---

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 October 31, 2010

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)                             

1-877-331-8777(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. [X] YES  
 [   ] 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 BANKRUPTCYPROCEEDINGS 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. 205,202,533
common shares issued and outstanding as of January 27, 2011

1

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Our consolidated unaudited interim financial statements for the
nine month period ended October 31, 2010 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)                     

|                                                                                                                                                                                                |   | October 31  |   |   | January 31 |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ---------- | -
|                                                                                                                                                                                                |   | 2010        |   |   | 2010       |  
|                                                                                                                                                                                                |   |             |   |   |            |  
|ASSETS                                                                                                                                                                                          |   |             |   |   |            |  
|Current                                                                                                                                                                                         |   |             |   |   |            |  
|Cash                                                                                                                                                                                            | $ | 3,405       |   | $ | 7,865      |  
|Prepaids                                                                                                                                                                                        |   | 94,169      |   |   | 36,120     |  
|Total current assets                                                                                                                                                                            |   | 97,574      |   |   | 43,985     |  
|                                                                                                                                                                                                |   |             |   |   |            |  
|Property and Equipment                                                                                                                                                                          |   | 21,686      |   |   | 19,370     |  
|                                                                                                                                                                                                |   |             |   |   |            |  
|Mineral Properties                                                                                                                                                                              |   |             |   |   |            |  
|Mineral Rights                                                                                                                                                                                  |   | 145,538     |   |   | 129,921    |  
|Total Mineral Properties                                                                                                                                                                        |   | 145,538     |   |   | 129,921    |  
|                                                                                                                                                                                                |   |             |   |   |            |  
|Total assets                                                                                                                                                                                    | $ | 264,798     |   | $ | 193,276    |  
|                                                                                                                                                                                                |   |             |   |   |            |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                                                                           |   |             |   |   |            |  
|Current                                                                                                                                                                                         |   |             |   |   |            |  
|                                                                                                                                                                                                |   |             |   |   |            |  
|Accounts payable and accrued expenses                                                                                                                                                           | $ | 349,619     |   | $ | 632,023    |  
|Note Payable                                                                                                                                                                                    |   | 86,976      |   |   | 420,622    |  
|Derivative liability                                                                                                                                                                            |   | 1,275,025   |   |   | 233,008    |  
|Due to related parties                                                                                                                                                                          |   | 6,610       |   |   | -          |  
|Stock issuance liability                                                                                                                                                                        |   | 93,140      |   |   | 92,100     |  
|Other accrued liabilities                                                                                                                                                                       |   | 123,219     |   |   | 120,812    |  
|Total current liabilities                                                                                                                                                                       |   | 1,934,589   |   |   | 1,498,565  |  
|Note payable long term                                                                                                                                                                          |   | -           |   |   | 66,092     |  
|Total liabilities                                                                                                                                                                               |   | 1,934,589   |   |   | 1,564,657  |  
|                                                                                                                                                                                                |   |             |   |   |            |  
|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    81,202,556 shares and 2,736,857 shares issued
      and outstanding at     October 31, 2010 and January 31,
      2010 |   | 81,203      |   |   | 2,738      |  
|Additional paid-in capital                                                                                                                                                                      |   | 11,452,012  |   |   | 7,345,090  |  
|Accumulated other comprehensive loss                                                                                                                                                            |   | (32,050     | ) |   | (32,255    | )
|Deficit accumulated during exploration
      stage                                                                                                                                              |   | (13,160,873 | ) |   | (8,676,871 | )
|Total stockholders deficit                                                                                                                                                                     |   | (1,659,708  | ) |   | (1,361,298 | )
|Noncontrolling interest                                                                                                                                                                         |   | (10,083     | ) |   | (10,083    | )
|Total deficit                                                                                                                                                                                   |   | (1,669,791  | ) |   | (1,371,381 | )
|Total liabilities and deficit                                                                                                                                                                   | $ | 264,798     |   | $ | 193,276    |  

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

F-1

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

|                                                         |   |                       |   |   | For the Nine Months    |  
|-------------------------------------------------------- | - | --------------------- | - | - | ---------------------- | -
|                                                         |   | From Inception Date   |   |   | Ended
      October 31 |  
|                                                         |   | of September 23, 2004 |   |   | 2010                   |  
|                                                         |   | to Period Ended       |   |   |                        |  
|                                                         |   | October 31, 2010      |   |   |                        |  
|                                                         |   |                       |   |   |                        |  
|OPERATING EXPENSES                                       |   |                       |   |   |                        |  
|Exploration expenses                                     | $ | 122,650               |   | $ | -                      |  
|Professional fees                                        |   | 241,768               |   |   | -                      |  
|Director fees                                            |   | 120,000               |   |   | -                      |  
|Consulting fees                                          |   | 1,389,557             |   |   | 295,207                |  
|Legal fees                                               |   | 346,278               |   |   | 28,647                 |  
|General and administrative                               |   | 2,992,200             |   |   | 2,758,531              |  
|Impairment charge                                        |   | 4,700,000             |   |   | -                      |  
|LOSS FROM OPERATIONS                                     |   | 9,912,453             |   |   | 3,082,385              |  
|Total Operating Expenses                                 |   | (9,912,453            | ) |   | (3,082,385             | )
|OTHER INCOME (EXPENSE)                                   |   |                       |   |   |                        |  
|Derivative expense                                       |   | (1,362,616            | ) |   | (1,229,608             | )
|Loss on settlement of debt                               |   | (1,456,151            | ) |   | -                      |  
|Interest expense                                         |   | (261,838              | ) |   | (172,009               | )
|Other loss, net                                          |   | (1,067                | ) |   | -                      |  
|Foreign currency translation gain                        |   | 1,531                 |   |   | -                      |  
|TOTAL OTHER INCOME (EXPENSE)                             |   | (3,080,141            | ) |   | (1,401,617             | )
|                                                         |   |                       |   |   |                        |  
|Net loss for the period                                  |   | (12,992,594           | ) |   | (4,484,002             | )
|Less: net loss attributable to                           |   |                       |   |   |                        |  
|noncontrolling interest                                  |   | 1,647                 |   |   | -                      |  
|                                                         |   |                       |   |   |                        |  
|Net loss attributable to TAO commonshareholders         | $ | (12,990,947           | ) | $ | (4,484,002             | )
|                                                         |   |                       |   |   |                        |  
|LOSS PER SHARE  BASIC                                   |   |                       |   | $ | (0.16                  | )
|                                                         |   |                       |   |   |                        |  
|WEIGHTED AVERAGE NUMBER OF ISSUED SHARES:
       - BASIC |   |                       |   |   | 28,693,367             |  

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

F-2

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TAO MINERALS LTD. and Subsidiary(An Exploration Stage Company)ConsolidatedStatements of Operations (Unaudited)

|                                                            |   | For the Three Months   |  
|----------------------------------------------------------- | - | ---------------------- | -
|                                                            |   | Ended
      October 31 |  
|                                                            |   | 2010                   |  
|                                                            |   |                        |  
|OPERATING EXPENSES                                          |   |                        |  
|Exploration expenses                                        | $ | -                      |  
|Professional fees                                           |   | -                      |  
|Director fees                                               |   | -                      |  
|Consulting fees                                             |   | 101,874                |  
|Legal fees                                                  |   | 2,206                  |  
|General and administrative                                  |   | 936,628                |  
|Impairment charge                                           |   | -                      |  
|LOSS FROM OPERATIONS                                        |   | 1,040,708              |  
|Total Operating Expenses                                    |   | (1,040,708             | )
|OTHER INCOME (EXPENSE)                                      |   |                        |  
|Derivative expense                                          |   | (1,052,737             | )
|Loss on settlement of debt                                  |   | -                      |  
|Interest expense                                            |   | (121,245               | )
|Other loss, net                                             |   | -                      |  
|Foreign currency translation gain                           |   | -                      |  
|TOTAL OTHER INCOME (EXPENSE)                                |   | (1,173,982             | )
|                                                            |   |                        |  
|Net loss for the period                                     |   | (2,214,690             | )
|Less: net loss attributable tononcontrolling
      interest |   | -                      |  
|                                                            |   |                        |  
|Net loss attributable to TAO commonshareholders            | $ | (2,214,690             | )
|                                                            |   |                        |  
|LOSS PER SHARE  BASIC                                      | $ | (0.04                  | )
|                                                            |   |                        |  
|WEIGHTED AVERAGE NUMBER OF ISSUED SHARES:
       - BASIC    |   | 53,478,390             |  

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

F-3

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

|                                                 |   | From Inception Date  |   |   |                  |   |   |                  |  
|------------------------------------------------ | - | -------------------- | - | - | ---------------- | - | - | ---------------- | -
|                                                 |   | of September 23,     |   |   | For the Nine     |   |   | For the Nine     |  
|                                                 |   | 2004 to Period Ended |   |   | Months Ended     |   |   | Months Ended     |  
|                                                 |   | October 31, 2010     |   |   | October 31, 2010 |   |   | October 31, 2009 |  
|Cash Provided by (Used
      for) Operating      |   |                      |   |   |                  |   |   |                  |  
|Activities                                       |   |                      |   |   |                  |   |   |                  |  
|Net (loss) for the period                        | $ | (12,990,947          | ) | $ | (4,484,002       | ) | $ | (370,127         | )
|Stock issued for services                        |   | 3,286,386            |   |   | 2,604,000        |   |   | -                |  
|Loss on settlement of debt                       |   | 1,456,151            |   |   | -                |   |   | 102,000          |  
|Impairment charges                               |   | 4,700,000            |   |   | -                |   |   | -                |  
|Minority interest in loss                        |   | (11,648              | ) |   | -                |   |   | (67              | )
|Changes in non-cash working capital items:       |   |                      |   |   |                  |   |   |                  |  
|Prepaids                                         |   | (90,951              | ) |   | (54,831          | ) |   | 5,491            |  
|Discount on note payable                         |   | (108,908             | ) |   | -                |   |   | -                |  
|Accounts payable and accrued liabilities         |   | 914,728              |   |   | 169,366          |   |   | 209,285          |  
|Derivative
      liability                       |   | 1,668,374            |   |   | 1,435,366        |   |   | 13,989           |  
|Cash used by operations                          |   | (1,176,815           | ) |   | (330,101         | ) |   | (39,429          | )
|Investing Activities                             |   |                      |   |   |                  |   |   |                  |  
|Acquisition of subsidiary                        |   | (114,185             | ) |   | -                |   |   | -                |  
|Purchase of fixed assets                         |   | (19,370              | ) |   | -                |   |   | (2,550           | )
|Purchase of mineral rights                       |   | (379,941             | ) |   | -                |   |   | (16,501          | )
|Cash
      used by investing activities          |   | (513,496             | ) |   | -                |   |   | (19,051          | )
|Financing Activities                             |   |                      |   |   |                  |   |   |                  |  
|Issuance of debt                                 |   | 1,670,820            |   |   | 325,800          |   |   | 50,000           |  
|Issuance of common stock                         |   | 55,310               |   |   | -                |   |   | -                |  
|Cash
      provided by financing activities      |   | 1,726,130            |   |   | 325,800          |   |   | 50,000           |  
|                                                 |   |                      |   |   |                  |   |   |                  |  
|Effect of Exchange Rate on Cash                  |   | (32,414              | ) |   | (159             | ) |   | 567              |  
|Cash Increase (Decrease)
      During the Period |   | 3,405                |   |   | (4,460           | ) |   | (8,480           | )
|Cash, Beginning of Period                        |   | -                    |   |   | 7,865            |   |   | 7,868            |  
|Cash and Equivalents, End of Period              | $ | 3,405                |   | $ | 3,405            |   | $ | (45              | )

Please see note #5 for additional supplemental cash flow
information.

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

F-4

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

|1. | Organization and Summary of Significant Accounting
      Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Nature of Operations and Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Tao Minerals, Ltd. (an exploration stage company) (the
      Company) was incorporated under the laws of the State of Nevada on
      September 23, 2004. The Company is natural resource exploration company
      with an objective of acquiring, exploring and if warranted and feasible,
      developing natural resource properties.                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | As reflected in the accompanying financial statements,
      the Company is in the exploration stage and has cumulative negative cash
      flows from operations of $1,176,815 since inception and losses of
      $4,484,002for the nine month period ended October 31, 2010. This raises
      substantial doubt about its ability to continue as a going concern. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The financial statements for the nine months ended
      October 31, 2010 and 2009, and for the period from September 23, 2004
      (inception) to October 31, 2010, together with the balance sheet as of
      October 31, 2010 included herein have not been audited by the Companys
      independent public accountants. In the opinion of management, all
      adjustments necessary to present fairly the financial position at October
      31, 2010 and the results of operations and cash flows for the periods
      presented herein have been made.                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The financial statements included herein have been
      prepared pursuant to the rules and regulations of the Securities and
      Exchange Commission. Certain information and footnote disclosures normally
      included in financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been
      omitted pursuant to such regulations. These financial statements should be
      read in conjunction with the financial statements and notes thereto
      included in the Companys Annual Report on Form 10-K for the year ended
      January 31, 2010.                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The financial statements of the Company have been
      prepared in accordance with accounting principles generally accepted in
      the United States of America. Because a precise determination of many
      assets and liabilities is dependent upon future events, the preparation of
      financial statements for a period necessarily involves the use of
      estimates which have been made using careful judgment. Actual results may
      vary from these estimates. Prior periods have been adjusted to conform to
      the presentation of the financial statements ended October 31,
  2010.                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2. | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-5

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

| | d) | On May 6, 2010, the Directors agreed to issue 6,000,000
      shares of common stock in settlement of services and entered into
      Consulting Agreements (4) to provide various financial and management
      services for the period April 16, 2010 through October 16, 2010.
      Compensation for the four (4) agreements amounted to 10,000,000 shares of
      restricted common stock.                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | e) | On May 20, 2010, the Directors approved settlement
      agreements with two of its lenders. From time to time each Lender may
      elect in its sole and absolute discretion to exchange all or a portion of
      the outstanding balance to common stock. Each Lender may convert the debt
      at a price per share equal to 50% of the lowest closing bid price of the
      Companys common stock for the trailing 30 days.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | f) | During the period ended October 31, 2010, one of the
      lenders converted $114,227 of Notes and derivative payable for 5,115,133
      shares of common stock.                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | g) | During the period ended October 31, 2010, one of the
      lenders converted $165,000 of Notes and derivative payable for 26,761,904
      shares of common stock and $14,000 of accrued interest into 4,000,000
      shares of common stock.                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | h) | During the period ended October 31, 2010, one of the
      lenders converted $91,250 of Notes and derivative payable for 12,884,198
      shares of common stock and $15,000 of accrued interest into 4,285,714
      shares of common stock.                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | i) | On July 1, 2010, the Company entered into a Business
      Consultant Agreement to receive advice on growth strategies including
      mergers, acquisitions and fundings. The term of the agreement is for 30
      days but may be extended upon agreement of both parties. The Company paid
      $25,000 and on August 19, 2010, issued 2,000,000 shares of common stock
      with a fair value of $44,000 to the
Consultant.  

|3. | Notes Payable
|-- | -------------
|   |              
|   | a)           
|   |              
|   | b)           

F-6

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

|4. | Other Matters                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                              
|   | a)                                                                                                                                                           
|   |                                                                                                                                                              
|   | b)                                                                                                                                                           
|   |                                                                                                                                                              
|5. | Supplemental Cash Flow Information                                                                                                                           
|   |                                                                                                                                                              
|   | a)                                                                                                                                                           
|   |                                                                                                                                                              
|   | b)                                                                                                                                                           
|   |                                                                                                                                                              
|   | c)                                                                                                                                                           
|   |                                                                                                                                                              
|   | d)                                                                                                                                                           
|   |                                                                                                                                                              
|6. | Subsequent Events                                                                                                                                            
|   |                                                                                                                                                              
|   | Subsequent events were evaluated through January 24,
      2011.                                                                                             
|   |                                                                                                                                                              
|   | Subsequent October 31, 2010, $384,000 of notes payable
      and related derivative liabilities were converted into 109,714,281 shares
      of common stock.

F-7

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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 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., 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 $240,000,000 pesos (or US$120,000).

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. The note was to be funded by December 31, 2008,
however the note was not funded by that date.

3

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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 new
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.

4

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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 October 31, 2010 and 2009

The following summary of our results of operations should be
read in conjunction with our consolidated financial statements for the quarter
ended October 31, 2010 which are included herein.

Our operating results for the three months ended October 31,
2010, for the three months ended October 31, 2009 and the changes between those
periods for the respective items are summarized as follows:

|                           |   | Three Months Ended
      October 31, 2010 |   |   | Three Months Ended
      October 31, 2009 |   |   | Change Between Three Month
      Period Ended October 31, 2010 and October
      31, 2009 |  
|-------------------------- | - | ----------------------------------------- | - | - | ----------------------------------------- | - | - | ----------------------------------------------------------------------------------------- | -
|Revenue                    | $ | Nil                                       |   | $ | Nil                                       |   | $ | Nil                                                                                       |  
|Professional fees          | $ | Nil                                       |   | $ | 4,600                                     |   | $ | (4,600                                                                                    | )
|Consulting fees            | $ | 101,874                                   |   | $ | 30,000                                    |   | $ | 71,874                                                                                    |  
|Legal fees                 | $ | 2,206                                     |   | $ | Nil                                       |   | $ | 2,206                                                                                     |  
|General and administrative | $ | 936,628                                   |   | $ | 22,581                                    |   | $ | 914,047                                                                                   |  
|Derivative expense         | $ | (1,052,737                                | ) | $ | (8,108                                    | ) | $ | 1,044,629                                                                                 |  
|Interest expense           | $ | (121,245                                  | ) | $ | (10,455                                   | ) | $ | 110,790                                                                                   |  
|Net Income (Loss)          | $ | (2,214,690                                | ) | $ | (75,744                                   | ) | $ | 2,138,946                                                                                 |  

Our consolidated financial statements report a net loss of
$2,214,690for the three month period ended October 31, 2010 compared to
a net loss of $75,744 for the three month period ended October 31, 2009. Our
losses have increased primarily as a result of consulting and general and
administrative fees.

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Results of Operations

Nine Months Ended October 31, 2010 and 2009

The following summary of our results of operations should be
read in conjunction with our consolidated financial statements for the quarter
ended October 31, 2010 which are included herein.

Our operating results for the nine months ended October 31,
2010, for the nine months ended October 31, 2009 and the changes between those
periods for the respective items are summarized as follows:

|                           |   | Nine Months Ended October
      31, 2010 |   |   | Nine Months Ended October
      31, 2009 |   |   | Change Between Nine Month
      Period Ended October 31, 2010 and October
      31, 2009 |  
|-------------------------- | - | ---------------------------------------- | - | - | ---------------------------------------- | - | - | ---------------------------------------------------------------------------------------- | -
|Revenue                    | $ | Nil                                      |   | $ | Nil                                      |   | $ | Nil                                                                                      |  
|Professional fees          | $ | Nil                                      |   | $ | 14,300                                   |   | $ | (14,300                                                                                  | )
|Consulting fees            | $ | 295,207                                  |   | $ | 139,500                                  |   | $ | 155,707                                                                                  |  
|Legal fees                 | $ | 28,647                                   |   | $ | 2,107                                    |   | $ | 26,540                                                                                   |  
|General and administrative | $ | 2,758,531                                |   | $ | 71,285                                   |   | $ | 2,687,246                                                                                |  
|Derivative expense         | $ | (1,229,608                               | ) | $ | (13,989                                  | ) | $ | 1,215,619                                                                                |  
|Loss on settlement of debt | $ | Nil                                      |   | $ | (102,000                                 | ) | $ | 102,000                                                                                  |  
|Interest expense           | $ | (172,009                                 | ) | $ | (27,254                                  | ) | $ | 144,755                                                                                  |  
|Net Income (Loss)          | $ | (4,484,002                               | ) | $ | (370,209                                 | ) | $ | 4,113,793                                                                                |  

Our consolidated financial statements report a net loss of
$4,484,002 for the nine month period ended October 31, 2010 compared to a net
loss of $370,209 for the nine month period ended October 31, 2009. Our losses
have increased primarily as a result of consulting and general and
administrative fees.

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 October 31, 2010, our current total assets were $97,574
and our total current liabilities were $1,934,589 and we had a working capital
deficit of $1,837,015. Our financial statements report a net loss of $4,484,002
for the nine month period ended October 31, 2010, and a net loss of $12,992,594
for the period from September 23, 2004 (date of inception) to October 31,
2010.

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.

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|Cash Flows                                         |   | As at       |  
|-------------------------------------------------- | - | ----------- | -
|                                                   |   | October 31, |  
|                                                   |   | 2010        |  
|                                                   |   |             |  
|Net Cash (Used) Provided by Operating Activities   | $ | 330,101     |  
|Net Cash Used In Investing Activities              | $ | Nil         |  
|Net Cash Provided by Financing Activities          | $ | 325,800     |  
|Cash Increase (Decrease) In Cash During The Period | $ | (4,460      | )

We had cash in the amount of $3,405 as of October 31, 2010 as
compared to $45 as of October 31, 2009. We had a working capital deficit of
$1,837,015 as of October 31, 2010 compared to working capital deficit of
$1,152,871 as of October 31, 2009.

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.

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.

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.

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There have been no changes in our internal controls over
financial reporting that occurred during the quarter ended October 31, 2010 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.

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.

8

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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.

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 $3,405 and a working capital
deficit of $1,837,015 as at our quarter ended October 31, 2010. 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
October 31, 2010 was $12,992,594. We have incurred losses for the quarter ended
October 31, 2010 of $2,214,690. 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.

9

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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.

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.

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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, 2010
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, 2010,
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.

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.

11

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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.

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.

12

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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

Effective August 3, 2010, we issued 2,000,000 shares of our
common stock pursuant a consulting services agreement. We have issued the shares
to one U.S. investor (as that term is defined in Regulation D of the Securities
Act of 1933) relying on Rule 506 of Regulation D and/or Section 4(2) of the
Securities Act of 1933.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. [Removed and Reserved]

Item 5. Other Information

Effective August 13, 2010 Julio Calle resigned as chief
financial officer of our company and James Sikora was appointed chief financial
officer.

Item 6. Exhibits

|Exhibit | Description                                                                                                                    
|------- | -------------------------------------------------------------------------------------------------------------------------------
|Number  |                                                                                                                                
|        |                                                                                                                                
|(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).          

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|Exhibit | Description                                                                                                                                                                                                                          
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |                                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                      
|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)                                               
|        |                                                                                                                                                                                                                                      
|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

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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: January 27th, 2011 | /s/
      James Sikora                                         
|                         | James Sikora                                                   
|                         | President, Chief Financial Officer and Director                
|                         | (Principal Executive Officer, Principal Financial
      Officer
|                         | and Principal Accounting Officer)                              

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