year ended
December 31, 2007 and the seven months ended December 31, 2006, is as follows:



|                                       |  |                                          |   |      |                                |      |         |         |                                |   |     
|-------------------------------------- |  | ---------------------------------------- | - | ---- | ------------------------------ | ---- | ------- | ------- | ------------------------------ | - | ----
|                                       |  | For the fiscal period ended December 31,
|                                       |  | 2007                                     |   | 2006
|                                       |  | Options                                  |   |      | Weighted AverageExercise Price |      | Options |         | Weighted AverageExercise Price
|Outstanding beginning of period        |  | 500,000                                  |   |      | $                              | 0.81 |         |        |                                |   |    
|Grant of options (825,000 exercisable) |  | 1,825,000                                |   |      | $                              | 1.07 |         | 500,000 |                                | $ | 0.81
|Exercised during period                |  | (150,000                                 | ) |      | $                              | 0.79 |         |        |                                |   |    
|Outstanding December 31                |  | 2,175,000                                |   |      | $                              | 1.01 |         | 500,000 |                                | $ | 0.81

The fair value of each option granted was estimated on the date of the grant using the Black-Scholes model with
the following assumptions: volatility 81%; risk-free interest rate of 4.97% to 5%; dividend yield of Nil; an expected life of between one and two and a half years. With respect to vesting, 325,000 options were granted during the first two quarters
of 2007 with immediate vesting, and options to acquire 1,500,000 shares were vested as to one third on the date of grant and one third on each of the first and second anniversary of the grants. The weighted-average grant date fair market value of
the 275,000 stock options granted during the first quarter was $0.43/share and for the 550,000 exercisable stock options granted during the second quarter was $0.52/share. All the non-exercisable stock options granted in the second quarter and
outstanding at year-end (for 1,000,000 shares, which had a weighted-average grant date fair market value of $0.45/share), for which compensation expense had not been booked, were cancelled subsequent to year-end.



|NOTE 16 | STOCK COMPENSATION PLAN
|------- | -----------------------

The board of directors adopted the 2006
Incentive Compensation Plan (the Compensation Plan) on October 12, 2006 and reserved 2,200,000 common shares to be made available for grant under the Compensation Plan. On December 6, 2007, the board of directors amended the
Compensation Plan by increasing the total shares reserved under the Compensation Plan to three million two hundred thousand (3,200,000) common shares available for grant. The purpose of the Compensation Plan is to afford the persons who provide
services to the Company or any of its subsidiaries or affiliates, whether directors, officers, consultants or employees of our Company or its subsidiaries or affiliates, an opportunity to obtain a proprietary interest in the Company by permitting
them to be paid in common shares of our stock and to conserve our cash by being able to pay and consultants or others who provide services to us in shares in lieu of cash. Under the terms of the Compensation Plan, the board of directors has full
authority to administer the Compensation Plan in accordance with the terms of the Compensation Plan and at any time to establish additional terms, conditions, rules or procedures for the Compensation Plan provided, however, that no such terms shall
be inconsistent with the provisions of the Compensation Plan. The Company has no plans to repurchase stock.

The Board decided in February 2007 to
compensate directors for previous board, meeting and committee fees for the fiscal 2006 and for the period through February 1, 2007 and issued 237,110 shares of our stock at a market value of $0.97 per share for a non-cash cost totaling
$230,000. These payments were made under the Companys Stock Compensation Plan. On March 2, 2007 we issued a further 16,990 shares to consultants at $1.03 per share for a total non-cash cost of $17,500.

At December 31, 2007, 2,945,900 shares were available for grant under the Compensation Plan.



|NOTE 17 | INCOME TAXES
|------- | ------------

The Company has net operating loss carry-forwards of
approximately $4.25 million (December 31, 2006 $1,069,276) available for deduction against future years taxable income. The valuation allowance increased to approximately $1.45 million (December 31, 2006 $378,590) during the year ended
December 31, 2007, since the realization of the net operating loss carry-forwards is doubtful. It is reasonably possible that our estimate of the valuation allowance will change. The operating loss carry-forwards will expire between 2019 and
2022.



44



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|NOTE 18 | SUBSEQUENT EVENTS
|------- | -----------------

On January 25, 2008, David Stafford
Johnson, Esq. was appointed Executive Chairman of the Company, replacing Dr. Frederik W. Warnaars. Dr. Warnaars, one of the Companys founders, has stepped down as Chairman, but remains a Director.

On January 25, 2008, the Board cancelled unexercisable and unvested stock options held by directors (which would have vested over the next 18 months) to acquire
1,000,000 shares at an average price of $1.08/share.

On February 15, 2008, the Company entered into and closed a $1,000,000 equity financing
agreement with European institutional investors. In this financing the Company issued 3,333,334 units, with each Unit equal to one common share and one-half warrant; each warrant entitles the holder to purchase 1,666,667 additional common shares at
$0.50 per share at any time up to February 15, 2013.

The Company also closed a $1.5 million convertible debenture financing with three U.S.-based
institutional investors on February 26, 2008. At the option of the Company, the debentures can be redeemed for cash or exchanged for common shares at a floor price of $0.30 per share. The investors will also receive 3,750,000 Series A Warrants,
priced at $0.35 per share that can be exercised in six months after closing and have a term of five years to February 26, 2013, and the 4,999,997 Series B warrants are immediately exercisable at $0.35 per share and have a term of eighteen
months to August 26, 2009.

On March 26, 2008, the Company announced that Bolsa had entered into an agreement to acquire 20 patented mining
claims (the Viewsites claims) in the Turquoise Mining District of Cochise County, Arizona. The Viewsites claims are located to the west and southwest of the MAN Area that is part of the Hill Copper-Zinc Project. These claims encompass an
estimated 363 acres (survey pending) and incorporate projected extensions of the MAN Area mineralization. Bolsa will acquire the Viewsites claims with staged payments totaling $950,000 over thirty months. Closing is scheduled to occur by
August 1, 2008 following completion of a detailed survey of the 20 patented mining claims.

*** *** ***



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

We have had no disagreements with our accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to the
satisfaction of our accountants would have caused them to make reference thereto in their reports on our audited financial statements.

We engaged Mason
Russell West, LLC, Certified Public Accountants, of Littleton, Colorado, as our principal independent auditors effective August 9, 2006. In November 2007, Mason Russell West LLC merged their firm into Haynie & Company, Certified Public
Accountants and going forward our principal independent auditors will be Haynie & Company, although we have not had a change of auditors. Our principal independent auditors prior to Mason Russell West LLC were Dohan and Company, Certified
Public Accountants. Concurrent with the appointment of Mason Russell West, LLC Certified Public Accountants, Dohan and Company, Certified Public Accountants resigned as our principal independent auditors effective August 9, 2006. The decision
to change principal independent auditors was approved by our board of directors.

The report of Dohan and Company, Certified Public Accountants dated
July 19, 2005 on our balance sheet for the year ended May 31, 2005, the related statement of stockholders equity for the period from February 19, 2004 (inception) to May 31, 2005 and the related statements of operations and
cash flows for each of the years ended May 31, 2005 and 2004 and for the period from February 19, 2004 (inception) to May 31, 2005 did not contain an adverse opinion or disclaimer of opinion, nor was it modified as to uncertainty,
audit scope, or accounting principles, other than to state that there is substantial doubt as to our ability to continue as a going concern.

In connection
with the audit of the year ended May 31, 2005 and the period from February 19, 2004 (inception) to May 31, 2005 and during the subsequent interim period through to the date of their resignation, there were no disagreements with Dohan
and Company, Certified Public Accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to the satisfaction of Dohan and Company, Certified
Public Accountants would have caused them to make reference thereto in their reports on our audited financial statements.



45



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|ITEM 8A(T) | CONTROLS AND PROCEDURES
|---------- | -----------------------

Evaluation of disclosure controls and
procedures.

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as
of December 31, 2007, our president and chief executive officer and our chief financial officer have concluded that our disclosure controls and procedures are effective such that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and (ii) accumulated and communicated to our management,
including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding disclosure. A control system cannot provide absolute assurance, however, that the objectives of the control systems are met,
and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in internal controls over financial reporting:

There was no change in our internal controls over financial reporting that occurred
during the period covered by this report, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Managements Annual Report on Internal Control over Financial Reporting:

Our management is responsible for
establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting
may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide no reasonable assurance of achieving their control objectives. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our principal executive officer and principal accounting officer, conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal ControlIntegrated Framework. Based on its evaluation, our management concluded that as of December 31, 2007 our internal control over financial
reporting is effective.

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



|ITEM 8B | OTHER INFORMATION
|------- | -----------------

None.

PART III



|ITEM 9 | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
|------ | ------------------------------------------------------------

As of
March 21, 2008, our directors and executive officers, their ages, positions held, and duration as such, are as follows:



|                      |  |                                                      |  |     |  |                               
|--------------------- |  | ---------------------------------------------------- |  | --- |  | ------------------------------
|Name                  |  | Position Held with the Company                       |  | Age |  | Date First Elected orAppointed
|Stephen B. Doppler    |  | President and Chief Executive Officer and a Director |  | 51  |  | August 17, 2006               
|David C. Jonson       |  | Vice-President, Business Development                 |  | 78  |  | August 17, 2006               
|Earl H. Detra         |  | Vice President, Exploration                          |  | 56  |  | October 16, 2007              
|David S. Johnson      |  | Chairman of the Board and a Director                 |  | 56  |  | September 28, 2006            
|Stephen R. Stine      |  | Chief Operating Officer and a Director               |  | 60  |  | September 28, 2006            
|Allan J. Marter       |  | Chief Financial Officer and a Director               |  | 60  |  | November 28, 2006             
|Dr. Frederik Warnaars |  | Company Secretary and a Director                     |  | 72  |  | August 17, 2006               

All directors of our company hold office until the next annual meeting of the stockholders or until their
successors have been elected and qualified. Currently there are five seats on our board of directors. The officers of our company are appointed by our board of directors and serve until their successors are appointed by the board of directors or
until their death, resignation or removal from office.



46



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Business Experience

The following is a brief account of the education and business experience of each of our directors, executive officers and key employees during at least the past five years, indicating each persons principal occupation during the
period, and the name and principal business of the organization by which he or she was employed.

Stephen B. Doppler, President and Chief Executive
Officer and a Director

Mr. Doppler has been President and Chief Executive Officer of the Company since October 16, 2007 and was previously
Chairman (until October 16, 2007) and Secretary (from August 17, 2006 until October 16, 2007) and a director of our Company. Mr. Doppler has worked in the mining industry for nearly 20 years. Since 1999, Mr. Doppler has
acted as the managing director of Doppler & Associates of Colorado, a consulting firm specializing in reverse takeovers and other corporate transactions involving OTC-BB companies. From 1996 to 1999, Mr. Doppler acted as President, CEO
and Chairman of Adamas Resources Corp., a junior resource company listed on the TSX Venture Exchange. Prior to 1996, Mr. Doppler provided advisory and consulting services in the area of mergers and acquisitions, planning and valuations to
international mining companies with copper, gold and silver projects. Mr. Doppler earned a Master of Sciences in Mineral Economics from the Colorado School of Mines, and a Bachelor of Arts (Geology) and a Bachelor of Arts (Economics) from Bates
College in Maine.

David C. Jonson, Vice-President, Business Development

Mr. Jonson has been Vice President, Business Development of the Company since October 16, 2007 and prior to that was Vice-President of Exploration and was a director of our Company from August 17, 2006
to November 7, 2006. Mr. Jonson has over forty-four years of experience as a mining geologist, half of which were spent in management and the other half as a geological consultant. Since 1977, Mr. Jonson has provided consulting
services to various clients during which he has made field or office evaluations of over 600 prospects, mines and mining districts and has discovered or identified numerous large, attractive precious and base metal prospects, prepared several
bankable feasibility studies, and designing computerized mining models. Prior to 1977 Mr. Jonson was employed in various geological positions with Freeport Exploration Co., Midwest Oil Corp., Climax Molybdenum Co. and Newmont Mining Corp. After
spending two years with the U.S. Army Corps of Engineers, Mr. Jonson earned a Master of Sciences in Geology from the Colorado School of Mines in 1955. Mr. Jonson is a Fellow with the Society of Economic Geologists.

David S. Johnson, Chairman of the Board

Mr. Johnson serves as
our Chairman (since January 25, 2008) and as a director and was previously General Counsel to the Company and a director since September 28, 2006. He was also Corporate Secretary of the Company between October 16, 2007 and
January 25, 2008, when he resigned as Corporate Secretary and General Counsel to take on the role of Chairman. Since 2003, Mr. Johnson has founded and acted as president of Tordal Ventures, LLC; a multifaceted financial, investment and
advisory company, currently representing, among many other companies, NYCON Resources, Inc. in developing domestic and international precious metal projects. In the 1980s and through the 1990s, Mr. Johnson was corporate counsel to Duval Mining
Corporation (a subsidiary of Pennzoil) and later was General Counsel and a member of Amselco Minerals Executive Committee (a subsidiary of British Petroleum), a Principal and VP of Law for Castle Group, and a VP and Director of Energy
Acquisition Corporation. Mr. Johnson earned an AB from Dartmouth College, an MBA with honors from Arizona State University, and a Juris Doctor of Law from the University of Arizona, with post graduate certificates from Denver University, the
Colorado School of Mines and Harvard University. Since 2005, he has been an Adjunct Professor at the Metropolitan State College in Denver, CO, teaching courses in business essentials and the legal environment of business.

Stephen R. Stine, Chief Operating Officer and a Director

A director
since September 28, 2006, Mr. Stine was appointed Chief Operating Officer on May 1, 2007. Mr. Stine has 35 years of experience in the management of metallurgical, exploration, and development efforts with over 15 exploration and
mining projects. Since founding Stine Consulting, Inc. in 2000, he has worked in varying management consulting capacities for Tournigan Gold Corporation, Gold Fields Limited, Newmont Mining Corporation, Alamos Gold Inc., and North American Palladium
Ltd. Between 1994 and 2000, Mr. Stine was President of Laguna Gold Company, and First Dynasty Mines Ltd. Prior to 1994, he worked for FMC Gold Company, Cyprus Minerals Company, U.S. Borax and Chemical Corporation, Southern Peru Copper
Corporation, Ortloff Minerals Service Corporation, and Amax. Mr. Stine earned his Bachelor of Science degree in Metallurgical Engineering from the Colorado School of Mines and is a Colorado and Minnesota Professional Engineer.

Allan J. Marter, Chief Financial Officer and a Director

Mr. Marter was appointed Interim Chief Financial Officer and a director on November 28, 2006. A Past-President of the Northwest Mining Association, Mr. Marter has 30 years of senior management and financial experience in the
mining industry. For the seven years from November 1999 through October 2006 he served as Chief Financial Officer for Golden Star Resources Ltd. (AMEX: GSS,



47



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TSX: GSC), (a mid-tier gold producer. During the 1990s he was a director of Endeavour Financial Inc. and the principal of Waiata Resources (now Waiata Inc.),
Mr. Marters own firm which provides financial and advisory services to the mining industry. In the 1970s and 1980s he worked in financial management and executive positions for Crown Resources Corporation, Quartz Mountain Gold, Cornucopia
Resources and Hudson Bay Mining and Smelting. In addition to working as an investment banker within the mining industry, Mr. Marter has also served as a director and financial advisor for a number of junior Canadian and US junior exploration
and mining companies.

Dr. Frederik Warnaars, Company Secretary and a Director

Dr. Warnaars is now Corporate Secretary (since January 25, 2008) and was previously the Chairman (October 16, 2007 until January 25, 2008) and President and Chief Executive Officer (from August 17,
2006 until October 16, 2007) and a director of our Company. Dr. Warnaars has accumulated over thirty-two years of experience in geology and the management of exploration and development teams. Since 1993, when Dr. Warnaars founded
International American Resources, Inc. and Minera Holmex S.A. de C.V., Dr. Warnaars was able to acquire exploration properties, and to provide consulting services to various companies including MIM (Australia), Apex Silver Mines Ltd. and
Queenstake. Prior to 1993, Dr. Warnaars acted in senior geological and consulting positions in many countries including Ecuador, Papua New Guinea and Chile with Cyrus Mineral Company, Cyprus Minera de Honduras, Behre Dolbear
Riverside & Company, Exxon Minerals Company, Esso and Kennecott Copper Corporation. From 1965 to 1969, Dr. Warnaars was an assistant professor of geochemistry and geophysics at the University of Utrecht, Netherlands. Dr. Warnaars
earned a Doctorate in Petrology from the University of Leyden, Netherlands, in 1967.

Earl H. Detra, Vice President, Exploration

Mr. Detra was appointed Vice President, Exploration of Bolsa on October 1, 2006. As of October 16, 2007, Mr. Detra was appointed Vice President,
Exploration of the Company. Mr. Detra has been active in exploration and mining for over 30 years working for a number of companies including Cominco American, Inc., Noranda Exploration, Noranda Mining, Texasgulf Minerals and Metals, and Amax
Gold. He was District Geologist for Texasgulf at Cripple Creek, Colorado and Geology Superintendent at the Hayden Hill Mine in California for Amax Gold. He has worked in open-pit and underground operations and in exploration throughout North America
and the Pacific Rim. He received a B. S. in Geology from The Pennsylvania State University and a M.S. in Geology from the University of Montana.

Committees of the Board of Directors

Effective December 22, 2006, the board of directors appointed Messrs. David S. Johnson and
Stephen R. Stine to the Audit Committee. On the same date, the board of directors appointed Messrs. Stephen B. Doppler, David S. Johnson and Allan J. Marter to the Compensation Committee. Our board of directors presently does not have a nominating
committee, executive committee or a separate stock plan committee.

Terms of Office

Our directors are appointed for one-year terms to hold office until the next annual general meeting of the holders of our common stock or until removed from office in accordance with our by-laws. Our officers are
appointed by our board of directors and hold office until removed by our board of directors.

Audit Committee Financial Expert

Our board of directors has determined that it does not have a member of its audit committee who qualifies as an audit committee financial expert as defined in
Item 401(e) of Regulation S-B, and is independent as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.

We believe that the members of our audit committee and the board of directors are collectively capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. In addition, we believe that retaining an independent director who would qualify as an audit committee financial expert would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development and the fact that we have not generated any revenues to date.

Code of Ethics

We have adopted a Code of Ethics applicable to our officers and directors which is a code of ethics as defined by applicable rules of the
SEC. Our Code of Ethics was attached to our annual report filed on Form 10-KSB for the year ended May 31, 2006. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant
any waivers, including implicit waivers, from a provision of our Code of Ethics to our Chief Executive Officer, Chief Financial Officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date
and to whom it applies in a current report on Form 8-K filed with the SEC.



48



---

Family Relationships

There are no family relationships among our directors or officers.



|ITEM 10 | EXECUTIVE COMPENSATION
|------- | ----------------------

Summary Compensation Tables

The table below summarizes all compensation awarded to, earned by, or paid to our principal executive officer and each of our most highly compensated
executive officers who were serving as executive officers at the end of the period ended December 31, 2007, and to two additional individuals for whom disclosure would have been provided but for the fact that the individual was not serving as
our executive officer at the end of the most recently completed financial period (being December 31, 2007).

SUMMARY COMPENSATION
TABLE



|                                                  |  |      |     |  |           |        |     |          |     |                |   |         |                 |  |                                         |        |                                                                       |     |                          |     |          |     |  |   |        
|------------------------------------------------- |  | ---- | --- |  | --------- | ------ | --- | -------- | --- | -------------- | - | ------- | --------------- |  | --------------------------------------- | ------ | --------------------------------------------------------------------- | --- | ------------------------ | --- | -------- | --- |  | - | -------
|Nameand Principal Position                        |  | Year |     |  | Salary($) |        |     | Bonus($) |     | StockAwards($) |   |         | OptionAwards($) |  | Non-EquityIncentivePlanCompen-sation($) |        | Change inPensionValue
andNonqualifiedDeferredCompen-sationEarnings($) |     | AllOtherCompen-sation($) |     | Total($)
|Paul Fong(1)                                      |  | 2007 |     |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|Previously President, CEO, Treasurer and Director |  | 2006 | (2) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  | 2006 | (3) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  |      |     |  |           |        |     |          |    
|Patrick McGrath(1)                                |  | 2007 |     |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|Previously CFO, Secretary and Director            |  | 2006 | (2) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  | 2006 | (3) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  |      |     |  |           |        |     |          |    
|Frederik Warnaars(1) (4)                          |  | 2007 |     |  | $         | 75,000 | (9) |          | Nil |                | $ | 117,000 | (10)            |  | $                                       | 51,000 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 243,000
|President, CEO or Chairman during 2006 and 2007   |  | 2006 | (2) |  | $         | 49,500 |     |          | Nil |                |   | Nil     |                 |  | $                                       | 33,300 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 82,800 
|and now Corporate Secretary                       |  | 2006 | (3) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  |      |     |  |           |        |     |          |    
|Stephen B. Doppler(1) (4)                         |  | 2007 |     |  | $         | 24,332 | (9) |          | Nil |                | $ | 146,839 | (10)            |  | $                                       | 54,000 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 225,171
|President, CEO and a Director                     |  | 2006 | (2) |  | $         | 19,283 |     |          | Nil |                |   | Nil     |                 |  | $                                       | 33,300 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 52,583 
|                                                  |  | 2006 | (3) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  |      |     |  |           |        |     |          |    
|David C. Jonson(1) (4) (5)                        |  | 2007 |     |  | $         | 44,000 | (9) |          | Nil |                | $ | 61,900  | (10)            |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 105,900
|Vice President, Business Development              |  | 2006 | (2) |  | $         | 47,375 |     |          | Nil |                |   | Nil     |                 |  | $                                       | 33,300 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 80,675 
|                                                  |  | 2006 | (3) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  |      |     |  |           |        |     |          |    
|David S. Johnson(6) (4)                           |  | 2007 |     |  | $         | 26,000 | (9) |          | Nil |                | $ | 152,000 | (10)            |  | $                                       | 54,000 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 232,000
|Chairman, previously Corporate Counsel, Corporate |  | 2006 | (2) |  | $         | 10,000 |     |          | Nil |                |   | Nil     |                 |  | $                                       | 34,050 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 44,050 
|Secretary and a Director                          |  | 2006 | (3) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  |      |     |  |           |        |     |          |    
|Stephen R. Stine(7)                               |  | 2007 |     |  | $         | 16,000 | (9) |          | Nil |                | $ | 122,000 | (10)            |  | $                                       | 54,000 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 192,000
|Chief Operating Officer and a Director            |  | 2006 | (2) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  | $                                       | 34,050 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 34,050 
|                                                  |  | 2006 | (3) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  |      |     |  |           |        |     |          |    
|Allan J. Marter(8)                                |  | 2007 |     |  | $         | 28,000 | (9) |          | Nil |                | $ | 120,000 | (10)            |  | $                                       | 84,000 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 232,000
|Chief Financial Officer and a Director            |  | 2006 | (2) |  | $         | 3,000  |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 3,000  
|                                                  |  | 2006 | (3) |  |           | Nil    |     |          | Nil |                |   | Nil     |                 |  |                                         | Nil    |                                                                       | Nil |                          | Nil |          | Nil |  |   | Nil    
|                                                  |  |      |     |  |           |        |     |          |    
|Earl H. Detra(4)                                  |  | 2007 |     |  | $         | 43,368 | (9) |          | Nil |                | $ | 10,000  | (10)            |  | $                                       | 33,000 |                                                                       | Nil |                          | Nil |          | Nil |  | $ | 86,368 
|Vice President, Exploration                       |  |      |     |  |           |        |     |          |     |                |   |         |                 |  |                                         |        |                                                                       |     |                          |     |          |     |  |   |        



|(1) | On August 17, 2006, Dr. Frederik Warnaars was appointed President, CEO, CFO, Treasurer and a director, Mr. Stephen B. Doppler was appointed as our Corporate
Secretary and a director, Mr. David C. Jonson was appointed Vice President Exploration and a director, and both Mr. Paul Fong and Mr. Patrick McGrath resigned as officers and directors of our company.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The previous fiscal period was for the seven months ended December 31, 2006.
|--- | ----------------------------------------------------------------------------



|(3) | The fiscal period prior to that was for the year ended May 31, 2006.
|--- | --------------------------------------------------------------------



|(4) | On October 16, 2007, Mr. Stephen B. Doppler was appointed President and CEO, Dr. Frederick W. Warnaars, Chairman of the Board, Mr. David C.
Jonson, Vice President, Business Development, Mr. Earl H. Detra, Vice President, Exploration and Mr. David S. Johnson, Corporate Secretary of the Company.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Mr. David C. Jonson served as a director of the company until November 7, 2006 when he resigned.
|--- | ------------------------------------------------------------------------------------------------



|(6) | Mr. David S. Johnson was appointed a director and General Counsel of the company effective September 28, 2006 and Corporate Secretary on October 16, 2007. He
resigned these two roles and became Chairman on January 25, 2008, upon the resignation of Dr. Warnaars as Chairman (and Dr. Warnaars became Corporate Secretary on this date).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Mr. Stephen R. Stine was appointed a director of the company effective September 28, 2006, and was appointed Chief Operating Officer effective May 1, 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) | Mr. Allan J. Marter was appointed Chief Financial Officer and a director effective November 28, 2006.
|--- | -----------------------------------------------------------------------------------------------------



|(9) | Salary is amount paid in cash in 2007 to Directors and Officers for contract consulting services, not including stock awarded in lieu of cash.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------



|(10) | Stock awards include amounts for salary paid in 2007 to Directors and Officers in lieu of cash, and fees paid for Board of Director fees, Compensation Committee fees, Audit
Committee fees, and Board Meeting Attendance fees for the seven months ended December 31, 2006 and for the year ended December 31, 2007.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



49



---

Consulting Contracts

Effective August 17, 2006, we entered into a consulting agreement with International American Resources, Inc., a corporation wholly-owned by Dr. Frederik Warnaars. Under the terms of this agreement, International American
Resources, Inc. contracted to supply the services of Dr. Warnaars as President and CEO of our company for a period of two years, subject to annual renewal. For the provision of these consulting services, we will pay International American
Resources, Inc. $5,000 monthly for the consulting services provided. We granted 100,000 options to Dr. Warnaars during the seven months ended December 31, 2006, and 300,000 options during the year ended December 31, 2007.

Effective August 17, 2006, we entered into a consulting agreement with Jonson Management Company, a corporation wholly-owned by David C. Jonson. Under the terms
of this agreement, Jonson Management Company contracted to supply the services of Mr. Jonson as a consultant to our company for a period of two years, subject to annual renewal. Jonson Management Company will, through Mr. Jonson, provide
assistance and guidance to our company and its subsidiary, Bolsa, in acquiring, developing and operating our mineral properties and projects, and to contact and negotiate with the owners of suitable mineral properties for potential acquisition by
our company. For the provision of these consulting services, we presently pay Jonson Management Company $6,000 monthly for the consulting services provided. We also granted 100,000 options to Mr. Jonson during the seven months ended
December 31, 2006.

Effective August 17, 2006, we entered into a consulting agreement with Salzburg Holdings LLC, a corporation wholly-owned by
Stephen B. Doppler. Under the terms of this agreement, Salzburg Holdings LLC agreed to supply the services of Mr. Doppler, on a part-time basis, as a consultant to our company for a period of two years, subject to annual renewal. Salzburg
Holdings LLC will, through Mr. Doppler, provide assistance and guidance to our company, and to our subsidiaries, in acquiring, developing and operating our mineral properties and projects, and contacting and negotiating with the owners of
suitable mineral properties for potential acquisition by our company. For the provision of these consulting services, we will pay Salzburg Holdings LLC the amount of $43.75 per hour for consulting services provided. We granted 100,000 options to
Mr. Doppler during the seven months ended December 31, 2006, and 300,000 options during the year ended December 31, 2007.

We entered into a
consulting agreement with David S. Johnson on September 1, 2006 under which Mr. Johnson will be retained as General Counsel to the company. For the provision of his service on a part-time basis as General Counsel, focusing on the
companys ongoing land acquisition program in addition to transaction assistance and general legal advisory services, we will pay Mr. Johnson $2,500 per month for up to twenty five hours and at a rate of $125 per hour thereafter. We
granted 100,000 options to Mr. Johnson during the seven months ended December 31, 2006, and 300,000 options during the year ended December 31, 2007.

Effective November 1, 2006, we entered into a consulting agreement with Waiata Inc., a corporation wholly-owned by Allan J. Marter. Under the terms of this agreement, Waiata Inc. agreed to supply the services of Mr. Marter, on a
part-time basis, to act as Chief Financial Officer for our company. For the provision of these consulting services, we paid Waiata Inc. $4,000 per month during 2007. We made separate stock option grants to Mr. Marter of 100,000 options and
300,000 options during the year ended December 31, 2007.

Effective May 1, 2007, we entered into a consulting agreement with Stine Consulting,
LLC, a corporation wholly-owned by Stephen R. Stine. Under the terms of this agreement, Stine Consulting, LLC agreed to supply the services of Mr. Stine, on a part-time basis, to act as Chief Operating Officer for our company, and as a
consultant to our company for a period of one year, subject to annual renewal. Stine Consulting, LLC will, through Mr. Stine, provide assistance and guidance to our company, and to our subsidiaries, in acquiring, developing and operating our
mineral properties and projects, and contacting and negotiating with the owners of suitable mineral properties for potential acquisition by our company. For the provision of these consulting services, we will pay Stine Consulting, LLC the amount of
$4000 per month for consulting services provided. We granted 100,000 options to Mr. Stine during the seven months ended December 31, 2006, and 200,000 options during the year ended December 31, 2007.

We entered into a consulting agreement with Earl H. Detra on October 1, 2006 under which Mr. Detra will perform the duties of a Vice President, Exploration for
Bolsa Resources, until December 31, 2007, subject to renewal. As of October 16, 2007, Mr. Detra was appointed Vice President, Exploration for all of the companys projects. For the provision of his service on a part-time basis as
Vice President, Exploration, we will pay Mr. Detra $350 per day in the office and $400 per day in the field. We granted 75,000 options to Mr. Detra during the year ended December 31, 2007.



50



---

Outstanding Equity Awards at December 31, 2007

During the year ended December 31, 2007 we granted stock options to executive officers and directors as set out in the table below.



|                                                        |  |                                                              |  |                                                                |  |                                                                                       |  |                        |      |                       |                  |                                                       |     |                                                            |     |                                                                                                |     |                                                                                                                 |    
|------------------------------------------------------- |  | ------------------------------------------------------------ |  | -------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | ---------------------- | ---- | --------------------- | ---------------- | ----------------------------------------------------- | --- | ---------------------------------------------------------- | --- | ---------------------------------------------------------------------------------------------- | --- | --------------------------------------------------------------------------------------------------------------- | ---
|                                                        |  | Options Awards                                               |  | Stock Awards                                                  
|Name                                                    |  | NumberofSecuritiesUnderlyingUnexercisedOptions(#)Exercisable |  | NumberofSecuritiesUnderlyingUnexercisedOptions(#)Unexercisable |  | EquityIncentive PlanAwards:Numberof SecuritiesUnderlyingUnexercisedUnearnedOptions(#) |  | OptionExercisePrice($) |      | OptionExpiration Date |                  | Number ofShares orUnits ofStockThat HaveNot Vested(#) |     | Market ValueofShares orUnits ofStockThat HaveNot Vested($) |     | EquityIncentive PlanAwards:Number ofUnearnedShares, Units orOther RightsThat Have
NotVested(#) |     | Equity IncentivePlan Awards:Market or PayoutValue ofUnearned Shares,Units or OtherRights That
HaveNot Vested($)
|Paul Fong Former President, CEO, Treasurer and Director |  | Nil                                                          |  | Nil                                                            |  | Nil                                                                                   |  |                        | N/A  |                       | N/A              |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil
|Patrick McGrath Former CFO, Secretary and Director      |  | Nil                                                          |  | Nil                                                            |  | Nil                                                                                   |  |                        | N/A  |                       | N/A              |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil
|Frederik Warnaars Chairman of the Board                 |  | 100,000                                                      |  | 200,000                                                        |  | Nil                                                                                   |  | $                      | 1.17 |                       | June 12, 2010    |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil
|Stephen Doppler President and CEO                       |  | 100,000                                                      |  | 200,000                                                        |  | Nil                                                                                   |  | $                      | 1.06 |                       | June 12, 2010    |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil
|David C. Jonson Vice President Corporate Development    |  | 100,000                                                      |  | 200,000                                                        |  | Nil                                                                                   |  | $                      | 1.06 |                       | June 12, 2010    |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil
|David S. Johnson(6)                                     |  | 100,000                                                      |  | 200,000                                                        |  | Nil                                                                                   |  | $                      | 1.06 |                       | June 12, 2010    |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil
|Corporate Secretary, General Counsel and a Director     |  |                                                              |  |                                                                |  |                                                                                       |  |                        |      |                       |                  |                                                       |     |                                                            |     |                                                                                                |     |                                                                                                                 |    
|Stephen R. Stine(7)                                     |  | 100,000                                                      |  | 200,000                                                        |  | Nil                                                                                   |  | $                      | 1.06 |                       | June 12, 2010    |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil
|COO and Director                                        |  |                                                              |  |                                                                |  |                                                                                       |  |                        |      |                       |                  |                                                       |     |                                                            |     |                                                                                                |     |                                                                                                                 |    
|Allan J. Marter(8)                                      |  | 100,000                                                      |  | Nil                                                            |  | Nil                                                                                   |  | $                      | 0.75 |                       | January 2, 2012  |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil
|Chief Financial Officer and a Director                  |  | 100,000                                                      |  | 200,000                                                        |  | Nil                                                                                   |  | $                      | 1.06 |                       | June 12, 2010    |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil
|Earl H. Detra Vice President Exploration                |  | 75,000                                                       |  | Nil                                                            |  | Nil                                                                                   |  | $                      | 1.10 |                       | February 1, 2010 |                                                       | Nil |                                                            | Nil |                                                                                                | Nil |                                                                                                                 | Nil

There are no arrangements or plans in which we provide pension, retirement or similar benefits for our directors
or officers. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or officers, except that stock options may be granted at the discretion of our board of
directors in the future.



51



---

We have no plans or arrangements in respect of remuneration received or that may be received by the officers to
compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control.

Stock Option Plan

The board of directors adopted the 2006 Stock
Option Plan (the Plan) on September 15, 2006 and reserved two million eight hundred thousand (2,800,000) common shares to be made available for grant under the Plan. On December 6, 2007, the board of directors amended the
Plan by increasing the total shares reserved under the Plan to three million two hundred thousand (3,200,000) common shares available for grant. The purpose of the Plan is to afford the persons who provide services to our company or any of its
subsidiaries or affiliates, whether directors, officers, consultants or employees of our company or its subsidiaries or affiliates, an opportunity to obtain a proprietary interest in our company by permitting them to purchase common shares of our
stock and to aid in attracting, as well as retaining and encouraging the continued involvement of such persons with us. Under the terms of the Plan, the board of directors has full authority to administer the Plan in accordance with the terms of the
Plan and at any time amend or revise the terms of the Plan provided, however, that no amendment or revision shall alter the terms of options already granted. The shareholders ratified and approved the adoption of the 2006 Stock Option Plan at the
Annual General Meeting of Stockholders held on May 18, 2007.

Under the Plan, the exercise price of the shares covered by each option shall be
determined by the directors and shall be not less than the closing price of our common shares on the stock exchange, quotation system or stock exchanges on which the shares are listed on the date of the grant or the day the fair market value is to
be determined or the immediately preceding the day on which the stock is reported. If granted to an employee or director the per share exercise price shall be not less than the fair market value of the share on the date of the grant, unless the
grant is to an employee who holds more than 10% of the voting power of our stock, in which case the per share exercise price shall be not less than 110% of the fair market value on the date of the grant. Options granted under the Plan vest
immediately for non-employee directors and the vesting schedule for all others granted options under the Plan will be established by the Board or a committee appointed by the Board to administer the Plan on behalf of the Board. Our company has not
established a separate committee to this date. Options granted under the Plan will not be transferable and, if they are not exercised, will expire thirty (30) days following the date the optionee ceases to be director, officer, employee or
consultant of our company unless by death, in which case the option may be exercised within 12 months following the date of death.

The assumptions used in
valuing options granted during 2007 are included in Note 15 to the consolidated financial statements. At December 31, 2007, 875,000 options were available for grant under the Plan.

Stock Compensation Plan

The board of directors adopted the 2006 Incentive Compensation Plan (the Compensation
Plan) on October 12, 2006 and reserved 2,200,000 common shares to be made available for grant under the Compensation Plan. On December 6, 2007, the board of directors amended the Compensation Plan by increasing the total shares
reserved under the Compensation Plan to three million two hundred thousand (3,200,000) common shares available for grant. The purpose of the Compensation Plan is to afford the persons who provide services to the Company or any of its
subsidiaries or affiliates, whether directors, officers, consultants or employees of our Company or its subsidiaries or affiliates, an opportunity to obtain a proprietary interest in the Company by permitting them to be paid in common shares of our
stock and to conserve our cash by being able to pay and consultants or others who provide services to us in shares in lieu of cash. Under the terms of the Compensation Plan, the board of directors has full authority to administer the Compensation
Plan in accordance with the terms of the Compensation Plan and at any time to establish additional terms, conditions, rules or procedures for the Compensation Plan provided, however, that no such terms shall be inconsistent with the provisions of
the Compensation Plan. The Company has no plans to repurchase stock.

In 2007 we issued 237,110 shares of our stock under the Stock Compensation Plan to
our directors and officers for directors fees and meeting fees for the seven months ended December 31, 2006 and for the period through February 1, 2007 at a market value of $0.97 per share for a total non-cash cost of $230,000. In
March 2007 we issued 16,990 shares to consultants at $1.03 per share for a total non-cash cost of $17,500.

At December 31, 2007, 2,945,900 shares
were available for grant under the Compensation Plan.



|ITEM 11 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|------- | ----------------------------------------------------------------------------------------------

The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding common stock as of March 21, 2008, and by the officers and directors, individually and as a
group. All shares are owned directly.



52



---

|                                                                                                                 |  |                                          |             |  |                        |  
|---------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ----------- |  | ---------------------- | -
|Name and Address of Beneficial Owner                                                                             |  | Amount and Nature ofBeneficial Ownership |             |  | Percentageof Class (1) |  
|Dr. Frederik Warnaars(2)(3) 5554 S. Prince Street, Littleton CO 80120                                            |  | 4,071,944(                               | 4)(13)(16)  |  | 9.6                    | %
|David C. Jonson(5) 5554 S. Prince Street, Littleton CO 80120                                                     |  | 1,712,823(                               | 6)(10)(17)  |  | 4.0                    | %
|Stephen B. Doppler(2)(7) 5554 S. Prince Street, Littleton CO 80120                                               |  | 1,890,028(                               | 10)(14)(16) |  | 4.5                    | %
|David S. Johnson(2)(8) 5554 S. Prince Street, Littleton CO 80120                                                 |  | 2,145,636(                               | 11)(14)(16) |  | 5.1                    | %
|Stephen R. Stine(2) 5554 S. Prince Street, Littleton CO 80120                                                    |  | 1,612,911(                               | 11)(14)(16) |  | 3.8                    | %
|Allan J. Marter(2)(9) 5554 S. Prince Street, Littleton CO 80120                                                  |  | 1,571,244(                               | 12)(14)(16) |  | 3.7                    | %
|Earl H. Detra 5554 S. Prince Street, Littleton CO 80120                                                          |  | 502,778(                                 | 15)(18)     |  | 1.2                    | %
|                                                                                                                 |  |                                          |             |  |                        |  
|Directors and Executive Officers as a Group                                                                      |  | 13,507,364                               |             |  | 31.9                   | %
|Telifonda Holdings Co. Limited, c/o Briantserve Limited Maria House, 5thFloor, 1
Avlonos Street, Nicosia, Cyprus |  | 3,333,334                                |             |  | 8.4                    | %



|(1) | Based on 39,879,789 shares of common stock issued and outstanding as of March 21, 2008. Beneficial ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with respect to securities. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners,
have sole investment and voting power with respect to such shares, subject to community property laws where applicable.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | This individual is a director of our company.
|--- | ---------------------------------------------



|(3) | Dr. Warnaars is also the Corporate Secretary of the Company.
|--- | ------------------------------------------------------------



|(4) | 800,000 of these common shares are held by International American Resources, Inc., a wholly-owned corporation of Dr. Frederik Warnaars.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------



|(5) | Mr. David C. Jonson is the Vice President Business Development of our company.
|--- | ------------------------------------------------------------------------------



|(6) | 800,000 of these common shares are held by Jonson Management Co., a wholly-owned corporation of David Jonson.
|--- | -------------------------------------------------------------------------------------------------------------



|(7) | Mr. Stephen B. Doppler is the President and CEO of the Company.
|--- | ---------------------------------------------------------------



|(8) | Mr. Johnson is the Chairman of the Board of Directors of our company.
|--- | ---------------------------------------------------------------------



|(9) | Mr. Marter is the Chief Financial Officer of our company.
|--- | ---------------------------------------------------------



|(10) | Includes stock options entitling the holder to acquire 100,000 shares upon payment of $0.79 per share.
|---- | ------------------------------------------------------------------------------------------------------



|(11) | Includes stock options entitling the holder to acquire 100,000 shares upon payment of $0.84 per share.
|---- | ------------------------------------------------------------------------------------------------------



|(12) | Includes stock options entitling the holder to acquire 100,000 shares upon payment of $0.75 per share.
|---- | ------------------------------------------------------------------------------------------------------



|(13) | Includes stock options entitling the holder to acquire 100,000 shares upon payment of $1.17 per share.
|---- | ------------------------------------------------------------------------------------------------------



|(14) | Includes stock options entitling the holder to acquire 100,000 shares upon payment of $1.06 per share.
|---- | ------------------------------------------------------------------------------------------------------



|(15) | Includes stock options entitling the holder to acquire 75,000 shares upon payment of $1.10 per share.
|---- | -----------------------------------------------------------------------------------------------------



|(16) | Includes stock options entitling the holder to acquire 250,000 shares upon payment of $0.35 per share.
|---- | ------------------------------------------------------------------------------------------------------



|(17) | Includes stock options entitling the holder to acquire 100,000 shares upon payment of $0.36 per share.
|---- | ------------------------------------------------------------------------------------------------------



|(18) | Includes stock options entitling the holder to acquire 75,000 shares upon payment of $0.35 per share.
|---- | -----------------------------------------------------------------------------------------------------

We believe that all persons named have full voting and investment power with respect to the shares indicated, unless otherwise noted in the table. Under the rules of the Securities and Exchange Commission, a person
(or group of persons) is deemed to be a beneficial owner of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the
disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days,
such as options or warrants to purchase our common stock.

Securities Authorized for Issuance under Equity Compensation Plans

The board of directors adopted the 2006 Stock Option Plan (the Plan) on September 15, 2006 and reserved two million eight hundred thousand
(2,800,000) common shares to be made available for grant under the Plan. On December 6, 2007, the board of directors amended the Plan by increasing the total shares reserved under the Plan to three million two hundred thousand
(3,200,000) common shares available for grant. The purpose of the Plan is to afford the persons who provide services to our



53



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company or any of its subsidiaries or affiliates, whether directors, officers, consultants or employees of our company or its subsidiaries or affiliates, an
opportunity to obtain a proprietary interest in our company by permitting them to purchase common shares of our stock and to aid in attracting, as well as retaining and encouraging the continued involvement of such persons with us. Under the terms
of the Plan, the board of directors has full authority to administer the Plan in accordance with the terms of the Plan and at any time amend or revise the terms of the Plan provided, however, that no amendment or revision shall alter the terms of
options already granted. The shareholders ratified and approved the adoption of the 2006 Stock Option Plan at the Annual General Meeting of Stockholders held on May 18, 2007.

Under the Plan, the exercise price of the shares covered by each option shall be determined by the directors and shall be not less than the closing price of our common shares on the stock exchange, quotation system or
stock exchanges on which the shares are listed on the date of the grant or the day the fair market value is to be determined or the immediately preceding the day on which the stock is reported. If granted to an employee or director the per share
exercise price shall be not less than the fair market value of the share on the date of the grant, unless the grant is to an employee who holds more than 10% of the voting power of our stock, in which case the per share exercise price shall be not
less than 110% of the fair market value on the date of the grant. Options granted under the Plan vest immediately for non-employee directors and the vesting schedule for all others granted options under the Plan will be established by the Board or a
committee appointed by the Board to administer the Plan on behalf of the Board. Our company has not established a separate committee to this date. Options granted under the Plan will not be transferable and, if they are not exercised, will expire
thirty (30) days following the date the optionee ceases to be director, officer, employee or consultant of our company unless by death, in which case the option may be exercised within 12 months following the date of death.

The assumptions used in valuing options granted during 2007 are included in Note 15 to the consolidated financial statements. At December 31, 2007, 875,000 options
were available for grant under the Plan.

The board of directors adopted the 2006 Incentive Compensation Plan (the Compensation Plan) on
October 12, 2006 and reserved 2,200,000 common shares to be made available for grant under the Compensation Plan. On December 6, 2007, the board of directors amended the Compensation Plan by increasing the total shares reserved under the
Compensation Plan to three million two hundred thousand (3,200,000) common shares available for grant. The purpose of the Compensation Plan is to afford the persons who provide services to the Company or any of its subsidiaries or affiliates,
whether directors, officers, consultants or employees of our Company or its subsidiaries or affiliates, an opportunity to obtain a proprietary interest in the Company by permitting them to be paid in common shares of our stock and to conserve our
cash by being able to pay and consultants or others who provide services to us in shares in lieu of cash. Under the terms of the Compensation Plan, the board of directors has full authority to administer the Compensation Plan in accordance with the
terms of the Compensation Plan and at any time to establish additional terms, conditions, rules or procedures for the Compensation Plan provided, however, that no such terms shall be inconsistent with the provisions of the Compensation Plan. On
December 6, 2007 the board of directors amended the Compensation Plan by increasing the total shares reserved under the Compensation Plan to three million two hundred thousand (3,200,000) common shares available for grant. The Company has
no plans to repurchase stock.

In 2007 we issued 237,110 shares of our stock under the Stock Compensation Plan to our directors and officers for
directors fees and meeting fees for the seven months ended December 31, 2006 and for the period through February 1, 2007 at a market value of $0.97 per share for a total non-cash cost of $230,000. In March 2007 we issued 16,990
shares to consultants at $1.03 per share for a total non-cash cost of $17,500.

At December 31, 2007, 2,945,900 shares were available for grant under
the Compensation Plan.



|ITEM 12 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|------- | ------------------------------------------------------------------------

Other than as disclosed below, there have been no transactions, or proposed transactions, which have materially affected or will materially affect us in which any director, executive officer or beneficial holder of more than 10% of the
outstanding shares of common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest.

In November 2007, the Company entered into a lease and option agreement with a director and officer for a property in Elfrida, Arizona. Bolsa is using the house for a field office and for temporary field accommodation
and pays a market rent ($1,175/month) for the property. The Company also has an option to acquire the property for the amount of the mortgage debt outstanding on the property.

We have no policy regarding entering into transactions with affiliated parties.

Corporate Governance

We currently act with five (5) directors, consisting of Dr. Frederik Warnaars, Stephen B. Doppler, David S. Johnson, Stephen R. Stine and Allan J. Marter.



54



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We have determined that none of our directors are independent, as that term is used in Rule 4200(a)(15) of the Rules of
National Association of Securities Dealers.

Effective December 22, 2006, the board of directors appointed Messrs. David S. Johnson and Stephen R.
Stine to the Audit Committee. On the same date, the board of directors appointed Messrs. Stephen B. Doppler, David S. Johnson and Allan J. Marter to the Compensation Committee. Our board of directors presently does not have a nominating committee,
executive committee or a separate stock plan committee.

Audit Committee Financial Expert

Our board of directors has determined that it does not have a member of its audit committee who qualifies as an audit committee financial expert as defined in
Item 401(e) of Regulation S-B, and is independent as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.

We believe that the members of our audit committee and the board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for
financial reporting. In addition, we believe that retaining an independent director who would qualify as an audit committee financial expert would be overly costly and burdensome and is not warranted in our circumstances given the early stages of
our development and the fact that we have not generated any revenues to date.



|ITEM 13 | EXHIBITS
|------- | --------



|       |  |                                                                                                                                                                       
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Description                                                                                                                                                           
|3.1    |  | Articles of Incorporation(1)                                                                                                                                          
|       | 
|3.2    |  | By-Laws adopted by the Board of Directors on September 11, 2007(13)                                                                                                   
|       | 
|10.1   |  | Agreement between Aurelio Resources, Inc. and Furio Resources, Inc. dated April 27, 2006(5)                                                                           
|       | 
|10.2   |  | Amended Agreement between Aurelio Resources, Inc. and Furio Resources, Inc. dated June 9, 2006(6)                                                                     
|       | 
|10.3   |  | Amended Agreement between Aurelio Resources, Inc. and Aurelio Resource Corporation dated July 13, 2006(7)                                                             
|       | 
|10.4   |  | Consulting Agreement among Aurelio Resource Corporation, International American Resources, Inc. and Dr. Frederik Warnaars dated August 9, 2006(8)                     
|       | 
|10.5   |  | Consulting Agreement among Aurelio Resource Corporation, Jonson Management Company and David C. Jonson dated August 9, 2006(8)                                        
|       | 
|10.6   |  | Consulting Agreement among Aurelio Resource Corporation, Salzburg Holdings Inc. and Stephen B. Doppler dated August 9, 2006(8)                                        
|       | 
|10.7   |  | Purchase Agreement dated May 15, 2006, between Aurelio Resources, Inc. and Hope Mining and Milling Company(10)                                                        
|       | 
|10.8   |  | Amending Agreement dated September 11, 2006 between Aurelio Resources, Inc., Bolsa Resources, Inc. and Hope Mining and Milling Company(10)                            
|       | 
|10.9   |  | Consulting Agreement between Aurelio Resource Corporation and David S. Johnson dated September 1, 2006(15)                                                            
|       | 
|10.10  |  | Consulting Agreement among Aurelio Resource Corporation, Waiata Inc. and Allan J. Marter dated November 1, 2006(15)                                                   
|       | 
|10.11  |  | Aurelio Resources Corporation 2006 Stock Option Plan adopted by the Board of Directors on September 15, 2006(15)                                                      
|       | 
|10.12  |  | Form of Subscription Agreement  US Accredited(12)                                                                                                                    
|       | 
|10.13  |  | Form of Subscription Agreement  Offshore(12)                                                                                                                         
|       | 
|10.14  |  | Aurelio Resource Corporation 2006 Incentive Compensation Plan adopted by the Board of Directors on October 12, 2006(15)                                               
|       | 
|10.15  |  | Option to purchase agreement between Newmont Realty Company and Aurelio Resource Corporation effective March 27, 2007(16)                                             
|       | 
|10.16  |  | Mineral Lease Agreement and Option to Purchase between Bolsa Resources, Inc. and Philip J. Sterling, Manuel R. Hernandez and Fred Jenkins effective April 15, 2007(16)
|       | 
|10.17  |  | Purchase and Sale Agreement between Bolsa Resources, Inc. and the Rae Family (individually) effective August 6, 2007(13)                                              
|       | 
|10.18  |  | Consulting Agreement between Aurelio Resource Corporation and Stine Consulting, LLC dated May 1, 2007(14)                                                             
|       | 
|14.1   |  | Code of Ethics(11)                                                                                                                                                    



55



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|      |  |                                                                                                                     
|----- |  | --------------------------------------------------------------------------------------------------------------------
|      | 
|21    |  | Subsidiaries: Aurelio Resources, Inc., Minera Milenium S.A. de C.V. and Bolsa Resources, Inc.                       
|      | 
|31.1* |  | Certification Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002    
|      | 
|31.2* |  | Certification Statement of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|      | 
|32.1* |  | Certification Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002    
|      | 
|32.2* |  | Certification Statement of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



|* | Filed herewith.
|- | ---------------



|(1) | Incorporated by reference to our Form SB-2 filed with the Securities and Exchange Commission on July 9, 2004.
|--- | -------------------------------------------------------------------------------------------------------------



|(5) | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on May 2, 2006.
|--- | -----------------------------------------------------------------------------------------------------------



|(6) | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on June 15, 2006.
|--- | -------------------------------------------------------------------------------------------------------------



|(7) | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on July 17, 2006.
|--- | -------------------------------------------------------------------------------------------------------------



|(8) | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on August 23, 2006.
|--- | ---------------------------------------------------------------------------------------------------------------



|(10) | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on September 22, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------



|(11) | Incorporated by reference to our Form 10-KSB filed with the Securities and Exchange Commission on September 12, 2006.
|---- | ---------------------------------------------------------------------------------------------------------------------



|(12) | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on September 25, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------



|(13) | Incorporated by reference to our Form 10-QSB filed with the Securities and Exchange Commission on November 19, 2007.
|---- | --------------------------------------------------------------------------------------------------------------------



|(14) | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on May 16, 2007.
|---- | ------------------------------------------------------------------------------------------------------------



|(15) | Incorporated by reference to our S-8 registration statement filed with the Securities and Exchange Commission on January 25, 2007.
|---- | ----------------------------------------------------------------------------------------------------------------------------------



|(16) | Incorporated by reference to our Form 10-QSB filed with the Securities and Exchange Commission on August 14, 2007.
|---- | ------------------------------------------------------------------------------------------------------------------



|ITEM 14 | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|------- | --------------------------------------

The aggregate fees billed
or accrued for the two most recently completed fiscal years ended December 31, 2006 for professional services rendered by the principal accountant for the audit of the Corporations annual financial statements and review of the financial
statements included our Quarterly Reports on Form 10-QSB and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:



|                   |  |                             |        |                                     |   |       
|------------------ |  | --------------------------- | ------ | ----------------------------------- | - | ------
|                   |  | Year endedDecember 31, 2007 |        | Seven months endedDecember 31,
2006
|Audit fees         |  | $                           | 36,097 |                                     | $ | 14,175
|Audit related fees |  |                             | Nil    |                                     |   | Nil   
|Tax fees           |  |                             | Nil    |                                     |   | Nil   
|All other fees     |  |                             | Nil    |                                     |   | Nil   
|                   |  |                             |        |                                     |   |       
|Total              |  | $                           | 36,097 |                                     | $ | 14,175
|                   |  |                             |        |                                     |   |       

Our Audit Committee has not yet developed a charter.



56



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SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-KSB to be signed on its behalf by the undersigned, thereunto duly authorized.



|                             |  |                                                         
|---------------------------- |  | --------------------------------------------------------
|AURELIO RESOURCE CORPORATION
|                             | 
|By:                          |  | /s/ Stephen B. Doppler                                  
|                             |  | Stephen B. Doppler President and Chief Executive
Officer
|Date:                        |  | April 2, 2008                                           

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                   |  |                                                      |  |  |  |              |  |                                                                                              
|------------------ |  | ---------------------------------------------------- |  |  |  | ------------ |  | ---------------------------------------------------------------------------------------------
|                   |  |                                                      |  | 
|By:                |  | /s/ David S. Johnson                                 |  |  |  | By:          |  | /s/ Allan J. Marter                                                                          
|Name: Title: Date: |  | David S. Johnson Chairman and Director April 2, 2008 |  |  |  | Name: Title: |  | Allan J. Marter Chief Financial Officer, Director,
Principal Accounting and Financial Officer
|                   |  |                                                      |  |  |  | Date:        |  | April 2, 2008                                                                                



|             |  |                                                                                       |  |  |  |                    |  |                                                                 
|------------ |  | ------------------------------------------------------------------------------------- |  |  |  | ------------------ |  | ----------------------------------------------------------------
|             |  |                                                                                       |  | 
|By:          |  | /s/ Stephen B. Doppler                                                                |  |  |  | By:                |  | /s/ Frederik Warnaars                                           
|Name: Title: |  | Stephen B. Doppler President, Chief Executive Officer
and Principal Executive Officer |  |  |  | Name: Title: Date: |  | Frederik Warnaars Corporate Secretary and Director April 2, 2008
|Date:        |  | April 2, 2008                                                                         |  |  |  |                    |  |                                                                 



|                   |  |                                                                     |  |  |  |  |  | 
|------------------ |  | ------------------------------------------------------------------- |  |  |  |  |  | 
|                   |  |                                                                     |  | 
|By:                |  | /s/ Stephen R. Stine                                                |  |  |  |  |  | 
|Name: Title: Date: |  | Stephen R. Stine Chief Operating Officer and Director April 2, 2008 |  |  |  |  |  | 



57