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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

Form 10-Q

(Mark One)

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2011

or

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

For the transition period from ____________ to ____________

Commission File Number 000-51922

TAO MINERALS LTD.(Exact
name of registrant as specified in its charter)

|Nevada                                                                              | 20-1682702                       
|----------------------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or
      organization)                | (IRS Employer Identification No.)
|                                                                                    |                                  
|Officina 301 Edeficio El Crusero, Carrera 48, 12 Sur  148
      Medellin, Colombia | N/A                              
|(Address of principal executive offices)                                            | (Zip Code)                       

0115-314-2330(Registrants telephone number,
including area code)

N/A(Former name, former address and former
fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

[   ] YES [X] NO

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).

[   ] YES [   ] NO

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a small
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

Large accelerated filer [   ]
    Accelerated filer [ ]Non-accelerated filer [   ] (Do not check if a
      smaller reporting company)
    Smaller reporting company [X]


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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY 
  PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.

[   ] YES [   ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date. 397,605,877
common shares issued and outstanding as of June 28, 2011.

1

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Our consolidated unaudited interim financial statements for the
three month period ended April 30, 2011 form part of this quarterly report. They
are stated in United States Dollars (US$) and are prepared in accordance with
United States generally accepted accounting principles.

2

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|TAO MINERALS LTD. and Subsidiary
|--------------------------------
|(An Exploration Stage Company)  
|Consolidated Balance Sheets     
|(Unaudited)                     

|                                                                                                                                                                                             |   |             |   |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                                                                                                                                             |   | April 30,   |   |   | January 31, |  
|                                                                                                                                                                                             |   | 2011        |   |   | 2011        |  
|                                                                                                                                                                                             |   |             |   |   |             |  
|ASSETS                                                                                                                                                                                       |   |             |   |   |             |  
|Current                                                                                                                                                                                      |   |             |   |   |             |  
|Cash                                                                                                                                                                                         | $ | 144,803     |   | $ | 18,295      |  
|Prepaids                                                                                                                                                                                     |   | 7,648       |   |   | 8,695       |  
|Total current assets                                                                                                                                                                         |   | 152,451     |   |   | 26,990      |  
|                                                                                                                                                                                             |   |             |   |   |             |  
|Mineral Properties                                                                                                                                                                           |   |             |   |   |             |  
|Mineral Rights                                                                                                                                                                               |   | 132,500     |   |   | 132,500     |  
|Total Mineral Properties                                                                                                                                                                     |   | 132,500     |   |   | 132,500     |  
|                                                                                                                                                                                             |   |             |   |   |             |  
|Total assets                                                                                                                                                                                 | $ | 284,951     |   | $ | 159,490     |  
|                                                                                                                                                                                             |   |             |   |   |             |  
|LIABILITIES AND STOCKHOLDERS
      DEFICIT                                                                                                                                                  |   |             |   |   |             |  
|Current                                                                                                                                                                                      |   |             |   |   |             |  
|                                                                                                                                                                                             |   |             |   |   |             |  
|Accounts payable and accrued expenses                                                                                                                                                        | $ | 101,578     |   | $ | 102,558     |  
|Note payable                                                                                                                                                                                 |   | 173,548     |   |   | 272,846     |  
|Derivative liability                                                                                                                                                                         |   | 895,369     |   |   | 683,057     |  
|Due to related parties                                                                                                                                                                       |   | 195,508     |   |   | 199,047     |  
|Stock issuance liability                                                                                                                                                                     |   | 93,140      |   |   | 93,140      |  
|Other accrued liabilities                                                                                                                                                                    |   | 62,185      |   |   | 228,618     |  
|Total current liabilities                                                                                                                                                                    |   | 1,521,328   |   |   | 1,579,266   |  
|                                                                                                                                                                                             |   |             |   |   |             |  
|STOCKHOLDERS DEFICIT                                                                                                                                                                        |   |             |   |   |             |  
|Share Capital                                                                                                                                                                                |   |             |   |   |             |  
|Authorized:                                                                                                                                                                                  |   |             |   |   |             |  
|Preferred stock: $0.001 par value 1,000,000
      shares authorized                                                                                                                          |   | -           |   |   | -           |  
|None issued, allotted and outstanding                                                                                                                                                        |   |             |   |   |             |  
|                                                                                                                                                                                             |   |             |   |   |             |  
|Common stock: $0.001 par value, 1,000,000,000 shares
      authorized 
       306,644,021 shares and 196,631,122 shares issued and
      outstanding  at April 30, 2011 and January 31, 2011 |   | 302,645     |   |   | 196,632     |  
|Additional paid-in capital                                                                                                                                                                   |   | 13,632,597  |   |   | 13,033,514  |  
|Accumulated other comprehensive loss                                                                                                                                                         |   | (44,083     | ) |   | (39,255     | )
|Deficit accumulated during exploration
      stage                                                                                                                                           |   | (15,115,700 | ) |   | (14,599,401 | )
|Total stockholders deficit                                                                                                                                                                  |   | (1,224,541  | ) |   | (1,408,510  | )
|Non-controlling interest                                                                                                                                                                     |   | (11,836     | ) |   | (11,266     | )
|Total deficit                                                                                                                                                                                |   | (1,236,377  | ) |   | (1,419,776  | )
|Total liabilities and deficit                                                                                                                                                                | $ | 284,951     |   | $ | 159,490     |  
|The accompanying notes are an integral part of these
      financial statements.                                                                                                             |   |             |   |   |             |  

3

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|TAO MINERALS LTD. and Subsidiary     
|-------------------------------------
|(An Exploration Stage Company)       
|Consolidated Statements of Operations
|(Unaudited)                          

|                                                             |   |                   |   |   |                      |  
|------------------------------------------------------------ | - | ----------------- | - | - | -------------------- | -
|                                                             |   | From Inception to |   |   | For the Three Months |  
|                                                             |   | April 30, 2011    |   |   | Ended April 30,      |  
|                                                             |   | (Unaudited)       |   |   | 2011                 |  
|                                                             |   |                   |   |   |                      |  
|OPERATING EXPENSES                                           |   |                   |   |   |                      |  
|Exploration expenses                                         | $ | 194,355           |   | $ | 46,181               |  
|Professional fees                                            |   | 335,563           |   |   | 42,345               |  
|Director fees                                                |   | 120,000           |   |   | -                    |  
|Consulting fees                                              |   | 1,540,506         |   |   | 51,000               |  
|Legal fees                                                   |   | 326,735           |   |   | 7,097                |  
|General and administrative                                   |   | 3,270,446         |   |   | 77,473               |  
|Impairment charge                                            |   | 4,719,650         |   |   | -                    |  
|LOSS FROM OPERATIONS                                         |   | 10,507,255        |   |   | 224,096              |  
|Total Operating Expenses                                     |   | (10,507,255       | ) |   | (224,096             | )
|OTHER INCOME (EXPENSE)                                       |   |                   |   |   |                      |  
|Derivative expense                                           |   | (1,965,118        | ) |   | (101,539             | )
|Loss on settlement of debt                                   |   | (1,456,151        | ) |   | -                    |  
|Interest expense                                             |   | (1,021,114        | ) |   | (191,234             | )
|Other loss, net                                              |   | (1,067            | ) |   | -                    |  
|Foreign currency translation gain                            |   | 1,531             |   |   | -                    |  
|TOTAL OTHER INCOME (EXPENSE)                                 |   | (4,441,919        | ) |   | (292,773             | )
|                                                             |   |                   |   |   |                      |  
|Net loss for the period                                      |   | (14,949,174       | ) |   | (516,869             | )
|Less: net loss attributable to noncontrolling
      interest |   | 11,836            |   |   | 570                  |  
|Net loss attributable to TAO common
      shareholders       | $ | (14,937,338       | ) | $ | (516,299             | )
|Other Comprehensive Loss                                     |   |                   |   |   |                      |  
|Foreign currency translation
      adjustment                |   | (44,083           | ) |   | (4,828               | )
|                                                             |   |                   |   |   |                      |  
|Comprehensive Loss                                           | $ | (14,981,421       | ) | $ | (521,127             | )
|                                                             |   |                   |   |   |                      |  
|LOSS PER SHARE  BASIC                                       |   |                   |   | $ | (0.00                | )
|                                                             |   |                   |   |   |                      |  
|WEIGHTED AVERAGE NUMBER OF ISSUED
      SHARES:              |   |                   |   |   |                      |  
|- BASIC                                                      |   |                   |   |   | 252,423,890          |  

The accompanying notes are an integral part of these
financial statements.

4

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|TAO MINERALS LTD. And Subsidiary     
|-------------------------------------
|(An Exploration Stage Company)       
|Consolidated Statements of Cash Flows
|(Unaudited)                          

|                                            |   | From Inception to |   |   | For the Three Months |  
|------------------------------------------- | - | ----------------- | - | - | -------------------- | -
|                                            |   | April 30, 2011    |   |   | Ended April 30,      |  
|                                            |   | (Unaudited)       |   |   | 2011                 |  
|Cash Provided by (Used for)
      Operating |   |                   |   |   |                      |  
|Activities                                  |   |                   |   |   |                      |  
|Net (loss) for the period                   | $ | (14,945,774       | ) | $ | (516,299             | )
|Stock issued for services                   |   | 3,286,386         |   |   | -                    |  
|Loss on settlement of debt                  |   | 1,456,151         |   |   | -                    |  
|Impairment charges                          |   | 4,719,650         |   |   | -                    |  
|Minority interest in loss                   |   | (13,401           | ) |   | (570                 | )
|Changes in non-cash working capital items:  |   |                   |   |   |                      |  
|Prepaids                                    |   | (7,648            | ) |   | 1,047                |  
|Discount on note
      payable              |   | 727,398           |   |   | 169,572              |  
|Accounts payable and accrued liabilities    |   | 1,282,858         |   |   | (120,416             | )
|Due to related
      parties                |   | (286,130          | ) |   | (3,539               | )
|Derivative
      liability                  |   | 2,065,119         |   |   | 101,540              |  
|Cash used by
      operations               |   | (1,715,391        | ) |   | (368,665             | )
|Investing Activities                        |   |                   |   |   |                      |  
|Acquisition of subsidiary                   |   | (114,185          | ) |   | -                    |  
|Purchase of fixed assets                    |   | (19,370           | ) |   | -                    |  
|Purchase of
      mineral rights            |   | (379,941          | ) |   | -                    |  
|Cash used by investing activities           |   | (513,496          | ) |   | -                    |  
|Financing Activities                        |   |                   |   |   |                      |  
|Issuance of debt                            |   | 2,365,320         |   |   | 500,000              |  
|Issuance of common
      stock              |   | 55,310            |   |   | -                    |  
|Cash provided by financing activities       |   | 2,420,630         |   |   | 500,000              |  
|                                            |   |                   |   |   |                      |  
|Effect of Exchange Rate on Cash             |   | (46,940           | ) |   | (4,827               | )
|Cash Increase (Decrease) During the Period  |   | 144,803           |   |   | 126,508              |  
|Cash, Beginning of Period                   |   | -                 |   |   | 18,295               |  
|Cash and
      Equivalents, End of Period   | $ | 144,803           |   | $ | 144,803              |  

Supplemental Cash Flow Information;The Company
did not pay cash for either interest or taxes for the three months ended April
30, 2011 and 2010.

The accompanying notes are an integral part of these
financial statements.

5

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|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

|1. | Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | This summary of accounting policies for Tao Minerals Ltd.
      is presented to assist in understanding the Company's financial
      statements. The accounting policies conform to U.S. generally accepted
      accounting principles and have been consistently applied in the
      preparation of the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Nature of Operations and Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Tao Minerals, Ltd. (the Company) is a natural resource
      exploration company with an objective of acquiring, exploring and if
      warranted and feasible, developing natural resource properties. The
      Company was incorporated under the laws of the State of Nevada on
      September 23, 2004, and has been in the exploration stage since
      inception.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | As reflected in the accompanying financial statements,
      the Company is in the exploration stage and has cumulative negative cash
      flows from operations of $1,715,391 since inception and losses of $516,299
      for the three months ended April 30, 2011. This raises substantial doubt
      about its ability to continue as a going concern. These consolidated
      financial statements have been prepared on the assumption that the Company
      is a going concern, meaning it will continue in operation for the
      foreseeable future and will be able to realize assets and discharge
      liabilities in the ordinary course of operations. The financial statements
      do not include any adjustments that might result from the outcome of this
      uncertainty. The ability of the Company to continue as a going concern is
      dependent on the Companys ability to raise additional capital and
      implement its business plan. The financial statements do not include any
      adjustments that might be necessary if the Company is unable to continue
      as a going concern.                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Management believes that actions presently being taken to
      obtain additional funding and implement its strategic plans provide the
      opportunity for the Company to continue as a going concern. Management
      plans to raise equity financings over the next twelve months to finance
      operations. There is no guarantee that the Company will be able to
      complete any of these objectives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | These consolidated financial statements and related notes
      are presented in accordance with accounting principles generally accepted
      in the United States, and are expressed in US dollars. These consolidated
      financial statements include the accounts of TAO Minerals, LTD (Parent
      or TAO) and its 99% owned subsidiary, Minera TAO, SA Minera.
      Collectively, the consolidated entities are referred to herein as the
      Company. All significant inter-company transactions have been
      eliminated. The Companys fiscal year end is January 31.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Accounting Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The preparation of financial statements in conformity
      with US generally accepted accounting principles requires management to
      make estimates and assumptions that affect the reported amounts 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. The Company regularly evaluates
      estimates and assumptions related to valuation of long-lived assets, stock
      based compensation and deferred income tax asset valuation allowances. The
      Company bases its estimates and assumptions on current facts, historical
      experience and various other factors that it believes to be reasonable
      under the circumstances, the results of which form the basis for making
      judgments about the carrying values of assets and liabilities and the
      accrual of costs and expenses that are not readily apparent from other
      sources. The actual results experienced by the Company may differ
      materially and adversely from the Companys estimates. To the extent there
      are material differences between the estimates and the actual results,
      future results of operations will be affected.

6

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|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

Cash Equivalents

For purposes of the statement of cash
flows cash equivalents usually consist of highly liquid investments which are
readily convertible into cash with maturity of three months or less when
purchased.

Concentrations

The Company has no significant
off-balance-sheet concentrations of credit risk such as foreign exchange
contracts, options contracts or other foreign hedging arrangements. The Company
maintains the majority of its cash balances with one financial institution, in
the form of demand deposits. The companys assets and operations are
concentrated in the country of Colombia, South America.

Mineral Interests

Mineral interests associated with other
than owned properties are classified as tangible assets. As of April 30, 2011,
the Company had capitalized $132,500 related to the mineral rights. The mineral
rights will be amortized using the units-of-production method when production at
each project commences.

Long-Lived Assets

In accordance with ASC 360, Property
Plant and Equipment, the Company tests long-lived assets or asset groups for
recoverability when events or changes in circumstances indicate that their
carrying amount may not be recoverable. Circumstances which could trigger a
review include, but are not limited to: significant decreases in the market
price of the asset; significant adverse changes in the business climate or legal
factors; accumulation of costs significantly in excess of the amount originally
expected for the acquisition or construction of the asset; current period cash
flow or operating losses combined with a history of losses or a forecast of
continuing losses associated with the use of the asset; and current expectation
that the asset will more likely than not be sold or disposed significantly
before the end of its estimated useful life. Recoverability is assessed based on
the carrying amount of the asset and its fair value which is generally
determined based on the sum of the undiscounted cash flows expected to result
from the use and the eventual disposal of the asset, as well as specific
appraisal in certain instances. An impairment loss is recognized when the
carrying amount is not recoverable and exceeds fair value.

Foreign Currency
Translation

The Companys functional and reporting
currency is the United States dollar. Management has adopted ASC 740 Foreign
Currency Translation Matters. Monetary assets and liabilities denominated in
foreign currencies are translated using the exchange rate prevailing at the
balance sheet date. Non-monetary assets and liabilities denominated in foreign
currencies are translated at rates of exchange in effect at the date of the
transaction. Average monthly rates are used to translate revenues and expenses.
Gains and losses arising on translation or settlement of foreign currency
denominated transactions or balances are included in the determination of
income. The Company has not, to the date of these financial statements, entered
into derivative instruments to offset the impact of foreign currency
fluctuations.

7

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|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

The financial statements of the
subsidiary are translated to United States dollars in accordance with ASC 740
using period-end rates of exchange for assets and liabilities, and average rates
of exchange for the year for revenues and expenses. Translation gains (losses)
are recorded in accumulated other comprehensive income (loss) as a component of
stockholders deficit. Foreign currency transaction gains and losses are
included in current operations.

Environmental Costs

Environmental expenditures that relate
to current operations are expensed or capitalized as appropriate. Expenditures
that relate to an existing condition caused by past operations, and which do not
contribute to current or future revenue generation, are expensed. Liabilities
are recorded when environmental assessments and/or remedial efforts are
probable, and the cost can be reasonably estimated. Generally, the timing of
these accruals coincides with the earlier of completion of a feasibility study
or the Companys commitments to plan of action based on the then known facts.

Loss per Share

The Company computes net earnings
(loss) per share in accordance with ASC 260, Earnings Per Share, which requires
presentation of both basic and diluted earnings per share (EPS) on the face of
the income statement. Basic EPS is computed by dividing net earnings (loss)
available to common shareholders (numerator) by the weighted average number of
shares outstanding (denominator) during the period. Diluted EPS gives effect to
all dilutive potential common shares outstanding during the period using the
treasury stock method and convertible preferred stock using the if-converted
method. In computing diluted EPS, the average stock price for the period is used
in determining the number of shares assumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti-dilutive. The Company has $606,930 of convertible
debentures which can be converted to common stock. These shares have not been
included in any weighted average computations since the effect would be
anti-dilutive.

Income Taxes

The Company accounts for income taxes
under the ASC 740, Income Taxes. Under ASC 740, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under ASC 740, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.

8

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|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

Fair Value of Financial
Instruments

Our financial instruments consist
principally of cash, accounts payable, derivative liabilities, amounts due to
related parties, stock issuance liabilities and convertible notes. Pursuant to
ASC 820, Fair Value Measurements and Disclosures, and ASC 825, Financial
Instruments, the fair value of our cash equivalents is determined based on
Level 1 inputs, which consist of quoted prices in active markets for identical
assets, the fair value of derivative liabilities, stock issuance liabilities and
convertible notes are determined based on Level 3 inputs, which consist of
unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities. We believe that the
recorded values of all of our other financial instruments approximate their
current fair values because of their nature and respective relatively short
maturity dates or durations.

Comprehensive Loss

ASC 220, Comprehensive Income
establishes standards for the reporting and display of comprehensive loss and
its components in the financial statements. At April 30, 2011 and 2010, the
Companys only component of comprehensive loss was foreign currency translation
adjustments. Accordingly, the balance of accumulated other comprehensive loss
was charged to operations.

Stock-Based
Compensation

In accordance with ASC 718,
Compensation  Stock Based Compensation, the Company accounts for share-based
payments using the fair value method. Common shares issued to third parties for
non-cash consideration are valued based on the fair market value of the services
provided or the fair market value of the common stock on the measurement date,
whichever is more readily determinable.

Business Segments

The Company operates in one segment and
therefore segment information is not presented.

Mining Properties and Exploration
Costs

Exploration costs are charged to
operations in the year in which they are incurred. Costs of acquiring mineral
properties are capitalized until such time commencement of production commences
or a determination that such property is not commercially viable.

Mining properties are, upon
commencement of production, amortized over the estimated life of the ore body to
which they relate or are written off if the property is abandoned or if there is
considered to be a permanent impairment in value.

Investments in mining properties over
which the company has significant influence but not joint control are accounted
for using the equity method.

9

---

|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

|   | Site Restoration and Post Closure
    Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Expenditures related to ongoing environmental and
      reclamation activities are expensed, as incurred, unless previously
      accrued. Provisions for future site restoration and reclamation and other
      post closure costs in respect of operating facilities are charged to
      operations over the estimated life of the operating facility, commencing
      when a reasonably definitive estimate of the cost can be made.                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Accounting Changes and Error
    Corrections                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company follows ASC 250, Accounting Changes and Error
      Corrections. Changes in accounting principle are reported through
      retrospective application of the new accounting principle to all prior
      periods. Errors in the financial statements of a prior period discovered
      subsequent to their issuance shall be reported as a prior-period
      adjustment by restating the prior period.                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company has implemented all new accounting
      pronouncements that are in effect and that may impact its financial
      statements and does not believe that there are any other new accounting
      pronouncements that have been issued that might have a material impact on
      its financial position or results of operations.                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3. | Acquisition of Mineral Rights
      Golondrina
    Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On October 22, 2004, the Company acquired the mining
      rights to two claims collectively known as the Whale Mine property for a
      purchase price of $3,000. The Company received rights to all minerals
      contained in the Whale Mine property. During the year ended January 31,
      2008 the Company abandoned the property and wrote off the capitalized
      amount of $3,000.                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On February 28, 2006, the Company entered into an
      Assignment Agreement (the Definitive Agreement), with Primecap Resources
      Inc., of Las Vegas, Nevada, (Primecap), concerning the acquisition of
      Primecaps option (the Option), to acquire a 100% interest in the
      Risaldo La Golondrina D14-082 mineral property located in Narino, Colombia
      (the Property). Primecap had been granted the Option by Nueva California
      S.A., of Medellin, Colombia, pursuant to the terms and conditions of a
      Heads of Agreement dated August 23, 2004 (the HOA).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Definitive Agreement provides for the assignment of
      the Option for the following consideration:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Payment of US $150,000, (paid on April 13, 2006) and the
      issuance of 2,500,000 common shares in the capital stock of the Company,
      subject to applicable trading restrictions, to Nueva California. In
      addition, the Company will assume Primecaps financial obligations under
      the HOA. The obligations under the HOA are:                                                                                                                                                                                                                                                 

10

---

|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

| |  | 1.  | US$30,000 upon execution of the HOA, which amount has
      been paid;                         
| |  | --- | -----------------------------------------------------------------------------------------------
| |  | 2.  | US$20,000 on or before August 23, 2005, which amount has
      been paid;                      
| |  | 3.  | US$32,000 on or before August 23, 2006;                                                        
| |  | 4.  | US$40,000 on or before August 23, 2007;                                                        
| |  | 5.  | US$48,000 on or before August 23, 2008; and                                                    
| |  | 6.  | US$160,000 on or before August 23, 2009.                                                       
| |  | 7.  | 200,000 shares of the Assignor, as of August 23, 2004,
      which issuance has been completed;
| |  | 8.  | 200,000 shares of the Assignor, as of August 23, 2005,
      which issuance has been completed;
| |  | 9.  | 300,000 shares of the Assignor, as of August 23,
    2006;                                     
| |  | 10. | 300,000 shares of the Assignor, as of August 23,
    2007                                      

On, June 30, 2006, the Company entered
into an amending agreement (the Agreement) which Agreement amended certain
terms of an assignment agreement (the Assignment Agreement) dated February 28,
2006, between our Company and Primecap Resources Inc. of Nevada, as amended by
an amending agreement dated March 15, 2006.

The Agreement amends the total
consideration that our Company is to pay Primecap Resources Inc. (Primecap) as
to $100,000 on or before July 1, 2006 and $100,000 on or before July 1, 2007.
This Agreement satisfys our obligation in assuming the above noted financial
obligations under the HOA. The first $100,000 payment was made.

On May 9, 2008, we entered into a
second amending agreement which clarifies the first amending agreement as
follows:

Items 1 through 6 of the HOA agreement
are deleted. The total amounts payable to Primecap remains as amended in the
first amendment. The second $100,000 payment is now due on or before August 1,
2008 and was paid during the three months ended April 30, 2011. As of January
31, 2009 the Company has not issued the 300,000 shares of common stock due
August 23, 2006 and the 300,000 shares of common stock due August 23, 2007. The
Company has accrued $51,000 as a liability for the issuance of 300,000 shares of
common stock on August 23, 2006 at $0.17 the closing price of the stock as of
such date and $41,100 for the issuance liability of 300,000 shares of common
stock at August 23, 2007 at $0.137 the closing price of the stock at such date.
The Company has no further obligations under the HOA agreement other than those
stated here.

During the year ended January 31, 2009
the Company wrote off the $350,000 capitalized cost of the Golondrina property.
The Company has not been fiscally able to obtain an appraisal or other means of
valuing the market value of such property.

El Colmillo Property

On September 13, 2006, Minera entered
into an option agreement with Agronomicas de Colombia (ADC) to acquire a
mineral rights concession from Colombia for a gold mine called El Colmillo
intthe municipality of Antioquia, Colombia. In April 2008, Minera obtained a six
month extension and on July 15, 2008, a modification of the original terms was
obtained. The terms of the contract are now as follows:

11

---

|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

| |  | 1. | Payment of $80,000,000 Colombian pesos (COP)
      (approximately $50,000 US)                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | 2. | Payment of $40,000,000 COP (approximately $25,000 US) on
      the 15th of every month until the initial and monthly payments reach
      $320,000,000 COP (approximately $200,000 US)                                                                                                                                                                                                                                                                                                                                                   
| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | 3. | A royalty of 40% of net production until $1,100,000,000
      COP (approximately $687,500 US) has been paid.                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  |    | When 80% of item 3 has been reached ADC will pass legal
      title of the concession to Minera and will receive a 20% net royalty as
      long as the concession is maintained.                                                                                                                                                                                                                                                                                                                                                        
| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | 4. | Minera has paid $240,000,000 COP (approximately $150,000
      US) through December 2008 of the $320,000,000 COP (approximately $200,000
      US). During the month of December 2008 Minera personnel were met at the
      site by Colombian rebels that demanded a war tax. The Company immediately
      stopped its development efforts and reported the activity to the
      authorities. A force majeure clause in the contract allows Minera to cease
      operations until the cause that activates this clause is
  resolved.

The Company is still assessing the
security risk on this property and operations are still suspended.

Mutata Property

On October 12, 2010, the Company
entered into a letter of intent to acquire the Mutata property, a prospective
gold and platinum project in Colombia. The prospective acquisition consists of
one concession that is located approximately 200 kilometers north of Medellin in
the northwest region of the Antioquia Department known as Uraba. Collectively
the concession covers an area of over 4,900 hectares.

The letter of intent provides the
Company the right to examine the property for a period of one year and does not
specify any acquisition terms or conditions. Should the Company decide to
acquire the property the Company will negotiate and enter into a formal
acquisition agreement. During the one year period of assessment the Company is
responsible for all ongoing costs. At April 30, 2011, the Company was currently
completing the due diligence related to this property.

|4. | Related Party
Transactions
|-- | --------------------------

| | a) | The Golondrina property was acquired from a Company
      controlled by James Sikora our current president. At the time of the
      acquisition Mr. Sikora was not related to the Company.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                            
| | b) | Management fees incurred for the three months ended April
      30, 2011 totaled $30,000 to the President of the
Company.                                                                  

12

---

|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

|5. | Notes Payable
|-- | -------------

| |                                                                                 |  | April 30, |   |  | January 31, |  
| | ------------------------------------------------------------------------------- |  | --------- | - |  | ----------- | -
| |                                                                                 |  | 2011      |   |  | 2011        |  
| |                                                                                 |  | $         |   |  | $           |  
| | a) Demand loans - unsecured, non-interest
      bearing                         |  | 50,020    |   |  | 50,020      |  
| | b) Convertible notes - interest rate 12% per annum; due May
      28, 2011      |  | 106,930   |   |  | 125,800     |  
| | c) Convertible notes - interest rate 12%
      per annum; due February 15, 2011 |  |          |   |  | 250,000     |  
| | d) Convertible notes - interest rate 12% per annum; due
      August 15, 2011   |  | 250,000   |   |  |            |  
| | e) Convertible notes - interest rate 12%
      per annum; due August 21, 2011   |  | 250,000   |   |  |            |  
| | Less: Discount on convertible notes                                             |  | (483,402  | ) |  | (152,974    | )
| | Convertible Notes                                                               |  | 173,548   |   |  | 272,846     |  
| | Less: Current Portion                                                           |  | (173,548  | ) |  | (272,846    | )
| | Long Term Portion                                                               |  |          |   |  |            |  

| | a) | During the fiscal year ended January 31, 2010, the
      Company borrowed $50,020 of which $25,020 is owed to its President. The
      loans are unsecured, due on demand and bear no interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | b) | During the year ended January 31, 2011, the Company
      entered a 12% convertible debenture for $125,800 is due in one year. The
      terms of the debenture indicate both the holder and the Company is
      entitled, at its option, to convert at any time and from time to time, all
      or any part of the principal amount, plus accrued interest into common
      shares at a price per share equal to 50% of the lowest trading price of
      the common stock for the 30 days immediately prior to the notice of
      conversion. Due to this provision, the embedded conversion options qualify
      for derivative accounting under ASC 815-15 (See Note 9 below). This fair
      value of the derivative liabilities at issuance resulted in a full
      discount to the note payable. The carrying value of the convertible note
      was accreted over the term of the convertible note up to the value of
      $125,800.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | During the three month period ended April 30, 2011,
      $18,870 was converted into 9,435,000 shares of the Companys common
      stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | c) | On August 15, 2010, the Company entered into a 12%
      convertible debenture due February 15, 2011 in the amount of $250,000. The
      Holder is entitled, at its option, to convert at any time and from time to
      time, all or any part of the principal amount of this debenture, plus
      accrued interest, into common shares, at a price per share equal to the
      lowest 50% of the average of the 3 (three) lowest closing bid prices of
      the common stock for the 30 trading days immediately prior to the date
      that the Company receives notice of the conversion or 50% of the lowest
      trading price for the 20 trading days prior to closing of this agreement.
      Likewise the Company is entitled, at its option, at any time and from time
      to time, to convert all or any part of the principal amount of the
      debenture, plus accrued interest, into shares of the Companys common
      stock at a price equal to 50% of the lowest traded price of the common
      stock for the prior 20 trading days that the Company issues such a notice
      of conversion. Due to this provision, the embedded conversion option
      qualifies for derivative accounting under ASC 815-15 (See Note 9 below).
      This fair value of the derivative liability at issuance resulted in a full
      discount to the note payable. The carrying value of the convertible note
      was accreted over the term of the convertible note up to their value of
      $250,000.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | During the three month period ended April 30, 2011, the
      $250,000 note and $15,000 of accrued interest was converted into
      83,149,328 shares of the Companys common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

13

---

|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

| | d) | On November 15, 2010, the Company entered into a 12%
      convertible debenture due 180 days from the date of advancement in the
      amount of $250,000. The Holder is entitled, at its option, to convert at
      any time and from time to time, all or any part of the principal amount of
      this debenture, plus accrued interest, into common shares, at a variable
      conversion price equal to the lower of 50% of the lowest trading price for
      the common stock during the 30 trading days prior to the date of the
      conversion notice and $0.0035. The loan bears interest at 12% per year and
      the principal amount and any interest thereon are due on 180 days from the
      date of advancement. Likewise the Company is entitled, at its option, at
      any time and from time to time, to convert all or any part of the
      principal amount of the debenture, plus accrued interest, into shares of
      the Companys common stock at a price equal to 50% of the lowest traded
      price of the common stock for the prior 20 trading days that the Company
      issues such a notice of conversion. Due to this provision, the embedded
      conversion option qualifies for derivative accounting under ASC 815-15
      (See Note 9 below). This fair value of the derivative liability at
      issuance resulted in a full discount to the note payable. The carrying
      value of the convertible note will be accreted over the term of the
      convertible note up to the value of $250,000. At April 30, 2011, $8,825 of
      accretion had been recorded.                                                                                     
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | e) | On December 1, 2010, the Company entered into a 12%
      convertible debenture due 180 days from the date of advancement in the
      amount of $250,000. The Holder is entitled, at its option, to convert at
      any time and from time to time, all or any part of the principal amount of
      this debenture, plus accrued interest, into common shares, variable
      conversion price equal to the lower of 50% of the lowest trading price for
      the common stock during the 30 trading days prior to the date of the
      conversion notice and 50% of the lowest traded price for the 20 trading
      days prior to the closing of the agreement. The loan bears interest at 12%
      per year and the principal amount and any interest thereon are due on 180
      days from the date of advancement. Likewise the Company is entitled, at
      its option, at any time and from time to time, to convert all or any part
      of the principal amount of the debenture, plus accrued interest, into
      shares of the Companys common stock at a price equal to 50% of the lowest
      traded price of the common stock for the prior 20 trading days that the
      Company issues such a notice of conversion. Due to this provision, the
      embedded conversion option qualifies for derivative accounting under ASC
      815-15 (See Note 9 below). This fair value of the derivative liability at
      issuance resulted in a full discount to the note payable. The carrying
      value of the convertible note will be accreted over the term of the
      convertible note up to the value of $250,000. At April 30, 2011, $7,773 of
      accretion had been recorded.

|6. | Common Stock
|-- | ------------

| | a) | During the three months ended April 30, 2011, the Company
      converted $268,870 of notes payable into 92,584,328 shares of the
      Companys common stock.                                                                                 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                 
| | b) | On March 4, 2011, the Company issued 3,428,571 shares of
      common stock for $12,000 consulting fees included in accounts
    payable.                                                                                                       
| |    |                                                                                                                                                                                                                                                 
| | c) | On April 27, 2011, the Company issued 10,000,000 shares
      of common stock for $20,000 of debt included in accounts
payable.                                                                                                                 
| |    |                                                                                                                                                                                                                                                 
| | d) | During the three month period ended April 30, 2010, the
      President converted $339,000 of accounts payable to 4,237,500 shares of
      stock and Minera Primecap converted $94,500 of accounts payable for
      1,181,250 shares of stock.

|7. | Commitments
|-- | -----------

| | a) | During May 2010, the Directors consented to a
      subscription of 999,000 shares of common stock at $0.10 per share
      ($99,900) to three individuals in a private placement. As of April 30,
      2011, the private placement had not been completed.                                                                                                                                                                                                                                          
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | b) | On May 15, 2010, the Company signed an investor relations
      agreement to provide marketing, promotional and investor relations
      services through November 1, 2010. The cost of these services will be the
      issuance of 100,000 shares of common stock and a monthly fee of $3,000.
      The monthly fee is being paid but the stock has not been issued as of
      April 30, 2011. The Company has accrued the fair value of the shares of
      $1,040 as a stock issuance liability.

14

---

|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

|8. | Fair Value Measurements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | ASC 825 defines fair value as the price that would be
      received from selling an asset or paid to transfer a liability in an
      orderly transaction between market participants at the measurement date.
      In determining fair value for assets and liabilities required or permitted
      to be recorded at fair value, the Company considers the principal or most
      advantageous market in which it would transact and it considers
      assumptions that market participants would use when pricing the asset or
      liability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Fair Value Hierarchy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | ASC 825 establishes a fair value hierarchy that requires
      an entity to maximize the use of observable inputs and minimize the use of
      unobservable inputs when measuring fair value. A financial instruments
      categorization within the fair value hierarchy is based upon the lowest
      level of input that is significant to the fair value measurement. ASC 825
      establishes three levels of inputs that may be used to measure fair
      value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Level 1 applies to assets and liabilities for which there
      are quoted prices in active markets for identical assets or liabilities.
      Valuations are based on quoted prices that are readily and regularly
      available in an active market and do not entail a significant degree of
      judgment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Level 2 applies to assets and liabilities for which there
      are other than Level 1 observable inputs such as quoted prices for similar
      assets or liabilities in active markets, quoted prices for identical
      assets or liabilities in markets with insufficient volume or infrequent
      transactions (less active markets), or model-derived valuations in which
      significant inputs are observable or can be derived principally from, or
      corroborated by, observable market data. Level 2 instruments require more
      management judgment and subjectivity as compared to Level 1 instruments.
      For instance: determining which instruments are most similar to the
      instrument being priced requires management to identify a sample of
      similar securities based on the coupon rates, maturity, issuer, credit
      rating and instrument type, and subjectively select an individual security
      or multiple securities that are deemed most similar to the security being
      priced; and determining whether a market is considered active requires
      management judgment.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Level 3 applies to assets and liabilities for which there
      are unobservable inputs to the valuation methodology that are significant
      to the measurement of the fair value of the assets or liabilities. The
      determination of fair value for Level 3 instruments requires the most
      management judgment and subjectivity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Pursuant to ASC 825, the fair value of the cash
      equivalent is determined based on Level 1 inputs, which consists of
      quoted prices in active markets for identical assets. Convertible notes
      payable and derivative are valued based on Level 3 inputs, consisting of
      unobservable inputs to the valuation methodology that are significant to
      the measurement of the fair value of the assets or liabilities. The
      Company believes that the recorded values of all of the other financial
      instruments approximate their current fair values because of their nature
      and respective relatively short maturity dates or durations.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Assets and liabilities measured at fair value on a
      recurring basis were presented on the Companys balance sheet as at April
      30, 2011 as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

15

---

|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

| |                           |  | Fair Value Measurements Using |  |  |                   | 
| | ------------------------- |  | ----------------------------- |  |  | ----------------- | 
| |                           |  | Quoted prices in              |  |  |                   | 
| |                           |  | active markets                |  |  | Significant other | 
| |                           |  | for identical                 |  |  | observable        | 
| |                           |  | instruments                   |  |  | Inputs            | 
| |                           |  | (Level 1)                     |  |  | (Level 2)         | 
| |                           |  | $                             |  |  | $                 | 
| | Cash and cash equivalents |  | 144,803                       |  |  |                  | 
| | Convertible notes payable |  |                              |  |  |                   | 
| | Derivative liabilities    |  |                              |  |  |                  | 
| |                           |  | 144,803                       |  |  |                  | 

|   | The fair values of other financial instruments, which
      include accounts payable, due to related parties, and accrued liabilities
      approximate their carrying values due to the relatively short-term
      maturity of these instruments.                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|9. | Derivative Liability                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | ASC 815-15 lays out a procedure to determine if an
      equity-linked financial instrument (or embedded feature) is indexed to its
      own common stock.                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Convertible Debt - The embedded conversion option in the
      Companys convertible notes described in Note 5 contain a conversion
      feature that qualifies for embedded derivative classificiation. The fair
      value of these liabilities will be re-measured at the end of every
      reporting period and the change in fair value will be reported in our
      consolidated statement of operations as a gain or loss on derivative
      financial instruments.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The following table summarizes the change in derivative
      liabilities for the three months ended April 30,
2011:                                                                                                                                                                                                                                                                                                                                                           

| | Derivative Liabilities at April 30, 2010                 | $ | 683,057  |  
| | -------------------------------------------------------- | - | -------- | -
| | Addition of new derivative liabilities                   |   | 500,000  |  
| | Conversion of derivatives                                |   | (389,227 | )
| | Change in fair
      value of embedded conversion option |   | 101,539  |  
| | Derivative Liabilities at April 30, 2011                 | $ | 895,369  |  

The Company used the Black-Scholes
option pricing model to value the embedded conversion feature using the
following assumptions: number of options as set forth in the convertible notes
agreements; no expected dividend yield; expected volatility ranging from 138% -
503%; risk-free interest rates ranging from 0.04% - 0.53% and expected terms
based on the contractual term.

16

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|TAO MINERALS LTD. and Subsidiary              
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|Unaudited                                     

|10. | Subsequent Events                                            
|--- | -------------------------------------------------------------
|    |                                                              
|    | Subsequent events were evaluated through June 13,
      2011.

| | a) | Subsequent to April 30, 2011, the Company converted
      $65,000 of notes payable described in Note 5(d) into 50,000,000 shares of
      the Companys common stock.                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                             
| | b) | Subsequent to April 30, 2011, the holder of the
      convertible debenture described in Note 5(b) converted $25,000 of the
      outstanding debt into 12,500,000 shares of the Companys common
    stock.
| |    |                                                                                                                                                                                                             
| | c) | On May 17, 2011, the Company issued 7,461,874 shares of
      common stock for $13,058 of debt included in accounts payable at April 30,
      2011.                                                        
| |    |                                                                                                                                                                                                             
| | d) | On May 24, 2011, the Company issued 10,000,000 shares of
      common stock for $10,000 of debt included in accounts payable at April 30,
      2011.                                                       

17

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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements.
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 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 consolidated unaudited financial statements are stated in
United States Dollars (US$) and are prepared in accordance with United States
Generally Accepted Accounting Principles. The following discussion should be
read in conjunction with our financial statements and the related notes that
appear elsewhere in this quarterly 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
quarterly report.

In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars. All references to "US$"
refer to United States dollars and all references to "common stock" refer to the
common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our"
and "our company" mean Tao Minerals Ltd. and our subsidiary Minera Tao S.A.,
unless otherwise indicated.

General Overview and Business Development over the Last
Three Years

We were incorporated in the State of Nevada on September 23,
2004.

On July 16, 2008, through our majority owned subsidiary Minera
Tao S.A., we entered into an amended option agreement with Agrominas De
Colombia, LTDA to acquire 80% of a mining interest called El Comillo in
Antioquia, Colombia. The agreement amended the terms of the original option
agreement entered into by Minera Tao on October 2, 2007, and subsequently
extended on April 18, 2008.

Under the terms of the amended option agreement, the purchase
price of the option is $1.42 billion Colombian pesos or approximately US$825,000
dollars. We paid $80,000,000 pesos (approximately US$50,000) upon closing of the
option agreement and are obligated to pay $40,000,000 pesos on the 15th of every
month until $320,000,000 pesos has been paid. Thereafter 20% of production will
be paid until $1.1 billion pesos have been received by Agrominas De Colombia.
After the acquisition price is paid Agrominas De Colombia will continue to
receive 20% of the mining production. Upon receipt of $1.42 billion pesos by
Agrominas De Colombia the option will be exercised and 80% ownership in the
property will be transferred to Minera Tao. To date, we have paid to Agrominas
De Colombia $240,000,000pesos (or US$150,000).

On October 16, 2008, we entered into an agreement to issue a
$500,000, 8% convertible debenture to Galleon Investments Ltd. All or any
portion of the amounts due under the convertible debenture, which matures 90
days from the advancement date, may be converted at any time, at the option of
the holder, into common shares of our company at a conversion price of 75% of
the average of the three lowest closing bid prices of our common stock for the 5
trading days immediately prior to the date that we receive notice of conversion
of the convertible debenture.

18

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Effective September 21, 2009, we effected a 200 for 1 share
consolidation of our authorized and issued and outstanding common stock. As a
result, our authorized capital decreased from 552,000,000 shares of common stock
with a par value of $0.001 to 2,760,000 shares of common stock with a par value
of $0.001 and our issued and outstanding shares decreased from 547,370,946
shares of common stock to 2,736,854 shares of common stock.

The consolidation became effective with the Over-the-Counter
Bulletin Board at the opening for trading on September 23, 2009 under the stock
symbol TAON. Our CUSIP number is 87600P303.

Effective July 1, 2010, we entered into a consulting services
agreement with Kerry Associates, Inc., wherein Kerry Associates has the agreed
to provide certain consulting services to our company for a period of 30 days.
Under the terms of the agreement we paid Kerry Associates, Inc. $25,000 and
issued to Kerry Associates, Inc. 2,000,000 restricted shares of our stock

We are a start-up, exploration stage company and have not yet
generated or realized any revenues from our business operations. We must raise
cash in order to implement our plan and stay in business.

We are in the mineral resource business. This business
generally consists of three stages: exploration, development and production.
Mineral resource companies that are in the exploration stage have not yet found
mineral resources in commercially exploitable quantities, and are engaged in
exploring land in an effort to discover them. Mineral resource companies that
have located a mineral resource in commercially exploitable quantities and are
preparing to extract that resource are in the development stage, while those
engaged in the extraction of a known mineral resource are in the production
stage. Our company is in the exploration stage.

The address of our principal executive office is Officina 301
Edeficio El Crusero, Carrera 48, 12 Sur  148 Medellin Colombia. Our telephone
numbers is 877-331-8777.

Our common stock is quoted on the OTC Bulletin Board under the
symbol "TAON".

Mineral resource exploration can consist of several stages. The
earliest stage usually consists of the identification of a potential prospect
through either the discovery of a mineralized showing on that property or as the
result of a property being in proximity to another property on which exploitable
resources have been identified, whether or not they are or have in the past been
extracted.

After the identification of a property as a potential prospect,
the next stage would usually be the acquisition of a right to explore the area
for mineral resources. This can consist of the outright acquisition of the land
or the acquisition of specific, but limited, rights to the land (e.g., a
license, lease or concession). After acquisition, exploration would probably
begin with a surface examination by a prospector or professional geologist with
the aim of identifying areas of potential mineralization, followed by detailed
geological sampling and mapping of this showing with possible geophysical and
geochemical grid surveys to establish whether a known trend of mineralization
continues through un-exposed portions of the property (i.e., underground),
possibly trenching in these covered areas to allow sampling of the underlying
rock. Exploration also commonly includes systematic regularly spaced drilling in
order to determine the extent and grade of the mineralized system at depth and
over a given area, as well as gaining underground access by ramping or shafting
in order to obtain bulk samples that would allow one to determine the ability to
recover various commodities from the rock. Exploration might culminate in a
feasibility study to ascertain if the mining of the minerals would be economic.
A feasibility study is a study that reaches a conclusion with respect to the
economics of bringing a mineral resource to the production stage.

19

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Our mineral resource properties consist of exploration claims
located in Columbia (Risaldo La Golondrina D14-082 mineral property located in
Narino, Colombia) ( El Colmillo mineral property located in Antioquia,
Colombia). There is no assurance that a commercially viable mineral deposit
exists on any of our properties, and further exploration is required before we
can evaluate whether any exist and, if so, whether it would be economically and
legally feasible to develop or exploit those resources. Even if we complete our
current exploration program and we are successful in identifying a mineral
deposit, we would be required to spend substantial funds on further drilling and
engineering studies before we could know whether that mineral deposit will
constitute a reserve (a reserve is a commercially viable mineral deposit).
Please refer to the section entitled Risk Factors, of this quarterly report on
Form 10-Q, for additional information about the risks of mineral
exploration.

Our Current Business

We are an exploration stage company that has not yet generated
or realized any revenues from our business operations. We have concentrated our
recent exploration efforts on the La Golondrina Property in Columbia. In July,
2008 we acquired a mineral right in the El Colmillo property in Colombia. In
October, 2009, our company decided to employ our efforts in exploration of the
El Colmillo property for the next 12 months and will hold exploration of the
Golondrina property until a determination of viability at El Colmillo can be
determined. In December 2008, company personnel at the El Colmillo property were
met by Colombian rebels who demanded a war tax to permit the development
activities to continue. Our company immediately ceased any efforts at the mine
and reported the situation to the Colombian government and to the issuer of the
option. Our company invoked the force majeure section of the contract and we are
waiting to see what developments will take place.

Results of Operations

Three Months Ended April 30, 2011 and 2010

The following summary of our results of operations should be
read in conjunction with our consolidated financial statements for the quarter
ended April 30, 2011 which are included herein.

Our operating results for the three months ended April 30,
2011, for the three months ended April 30, 2010 and the changes between those
periods for the respective items are summarized as follows:

|                           |   |                    |   |   |                    |   |   | Change Between     |  
|-------------------------- | - | ------------------ | - | - | ------------------ | - | - | ------------------ | -
|                           |   |                    |   |   |                    |   |   | Three Month Period |  
|                           |   |                    |   |   |                    |   |   | Ended              |  
|                           |   | Three Months Ended |   |   | Three Months Ended |   |   | April 30, 2011     |  
|                           |   | April 30, 2011     |   |   | April 30, 2010     |   |   | and April 30, 2010 |  
|Revenue                    | $ | Nil                |   | $ | Nil                |   | $ | Nil                |  
|Professional fees          | $ | 42,345             |   | $ | Nil                |   | $ | 42,345             |  
|Director Fees              | $ | 120,000            |   | $ | Nil                |   | $ | 120,000            |  
|Consulting fees            | $ | 51,000             |   | $ | 152,500            |   | $ | (101,500           | )
|Legal fees                 | $ | 7,097              |   | $ | 13,833             |   | $ | (6,736             | )
|General and administrative | $ | 77,473             |   | $ | 5,881              |   | $ | 71,592             |  
|Derivative expense         | $ | (101,539           | ) | $ | (265,112           | ) | $ | (163,537           | )
|Interest expense           | $ | (191,234           | ) | $ | (16,300            | ) | $ | 174,934            |  
|Net Income (Loss)          | $ | (516,299           | ) | $ | (453,626           | ) | $ | 63,243             |  

Our consolidated financial statements report a net loss of
$516,299for the three month period ended April 30, 2011 compared to a
net loss of $453,626for the three month period ended April 30, 2010. Our
losses have increased primarily as a result of increased professional fees,
director fees and general and administrative expenses.

20

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Revenues

We have not earned any revenues since our inception and we do
not anticipate earning revenues in the near future.

Liquidity and Financial Condition

As of April 30, 2011, our current total assets were $152,451and our total current liabilities were $1,521,328and we had a
working capital deficit of $1,368,877. Our financial statements report a net
loss of $516,869 for the three month period ended April 30, 2011, and a net loss
of $14,949,174for the period from September 23, 2004 (date of inception)
to April 30, 2011.

We have suffered recurring losses from operations. The
continuation of our company is dependent upon our company attaining and
maintaining profitable operations and raising additional capital as needed. In
this regard we have raised additional capital through equity offerings and loan
transactions.

|Working Capital           |  |            |   |  |             |   |  | Change between |  
|------------------------- |  | ---------- | - |  | ----------- | - |  | -------------- | -
|                          |  |            |   |  |             |   |  | January 31,    |  
|                          |  | At         |   |  | At          |   |  | 2011           |  
|                          |  | April 30,  |   |  | January 31, |   |  | and April 30,  |  
|                          |  | 2011       |   |  | 2011        |   |  | 2011           |  
|                          |  | ($)        |   |  | ($)         |   |  | ($)            |  
|Current Assets            |  | 152,451    |   |  | 26,990      |   |  | 125,461        |  
|Current Liabilities       |  | 1,521,328  |   |  | 1,579,266   |   |  | (57,937        | )
|Working Capital/(Deficit) |  | (1,368,877 | ) |  | (1,552,276  | ) |  | 183,399        |  

|Cash Flows                                             |   | As at     | 
|------------------------------------------------------ | - | --------- | 
|                                                       |   | April 30, | 
|                                                       |   | 2011      | 
|                                                       |   |           | 
|Net Cash (Used) Provided by Operating
      Activities | $ | 368,665   | 
|Net Cash Used In Investing Activities                  | $ | Nil       | 
|Net Cash Provided by Financing Activities              | $ | 500,000   | 
|Cash Increase (Decrease) In Cash During The Period     | $ | 126,508   | 

We had cash in the amount of $144,803as of April 30,
2011 as compared to $9,323 as of April 30, 2010. We had a working capital
deficit of $1,368,877as of April 30, 2011 compared to working capital
deficit of $1,524,708as of April 30, 2010.

Our principal sources of funds have been from sales of our
common stock and short term loans.

Contractual Obligations

As a smaller reporting company, we are not required to
provide tabular disclosure obligations.

Going Concern

We have not yet achieved profitable operations and are
dependent on our ability to raise capital from stockholders or other sources to
meet our obligations and repay our liabilities arising from normal business
operations when they become due, in their report on our audited financial
statements for the year ended January 31, 2010, our independent auditors
included an explanatory paragraph regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional note
disclosure describing the circumstances that lead to this disclosure by our
independent auditors.

21

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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.

Critical Accounting Policies

The discussion and analysis of our financial condition and
results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with the accounting principles generally
accepted in the United States of America. Preparing financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenue, and expenses. These estimates and
assumptions are affected by managements application of accounting policies. We
believe that understanding the basis and nature of the estimates and assumptions
involved with the following aspects of our financial statements is critical to
an understanding of our financial statements.

Accounting Estimates

The preparation of financial statements in conformity with US
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts 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. Our company regularly evaluates estimates and assumptions
related to valuation of long-lived assets, stock based compensation and deferred
income tax asset valuation allowances. Our company bases its estimates and
assumptions on current facts, historical experience and various other factors
that it believes to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities and the accrual of costs and expenses that are not readily apparent
from other sources. The actual results experienced by our company may differ
materially and adversely from our companys estimates. To the extent there are
material differences between the estimates and the actual results, future
results of operations will be affected.

Cash Equivalents

For purposes of the statement of cash flows cash equivalents
usually consist of highly liquid investments which are readily convertible into
cash with maturity of three months or less when purchased.

Concentrations

Our company has no significant off-balance-sheet concentrations
of credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements. Our company maintains the majority of its cash
balances with one financial institution, in the form of demand deposits. Our
companys assets and operations are concentrated in the country of Colombia,
South America.

Mineral Interests

Mineral interests associated with other than owned properties
are classified as tangible assets. As of April 30, 2011, our company had
capitalized $132,500 related to the mineral rights. The mineral rights will be
amortized using the units-of-production method when production at each project
commences.

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Long-Lived Assets

In accordance with ASC 360, Property Plant and Equipment, our
company tests long-lived assets or asset groups for recoverability when events
or changes in circumstances indicate that their carrying amount may not be
recoverable. Circumstances which could trigger a review include, but are not
limited to: significant decreases in the market price of the asset; significant
adverse changes in the business climate or legal factors; accumulation of costs
significantly in excess of the amount originally expected for the acquisition or
construction of the asset; current period cash flow or operating losses combined
with a history of losses or a forecast of continuing losses associated with the
use of the asset; and current expectation that the asset will more likely than
not be sold or disposed significantly before the end of its estimated useful
life. Recoverability is assessed based on the carrying amount of the asset and
its fair value which is generally determined based on the sum of the
undiscounted cash flows expected to result from the use and the eventual
disposal of the asset, as well as specific appraisal in certain instances. An
impairment loss is recognized when the carrying amount is not recoverable and
exceeds fair value.

Foreign Currency Translation

Our companys functional and reporting currency is the United
States dollar. Management has adopted ASC 740 Foreign Currency Translation
Matters. Monetary assets and liabilities denominated in foreign currencies are
translated using the exchange rate prevailing at the balance sheet date.
Non-monetary assets and liabilities denominated in foreign currencies are
translated at rates of exchange in effect at the date of the transaction.
Average monthly rates are used to translate revenues and expenses. Gains and
losses arising on translation or settlement of foreign currency denominated
transactions or balances are included in the determination of income. Our
company has not, to the date of these financial statements, entered into
derivative instruments to offset the impact of foreign currency fluctuations.

The financial statements of the subsidiary are translated to
United States dollars in accordance with ASC 740 using period-end rates of
exchange for assets and liabilities, and average rates of exchange for the year
for revenues and expenses. Translation gains (losses) are recorded in
accumulated other comprehensive income (loss) as a component of stockholders
deficit. Foreign currency transaction gains and losses are included in current
operations.

Environmental Costs

Environmental expenditures that relate to current operations
are expensed or capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations, and which do not contribute to
current or future revenue generation, are expensed. Liabilities are recorded
when environmental assessments and/or remedial efforts are probable, and the
cost can be reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or our companys
commitments to plan of action based on the then known facts.

Loss per Share

Our company computes net earnings (loss) per share in
accordance with ASC 260, Earnings Per Share, which requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income
statement. Basic EPS is computed by dividing net earnings (loss) available to
common shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period using the
treasury stock method and convertible preferred stock using the if-converted
method. In computing diluted EPS, the average stock price for the period is used
in determining the number of shares assumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti-dilutive. Our company has $606,930 of convertible debentures which can be converted to common stock. These shares
have not been included in any weighted average computations since the effect
would be anti-dilutive.

23

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Income Taxes

Our company accounts for income taxes under the ASC 740, Income
Taxes. Under ASC 740, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under ASC
740, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.

Fair Value of Financial Instruments

Our financial instruments consist principally of cash, accounts
payable, derivative liabilities, amounts due to related parties, stock issuance
liabilities and convertible notes. Pursuant to ASC 820, Fair Value Measurements
and Disclosures, and ASC 825, Financial Instruments, the fair value of our cash
equivalents is determined based on Level 1 inputs, which consist of quoted
prices in active markets for identical assets, the fair value of derivative
liabilities, stock issuance liabilities and convertible notes are determined
based on Level 3 inputs, which consist of unobservable inputs to the valuation
methodology that are significant to the measurement of the fair value of the
assets or liabilities. We believe that the recorded values of all of our other
financial instruments approximate their current fair values because of their
nature and respective relatively short maturity dates or durations.

Comprehensive Loss

ASC 220, Comprehensive Income establishes standards for the
reporting and display of comprehensive loss and its components in the financial
statements. At April 30, 2011 and 2010, our companys only component of
comprehensive loss was foreign currency translation adjustments. Accordingly,
the balance of accumulated other comprehensive loss was charged to
operations.

Stock-Based Compensation

In accordance with ASC 718, Compensation  Stock Based
Compensation, our company accounts for share-based payments using the fair value
method. Common shares issued to third parties for non-cash consideration are
valued based on the fair market value of the services provided or the fair
market value of the common stock on the measurement date, whichever is more
readily determinable.

Mining Properties and Exploration Costs

Exploration costs are charged to operations in the year in
which they are incurred. Costs of acquiring mineral properties are capitalized
until such time commencement of production commences or a determination that
such property is not commercially viable.

Mining properties are, upon commencement of production,
amortized over the estimated life of the ore body to which they relate or are
written off if the property is abandoned or if there is considered to be a
permanent impairment in value.

Investments in mining properties over which our company has
significant influence but not joint control are accounted for using the equity
method.

24

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Site Restoration and Post Closure Costs

Expenditures related to ongoing environmental and reclamation
activities are expensed, as incurred, unless previously accrued. Provisions for
future site restoration and reclamation and other post closure costs in respect
of operating facilities are charged to operations over the estimated life of the
operating facility, commencing when a reasonably definitive estimate of the cost
can be made.

Recent Accounting Pronouncements

Our company has implemented all new accounting pronouncements
that are in effect and that may impact its financial statements and does not
believe that there are any other new accounting pronouncements that have been
issued that might have a material impact on its financial position or results of
operations.

Item 3. Quantitative Disclosures About Market Risks

As a smaller reporting company, we are not required to
provide the information required by this Item.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to our management, including our president (also
our principal executive officer, principal financial officer and principal
accounting officer) to allow for timely decisions regarding required
disclosure.

As the end of the quarter covered by this report, we carried
out an evaluation, under the supervision and with the participation of our
president (also our principal executive officer, principal financial and
accounting officer), of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on the foregoing, our president (also
our principal executive officer, principal financial and accounting officer)
concluded that our disclosure controls and procedures were not effective in
providing reasonable assurance in the reliability of our reports as of the end
of the period covered by this quarterly report.

There have been no changes in our internal controls over
financial reporting that occurred during the quarter ended April 30, 2011 that
have materially or are reasonably likely to materially affect, our internal
controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We know of no material, existing or pending legal proceedings
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial shareholder,
is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors

Much of the information included in this quarterly report
includes or is based upon estimates, projections or other "forward looking
statements". Such forward looking statements include any projections or
estimates made by us and our management in connection with our business
operations. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions
or other future performance suggested herein.

25

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Such estimates, projections or other "forward looking
statements" involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other "forward looking statements".

Our common shares are considered speculative during the
development of our new business operations. Prospective investors should
consider carefully the risk factors set out below.

Risks Associated With Our Business

All of our properties are in the exploration stage. There is
no assurance that we can establish the existence of any mineral resource on any
of our properties in commercially exploitable quantities. Until we can do so, we
cannot earn any revenues from operations and if we do not do so we will lose all
of the funds that we expend on exploration. If we do not discover any mineral
resource in a commercially exploitable quantity, our business could fail.

Despite exploration work on our mineral properties, we have not
established that any of them contain any mineral reserve, nor can there be any
assurance that we will be able to do so. If we do not, our business could fail.

A mineral reserve is defined by the Securities and Exchange
Commission in its Industry Guide 7 (which can be viewed over the Internet at
http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as
that part of a mineral deposit which could be economically and legally extracted
or produced at the time of the reserve determination. The probability of an
individual prospect ever having a "reserve" that meets the requirements of the
Securities and Exchange Commission's Industry Guide 7 is extremely remote; in
all probability our mineral resource property does not contain any 'reserve' and
any funds that we spend on exploration will probably be lost.

Even if we do eventually discover a mineral reserve on one or
more of our properties, there can be no assurance that we will be able to
develop our properties into producing mines and extract those resources. Both
mineral exploration and development involve a high degree of risk and few
properties which are explored are ultimately developed into producing mines.

The commercial viability of an established mineral deposit will
depend on a number of factors including, by way of example, the size, grade and
other attributes of the mineral deposit, the proximity of the resource to
infrastructure such as a smelter, roads and a point for shipping, government
regulation and market prices. Most of these factors will be beyond our control,
and any of them could increase costs and make extraction of any identified
mineral resource unprofitable.

We have a limited operating history and as a result there is
no assurance we can operate on a profitable basis.

We have a limited operating history and must be considered in
the exploration stage. Our company's operations will be subject to all the risks
inherent in the establishment of an exploration stage enterprise and the
uncertainties arising from the absence of a significant operating history.
Potential investors should be aware of the difficulties normally encountered by
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, and additional costs and expenses that may exceed current
estimates. The expenditures to be made by us in the exploration of the mineral
claims may not result in the discovery of mineral deposits. Problems such as
unusual or unexpected formations of rock or land 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 and acquire new claims for
new exploration or cease operations. The acquisition of additional claims will
be dependent upon us possessing capital resources at the time in order to
purchase such claims. If no funding is available, we may be forced to abandon
our operations. No assurance can be given that we may be able to operate on a
profitable basis.

26

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If we do not obtain additional financing, our business will
fail and our investors could lose their investment.

We had cash in the amount of $144,803and a working
capital deficit of $1,368,887as at our quarter ended April 30, 2011. We
currently do not generate revenues from our operations. Our business plan calls
for substantial investment and cost in connection with the acquisition and
exploration of our mineral properties currently under lease and option. Any
direct acquisition of the claim under lease or option is subject to our ability
to obtain the financing necessary for us to fund and carry out exploration
programs on the properties. The requirements are substantial. We do not
currently have any arrangements for additional financing and we can provide no
assurance to investors that we will be able to find such financing if required.
Obtaining additional financing would be subject to a number of factors,
including market prices for minerals, investor acceptance of our properties, and
investor sentiment. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us. The most likely source of
future funds presently available to us is through the sale of equity capital and
loans. Any sale of share capital will result in dilution to existing
shareholders.

Because there is no assurance that we will generate
revenues, we face a high risk of business failure.

We have not earned any revenues as of the date of this
quarterly report and have never been profitable. We do not have an interest in
any revenue generating properties. We were incorporated in September 2004 and to
date have been involved primarily in organizational activities and limited
exploration activities. Prior to our being able to generate revenues, we will
incur substantial operating and exploration expenditures without realizing any
revenues. We therefore expect to incur significant losses into the foreseeable
future. We have limited operating history upon which an evaluation of our future
success or failure can be made. Our net loss from inception to our quarter ended
April 30, 2011 was $14,949,174. We have incurred losses for the quarter ended
April 30, 2011 of $516,299. We recognize that if we are unable to generate
significant revenues from our activities, we will not be able to earn profits or
continue operations. Based upon current plans, we also expect to incur
significant operating losses in the future. We cannot guarantee that we will be
successful in raising capital to fund these operating losses or generate
revenues in the future. We can provide investors with no assurance that we will
generate any operating revenues or ever achieve profitable operations. If we are
unsuccessful in addressing these risks, our business will most likely fail and
our investors could lose their investment.

Because of the speculative nature of the exploration of
natural resource properties, there is substantial risk that this business will
fail.

There is no assurance that any of the claims we explore or
acquire will contain commercially exploitable reserves of minerals. Exploration
for natural resources is a speculative venture involving substantial risk.
Hazards such as unusual or unexpected geological formations and other conditions
often result in unsuccessful exploration efforts. We may also become subject to
significant liability for pollution, cave-ins or hazards, which we cannot insure
or which we may elect not to insure.

Our foremost project is located in Colombia where mineral
exploration activities may be affected in varying degrees by political and
government regulations which could have a negative impact on our ability to
continue our operations.

Certain projects in which we have interests are located in
Colombia. Mineral exploration activities in Colombia may be affected in varying
degrees by political instabilities and government regulations relating to the
mining industry. Any changes in regulations or shifts in political conditions
are beyond our control and may adversely affect our business. Operations may be
affected in varying degrees by government regulations with respect to
restrictions on production, price controls, export controls, income taxes,
expropriations of property, environmental legislation and mine safety. The
status of Colombia as a developing country may make it more difficult for us to
obtain any required financing for our projects. The effect of all these factors
cannot be accurately predicted. Notwithstanding the progress achieved in
restructuring Colombia political institutions and revitalizing its economy, the
present administration, or any successor government, may not be able to sustain
the progress achieved. While the Colombian economy has experienced growth in
recent years, such growth may not continue in the future at similar rates or at
all. If the economy of Colombia fails to continue its growth or suffers a
recession, we may not be able to continue our operations in that country. We do
not carry political risk insurance.

27

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If we cannot compete successfully for financing and for
qualified managerial and technical employees, our exploration program may
suffer.

Our competition in the mining industry 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 be unable to acquire additional financing on terms we consider
acceptable. We also compete with other mining companies in the recruitment and
retention of qualified managerial and technical employees. If we are unable to
successfully compete for financing or for qualified employees, our exploration
program may be slowed down or suspended.

If we are unable to hire and retain key personnel, we may
not be able to implement our business plan.

Our success is also largely dependent on our ability to hire
highly qualified personnel. This is particularly true in highly technical
businesses such as mineral exploration. These individuals are in high demand and
we may not be able to attract the personnel we need. In addition, we may not be
able to afford the high salaries and fees demanded by qualified personnel, or
may lose such employees after they are hired. Failure to hire key personnel when
needed, or on acceptable terms, would have a significant negative effect on our
business.

Inability of our officers and directors to devote sufficient
time to the operation of the business may limit our company's success.

Presently some of our officers and directors allocate only a
portion of their time to the operation of our business. If the business requires
more time for operations than anticipated or the business develops faster than
anticipated, the officers and directors may not be able to devote sufficient
time to the operation of the business to ensure that it continues as a going
concern. Even if this lack of sufficient time of our management is not fatal to
our existence, it may result in limited growth and success of the business.

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 exploration of 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. The payment of such liabilities may have a
material adverse effect on our financial position.

Our independent certified public accounting firm, in their
Notes to the audited financial statements for the year ended January 31, 2011
states that there is a substantial doubt that we will be able to continue as a
going concern.

Our independent certified public accounting firm state in their
notes to the audited financial statements for the year ended January 31, 2011,
that we have experienced significant losses since inception. Failure to arrange
adequate financing on acceptable terms and to achieve profitability would have
an adverse effect on our financial position, results of operations, cash flows
and prospects, there is a substantial doubt that we will be able to continue as
a going concern.

We are subject to various government regulations and
environmental concerns.

We are subject to various government and environmental
regulations. Permits from a variety of regulatory authorities are required for
many aspects of exploration, mining operations and reclamation. We cannot
predict the extent to which future legislation and regulation could cause
additional expense, capital expenditures, restrictions, and delays in the
development of our U.S. or Colombian properties, including those with respect to
unpatented mining claims.

28

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Our activities are not only subject to extensive federal, state
and local regulations controlling the exploration and mining of mineral
properties, but also the possible effects of such activities upon the
environment. Future legislation and regulations could cause additional expense,
capital expenditures, restrictions and delays in the development of our
properties, the extent of which cannot be predicted. Also, as discussed above,
permits from a variety of regulatory authorities are required for many aspects
of mine operation and reclamation. In the context of environmental permitting,
including the approval of reclamation plans, we must comply with known
standards, existing laws and regulations that may entail greater or lesser costs
and delays, depending on the nature of the activity to be permitted and how
stringently the regulations are implemented by the permitting authority. We are
not presently aware of any specific material environmental constraint affecting
our properties that would preclude the economic development or operation of any
specific property.

If we become more active on our properties, it is reasonable to
expect that compliance with environmental regulations will increase our costs.
Such compliance may include feasibility studies on the surface impact of the our
proposed operations; costs associated with minimizing surface impact, water
treatment and protection, reclamation activities, including rehabilitation of
various sites, on-going efforts at alleviating the mining impact on wildlife,
and permits or bonds as may be required to ensure our compliance with applicable
regulations. It is possible that the costs and delays associated with such
compliance could become so prohibitive that we may decide to not proceed with
exploration, development, or mining operations on any of our mineral
properties.

Risks Associated with Our Common Stock

Trading on the OTC Bulletin Board may be volatile and
sporadic, which could depress the market price of our common stock and make it
difficult for our stockholders to resell their shares.

Our common stock is quoted on the OTC Bulletin Board service of
the Financial Industry Regulatory Authority. Trading in stock quoted on the OTC
Bulletin Board is often thin and characterized by wide fluctuations in trading
prices, due to many factors that may have little to do with our operations or
business prospects. This volatility could depress the market price of our common
stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin
Board is not a stock exchange, and trading of securities on the OTC Bulletin
Board is often more sporadic than the trading of securities listed on a
quotation system like NASDAQ or a stock exchange like Amex. Accordingly,
shareholders may have difficulty reselling any of their shares.

Our stock is a penny stock. Trading of our stock may be
restricted by the Securities and Exchange Commissions penny stock regulations
and FINRAs sales practice requirements, which may limit a stockholders ability
to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange
Commission 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 $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 standardized 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.

29

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In addition to the penny stock rules promulgated by the
Securities and Exchange Commission, the Financial Industry Regulatory Authority
has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the Financial Industry Regulatory Authority believes that there
is a high probability that speculative low-priced securities will not be
suitable for at least some customers. The Financial Industry Regulatory
Authority requirements make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which may limit your ability to buy
and sell our stock.

Other Risks

Because some of our officers and directors are located in
non-U.S. jurisdictions, you may have no effective recourse against the non U.S.
officers and directors for misconduct and may not be able to enforce judgment
and civil liabilities against our officers, directors, experts and
agents.

Some of our directors and officers are nationals and/or
residents of countries other than the United States, specifically Canada and
Colombia, and all or a substantial portion of such persons assets are located
outside the United States. As a result, it may be difficult for investors to
enforce within the United States any judgments obtained against our officers or
directors, including judgments predicated upon the civil liability provisions of
the securities laws of the United States or any state thereof.

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most
significant risks to our business, but we cannot predict whether, or to what
extent, any of such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to our common stock.

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

Subsequent to January 31, 2011, we issued 21,935,000 shares of
our common stock to the holder of a convertible debenture for the conversion of
$43,870. We have issued all of the shares pursuant to an exemption from
registration relying on the provisions of Rule 144 promulgated under the
Securities Act of 1933, as amended.

Subsequent to January 31, 2011, we issued 83,149,328 shares of
common stock to settle $265,000 of principal and interest outstanding relating
to a convertible note. We have issued all of the shares pursuant to an exemption
from registration relying on the provisions of Rule 144 promulgated under the
Securities Act of 1933, as amended.

On March 4, 2011, we issued 3,428,571 shares of common stock
for $12,000 consulting fees. We have issued all of the shares pursuant to an
exemption from registration relying on the provisions of Rule 144 promulgated
under the Securities Act of 1933, as amended.

On April 27, 2011, we issued 10,000,000 shares of common stock
for $20,000 of debt. We have issued all of the shares pursuant to an exemption
from registration relying on We have issued all of the shares pursuant to an
exemption from registration relying on the provisions of Rule 144 promulgated
under the Securities Act of 1933, as amended.

Subsequent to April 30, 2011, weissued 50,000,000
shares of our companys common stock related to $65,000 of convertible notes. We
have issued all of the shares pursuant to an exemption from registration relying
on We have issued all of the shares pursuant to an exemption from registration
relying on the provisions of Rule 144 promulgated under the Securities Act of
1933, as amended.

30

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Subsequent to April 30, 2011, we issued 12,500,000 shares of
our companys common stock related to the holder of a convertible debenture for
the conversion of $25,000. We have issued all of the shares pursuant to an
exemption from registration relying on the provisions of Rule 144 promulgated
under the Securities Act of 1933, as amended.

On May 17, 2011, we issued 7,461,874 shares of common stock for
$13,058 of debt. We have issued all of the shares pursuant to an exemption from
registration relying on the provisions of Rule 144 promulgated under the

Securities Act of 1933, as amended.

On May 24, 2011, we issued 10,000,000 shares of common stock
for $10,000 of debt. We have issued all of the shares pursuant to an exemption
from registration relying on the provisions of Rule 144 promulgated under the

Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. [Removed and Reserved]

Item 5. Other Information

None.

Item 6. Exhibits

|Exhibit |                                                                                                                                                                                                                                
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                
|(3)     | (i) Articles of
      Incorporation; and (ii) Bylaws                                                                                                                                                                           
|        |                                                                                                                                                                                                                                
|3.1     | Articles of Incorporation
      (incorporated by reference from our Form SB-2 Registration Statement,
      filed on March 24, 2005).                                                                                          
|        |                                                                                                                                                                                                                                
|3.2     | Bylaws (incorporated by
      reference from our Form SB-2 Registration Statement, filed on March 24,
      2005).                                                                                                             
|        |                                                                                                                                                                                                                                
|3.3     | Certificate of Change
      (incorporated by reference from our Current Report on Form 8-K, filed on
      March 24, 2006).                                                                                                    
|        |                                                                                                                                                                                                                                
|3.4     | Certificate of Change
      (incorporated by reference from our Current Report on Form 8-K, filed on
      November 12, 2009).                                                                                                 
|        |                                                                                                                                                                                                                                
|(10)    | Material Contracts                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                
|10.1    | Purchase and Sale Agreement
      dated October 22, 2004 (incorporated by reference from our Amendment No. 1
      on Form SB-2/A Registration Statement, filed on April 28, 2005).                                            
|        |                                                                                                                                                                                                                                
|10.2    | Letter Agreement dated February
      1, 2006 between our company and Nueva California S.A. and Primecap
      Resources Inc. (incorporated by reference from our Current Report on Form
      8-K, filed on February 6, 2006).
|        |                                                                                                                                                                                                                                
|10.3    | Assignment Agreement dated
      February 28, 2006 between our company and Primecap Resources Inc.
      (incorporated by reference from our Current Report on Form 8-K, filed on
      March 10, 2006).                       
|        |                                                                                                                                                                                                                                
|10.4    | Amending Agreement dated March
      15, 2006 between our company and Primecap Resources Inc. (incorporated by
      reference from our Current Report on Form 8-K, filed on March 20, 2006).                                  
|        |                                                                                                                                                                                                                                
|10.5    | Consulting Agreement dated
      April 1, 2006 between our company and James Sikora (incorporated by
      reference from our Current Report on Form 8-K, filed on April 20, 2006)                                             

31

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|Exhibit |                                                                                                                                                                                                      
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                                                          
|        |                                                                                                                                                                                                      
|10.6    | Amending Agreement Dated June
      30, 2006 between our company and Primecap Resources Inc. (incorporated by
      reference from our Current Report on Form 8-K, filed on July 14, 2006).          
|        |                                                                                                                                                                                                      
|10.7    | Convertible Loan Agreement
      dated December 1, 2009 between our company and John C. Lama (incorporated
      by reference from our Current Report on Form 8-K, filed on December 11,
      2009).
|        |                                                                                                                                                                                                      
|10.8    | Consulting Services Agreement
      between our company and Kerry Services Inc. (incorporated by reference
      from our Current Report on Form 8-K, filed on August 12, 2010)                      
|        |                                                                                                                                                                                                      
|(31)    | Rule 13a-14(a)/15d-14(a)
      Certifications                                                                                                                                                        
|        |                                                                                                                                                                                                      
|31.1*   | Section 302 Certification under
      Sarbanes-Oxley Act of 2002.                                                                                                                                    
|        |                                                                                                                                                                                                      
|(32)    | Section 1350
      Certifications                                                                                                                                                                    
|        |                                                                                                                                                                                                      
|32.1*   | Section 906 Certification under
      Sarbanes-Oxley Act of 2002.                                                                                                                                    

* Filed herewith

32

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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 to
be signed on its behalf by the undersigned, thereunto duly authorized.

|                    | TAO MINERALS LTD.                                              
|------------------- | ---------------------------------------------------------------
|                    |                                                                
|                    |                                                                
|Date: June 28, 2011 | /s/ James
      Sikora                                         
|                    | James Sikora                                                   
|                    | President, Chief Financial Officer and Director                
|                    | (Principal Executive Officer, Principal
      Financial Officer
|                    | and Principal Accounting Officer)                              

33

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