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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

**FORM 10-QSB**

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

For the quarterly period ended**July 31,            2007**

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

For the transition period from ______________ to            ______________

Commission File Number  **000-4995**
| **TAO MINERALS                        LTD.**                                          |
|---------------------------------------------------------------------------------------|
| (Name of small                        business issuer in its charter)                 |
| **Nevada**                                                                            |   | **20-1682702** |
| (State or other                        jurisdiction of incorporation or organization) |   | (I.R.S.                        Employer Identification No.) |

 
| Officina 624,                        Empresarial Mall Ventura, Cra.32#1BSur 51, Medellin, Columbia |   | **N/A**                           |
|----------------------------------------------------------------------------------------------------|--------|-----------------------------------|
| (Address of                        principal executive offices)                                    |   | (Zip                        Code) |

Issuer’s telephone number  **(305) 726-0602**

Check            whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of            the Exchange Act during the past 12 months (or for such shorter period that the            registrant was required to file such reports), and (2) has been subject to such filing            requirements for the past 90 days.
| YesxNo | [  ] |
|--------|-----------|

Indicate by check mark whether the registrant is a shell company (as            defined in Rule 12b-2 of the Exchange Act).
| Yes [  ] |  Nox |
|--------------------|-----------|

**APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**

**PROCEEDINGS DURING THE PRECEDING FIVE YEARS**

Check            whether the registrant filed all documents and reports required to be filed by Section            l2, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan            confirmed by a            court.           Yes o No            o

**APPLICABLE ONLY TO CORPORATE ISSUERS**

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

As of            September 9, 2007, there were**51,816,000**shares of the issuer’s common stock and outstanding, par value            $0.001.
| Transitional Small Business Disclosure Format (Check                        one):   | Yes [ | ]   | No x |
|-----------------------------------------------------------------------------------------------|------------|---------------|-----------|

 

 

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INDEX

 
| PART 1.  | FINANCIAL INFORMATION |
|----------|-----------------------|
|     | Item 1                | Financial Statements |
|     |                  | Balance Sheets as of July 31, 2007 |
|     |                  | Statements of Operations for the three and six months ended                        July 31, 2007 and 2006, and for the period from September 23, 2004 (Date of                        inception) to July 31, 2007 |
|     |                  | Statements of Cash Flows for the six months ended July 31,                        2007 and 2006, and for the period September 23, 2004 (Date of inception) to                        July 31, 2007 |
|     |                  | Notes to Financial Statements |
|     | Item 2                | Management Discussion and Analysis |
|     | Item 3                | Controls and Procedures |
| PART II. | OTHER INFORMATION     |
|     | Item 1                | Legal Proceedings |
|     | Item 2                | Changes in Securities |
|     | Item 3                | Defaults Upon Senior Securities |
|     | Item 4                | Submission of Matters to a Vote of Security                        Holders |
|     | Item 5                | Other Information |
|     | Item 6                | Exhibits and Reports on Form 8K |
|     | SIGNATURES            |

 

 

             

             

             

             

2

 

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**TAO MINERALS LTD.**

**(An Exploration Stage Company)**

             

Unaudited Financial Statements

 

 

             
| Index                         | Page Number |
|-------------------------------|-------------|
| Balance Sheet                 | F-1         |
| Statements of Operations      | F-2         |
| Statements of Cash Flows      | F-3         |
| Notes to Financial Statements | F-4         |

 

 

3

 

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| **TAO MINERALS LTD.**

**(An Exploration Stage Company)**                                             |                                            |      |
|-------------------------------------------------------------------------------------------------------|-------------------------------------------------|-----------|
| Balance Sheet                                                                                         |                                            |      |
|                                                                                                  |                                            |      |
|                                                                                                  |                                            |      | July 31, 2007 |
| ASSETS                                                                                                |                                            |      |   |
| **Current**                                                                                           |                                            |      |   |
| Cash                                                                                                  | $                                               | 2,835     |
| Prepaid Expenses                                                                                      |                                            | 9,500     |
| **Total current assets**                                                                              |                                            | 12,335    |
| **Mineral Properties**                                                                                |                                            |      |
| Mineral Rights, net                                                                                   |                                            | 353,000   |
| **Total Mineral Properties**                                                                          |                                            | 353,000   |
|                                                                                                  |                                            |      |
| Total assets                                                                                          |                                            | $         | 365,335 |
| LIABILITIES                                                                                           |                                            |      |   |
| **Current**                                                                                           |                                            |      |   |
| Accounts payable and accrued expenses                                                                 | $                                               | 92,106    |
| Due to a related party                                                                                |                                            | 3,000     |
| Stock issuance liability                                                                              |                                            | 620,000   |
| Other accrued liabilities                                                                             |                                            | 183,000   |
| **Total current liabilities**                                                                         |                                            |      |
| Total Liabilities                                                                                     |                                            |      | 898,106 |
|                                                                                                  |                                            |      |   |
| **STOCKHOLDERS’ EQUITY**                                                                        |                                            |      |
| **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, 552,000,000 shares authorized |      |   |
| Issued, allotted and outstanding:                                                                     |                                            |      |
| 51,816,000                                                                                            | shares of common stock                          |      | 51,816 |
| **Additional paid-in capital**                                                                        |                                            | 58,095    |
| **Deficit accumulated during exploration                        stage**                               |                                            | (642,682) |
| **Total stockholders’ equity**                                                                  |                                            | (532,771) |
| **Total liabilities and stockholders’                        equity**                           | $                                               | 365,335   |
| **The accompanying notes are an integral part of these                        financial statements.** |
|                                                                                                       |                                                 |           |  |  |  |

 

 

 

 

 

F-1

 

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|   | **TAO MINERALS LTD.** |
|--------|-----------------------|

**(An Exploration Stage Company)**

Statements of Operations

             

             
|                                                                                        |   |                                                                                           |                                      |
|---------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|-------------------------------------------|
|                                                                                        |   | From Date of Inception September 23, 2004 to                        Period Ended July 31, 2007 | For the three Months ended

July 31, 2007 | For the three Months ended

July 31, 2006 | For the six Months ended

July 31, 2007 | For the six Months ended                        July 31, 2006 |
| **OPERATING EXPENSES**                                                                      |   |                                                                                           |                                      |   |   |   |   |   |   |   |
| Exploration expenses                                                                        | $      | 113,550                                                                                        |                                      | - |   | - | $ | **-** | $ | - |
| Professional fees                                                                           |   | 243,096                                                                                        |                                      | 48,523 |   | 18,683 |   | 55,698 |   | 33,585 |
| Consulting fees                                                                             |   | 214,850                                                                                        |                                      | 39,000 |   | 42,850 |   | 78,000 |   | 55,850 |
| General and administrative                                                                  |   | 18,541                                                                                         |                                      | 129 |   | 55,284 |   | 679 |   | 82,645 |
| Total Operating Expenses                                                                    |   | 590,037                                                                                        |                                      | 87,652 |   | 116,817 |   | 134,377 |   | 172,080 |
| **LOSS FROM OPERATIONS**                                                                    |   | (590,037)                                                                                      |                                      | (87,652) |   | (116,817) |   | **(134,377)** |   | (172,080) |
| **OTHER EXPENSE**                                                                           |   |                                                                                           |                                      | - |   |   |   | **-** |   |   |
| Foreign currency translation gain                        (loss)                             |   | 1,531                                                                                          |                                      | - |   | - |   | - |   | - |
| **Net Loss for the Period**                                                                 | $      | (588,506)                                                                                      | $                                         | (87,652) | $ | (116,817) | $ | (134,377) | $ | (172,080) |
|                                                                                        |   |                                                                                           |                                      |   |   |   |
| **LOSS PER SHARE – BASIC AND FULLY                        DILUTED**                   | **$**  | 0.0                                                                                            | $                                         | 0.0 | $ | 0.0 | $ | 0.0 |
| **WEIGHTED AVERAGE NUMBER OF ISSUED SHARES                        BASIC and FULLY DILUTED** |   | 51,816,000                                                                                     | 51,816,000                                | 51,816,000 | 56,432,022 |

             

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

 

 

 

 

 

 

F-2

 

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**TAO            MINERALS LTD.**

**(An            Exploration Stage Company)**

Statements of Cash Flows

 
|                                                                                                                                                                                                                                                                                                                  | From Inception Date of September 23, 2004 to July 31,                        2007 | For the Six Months ended July 31, 2007 | For the Six Months ended July 31, 2006 |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|----------------------------------------|----------------------------------------|-----------|
| **Cash Provided by (Used for) Operating                        Activities**                                                                                                                                                                                                                                           |                                                                              |                                   |                                   |      |   |   |   |
| Net loss for the period                                                                                                                                                                                                                                                                                               | $                                                                                 | (588,506)                              | **$**                                  | (134,377) | $ | (172,080) |   |
| Changes in non-cash working capital items                                                                                                                                                                                                                                                                             |                                                                              |                                   |                                   |      |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                                                                                                                                                 |                                                                              | 175,106                                |                                   | 85,768    |   | 10,363 |   |
| Prepaid expenses                                                                                                                                                                                                                                                                                                      |                                                                              | (9,500)                                |                                   | 8,000     |   | (2,000) |   |
| Increase in due from related party                                                                                                                                                                                                                                                                                    |                                                                              | 3,000                                  |                                   | -         |   |   |   |
| Subscription receivable                                                                                                                                                                                                                                                                                               |                                                                              | 425                                    |                                   | -         |   |   |   |
| Cash used by operations                                                                                                                                                                                                                                                                                               |                                                                              | (419,475)                              |                                   | (40,609)  |   | (163,717) |   |
| **Investing Activities**                                                                                                                                                                                                                                                                                              |                                                                              |                                   |                                   |      |   |   |   |
| Purchase of mineral rights                                                                                                                                                                                                                                                                                            |                                                                              | (253,000)                              |                                   | -         |   | (250,000) |   |
| Cash used by investing activities                                                                                                                                                                                                                                                                                     |                                                                              | (253,000)                              |                                   | -         |   | (250,000) |   |
| **Financing Activities**                                                                                                                                                                                                                                                                                              |                                                                              |                                   |                                   |      |   |   |
| Issuance of debt                                                                                                                                                                                                                                                                                                      |                                                                              | 620,000                                |                                   | -         |   | 520,000 |
| Issuance of common stock for cash                                                                                                                                                                                                                                                                                     |                                                                              | 55,310                                 |                                   | -         |   |   |
| Cash provided by financing activities                                                                                                                                                                                                                                                                                 |                                                                              | 675,310                                |                                   | -         |   | 520,000 |
| **Cash Increase (Decrease) During the Period**                                                                                                                                                                                                                                                                        |                                                                              | 2,835                                  |                                   | (40,609)  |   | 106,283 |
| **Cash, Beginning of Period**                                                                                                                                                                                                                                                                                         |                                                                              | -                                      |                                   | 43,444    |   | 2,361 |
| **Cash and Equivalent, End of Period**                                                                                                                                                                                                                                                                                | **$**                                                                             | 2,835                                  | $                                      | 2,835     | $ | 108,644 |
|                                                                                                                                                                                                                                                                                                                  |                                                                              |                                   |                                   |      |
| During the six months ended July 31, 2007 and 2006 the                        Company did not pay any cash for interest or taxes.

Supplemental Non cash Disclosure:

On January 31, 2007, the Company accrued a $100,000 payment                        for Mineral Rights related to it’s Colombian property. |
|                                                                                                                                                                                                                                                                                                                       |                                                                                   |                                        |                                        |           |  |  |  |  |  |

 

 

 

 

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

 

 

F-3

 

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**TAO            MINERALS LTD**

**(An            Exploration Stage Company)**

Notes            to Financial Statements

For the            period ended July 31, 2007

             
| **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            $419,475 since inception and losses of $134,377 for the six month period ended July 31,            2007. 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 six and three months ended July 31,            2007 and 2006, and for the period from September 23, 2004 (inception) to July 31, 2007,            together with the balance sheet as of July 31, 2007 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 July            31, 2007 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-KSB for the year ended January 31,            2007.

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 with the presentation of            the financial statements ended July 31, 2007.
| **2.** | **Mineral Properties** |
|--------|------------------------|

Pursuant to the Amending Agreement of June 30, 2006 the Company was            obligated to make a payment of $100,000 on July 1, 2007 to Primecap Resources, Inc.            (“PR”). The Company did not make such payment but has accrued such            obligation as of January 31, 2007. The Company is currently in talks with PR to extend            payment to November 1, 2007. Accrued liabilities of $183,000 pertain to the terms of            the Amending Agreement.
| **3.** | **Subsequent Events** |
|--------|-----------------------|

The Company was obligated to make a $ 40,000 payment and issue 300,000            shares of common stock to PR at August 23, 2007. To date, the Company has not made any            payments or issued stock to PR. The Company is currently in negotiations to extend the            payment and issuance of stock to November 1, 2007.

 

F-4

 

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| **Item 2.** | **Management’s Discussion and Analysis and Plan of                        Operation.** |
|-------------|----------------------------------------------------------------------------------------------|

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements as that term            is defined in the Private Securities Litigation Reform Act of 1995. These statements            relate to future events or our future financial performance. In some cases, you can            identify forward-looking statements by terminology such as “may”,            “should”, “expects”, “plans”,            “anticipates”, “believes”, “estimates”,            “predicts”, “potential” or “continue” or the            negative of these terms or other comparable terminology. These statements are only            predictions and involve known and unknown risks, uncertainties and other factors,            including the risks in the section entitled “Risk Factors”, that may cause            our or our industry’s actual results, levels of activity, performance or            achievements to be materially different from any future results, levels of activity,            performance or achievements expressed or implied by these forward-looking            statements.

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

Our            financial statements are stated in United States dollars and are prepared in accordance            with United States generally accepted accounting principles. The following discussion            should be read in conjunction with our financial statements and the related notes that            appear elsewhere in this quarterly report.

In            this quarterly report, unless otherwise specified, all references to “common            shares” refer to the common shares in our capital stock and the terms            “we”, “us” and “our” mean Tao Minerals            Ltd.

Overview

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.

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.

Our            mineral resource properties consist of exploration claims located in Nevada            (“Whale Mine property”) and in Columbia (“Risaldo La Golondrina            D14-082 mineral property located in Narino, 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

 

4

 

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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-QSB, for additional information            about the risks of mineral exploration.

PLAN OF OPERATIONS AND CASH REQUIREMENTS

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 and we intend to focus primarily on this            property over the nine month period ending January 31, 2008.

There is no assurance that a commercially viable mineral deposit exists            on any of our properties, including the La Golondrina Property, or that we will be able            to identify any mineral resource on any of these properties that can be developed            profitably. Even if we do discover commercially exploitable levels of mineral resources            on any of our properties there can be no assurance that we will be able to enter into            commercial production of our mineral properties:

***Golondria Gold-Silver Project*** 

Acquisition, Location and Access

On            February 1, 2006 we executed a letter agreement with Primecap Resources and Nueva            California S.A., concerning the acquisition of an interest in the Risaraldo La            Golondrina D14-082 property located in Narino, Colombia.

On            March 5, 2006, we entered into an Assignment Agreement dated effective February 28,            2006 (the “Definitive Agreement”), with Primecap Resources Inc., of Las            Vegas, Nevada, (Primecap), concerning the acquisition of Primecap’s option (the            “Option”), to acquire a 100% interest in the Risaldo La Golondrina D14-082            mineral property located in Narino, Colombia (the “Property”). Primecap had            been granted the Option by Nueva California S.A., of Medellin, Colombia, pursuant to            the terms and conditions of a Heads of Agreement dated August 23, 2004 (the            “HOA”).

The            Definitive Agreement provides for the assignment of the Option for the following            consideration:
|   | 1. | Payment of US$150,000, payable on or before March 15, 2006                        and upon execution of the Definitive Agreement; and |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------|
|   | 2. | The issuance of 2,500,000 common shares in the capital stock                        of the company, subject to applicable trading restrictions, to Nueva                        California which will be issued either contemporaneous with the payment of                        US$150,000 or within 14 days of the execution of a Definitive Agreement,                        whichever is the earlier. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

In            addition, we will assume Primecap’s financial obligations under the            HOA.

On            March 15, 2006, we entered into an amending agreement (the “Amending            Agreement”) which agreement amended certain terms of the Definitive Agreement.            The Amending Agreement provides for an extension to the payment terms such that the            $150,000 payment time of March 15, 2006 was extended to April 15, 2006. The payment was            made on April 10, 2006. On April 21, 2006 we issued 2,500,000 common shares to Nueva            California SA pursuant to the terms of the Definitive Agreement.

The            property is located within a mixture of small-scale mining and small-scale agricultural            lands. Limited accommodations and supplies are available in Sotomayor, while Pasto acts            as the main supply centre. The property is accessible from Sotomayor by a one-lane            gravel road for the first four kilometres and then by a 1 kilometre ATV trail. Access            to Sotomayor is from Pasto by a secondary gravel road, with travel time estimated to be            4 hrs. Transportation to Sotomayor is available in Pasto. The gravel roads are suitable            for movement of heavy equipment.

 

 

5

 

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ESTIMATED BUDGET, PHASE 1 PROGRAM

Chronological Schedule
|     |                             | **Weeks** |
|----------|----------------------------------|-----------|
| **Item** | **Labour**                       | **1**     | **2** | **3** | **4** | **5** | **6** | **7** | **8** | **9** | **10** |
| **1**    | **Historical data**              | **X**     |   |   |   |   |   |   |   |   |   |
| **2**    | **Environmental Review**         |      | **X** |   | **X** |   | **X** |   |   |   |   |
| **3**    | **Regional Geological Mapping**  |      |   | **X** |   |   |   |   |   |   |   |
| **4**    | **Stream Sediment Geochemistry** |      |   |   | **X** |   |   |   |   |   |   |
| **5**    | **Detailed Geological Mapping**  |      |   |   |   | **X** | **X** | **X** |   |   |   |
| **6**    | **Underground Sampling**         |      |   |   |   |   | **X** | **X** |   |   |   |
| **7**    | **Soil Geochemistry**            |      |   |   | **X** |   |   |   |   |   |   |
| **8**    | **Trench Sampling**              |      |   |   |   |   |   |   | **X** |   |   |
| **9**    | **Rock Sampling (Prospecting)**  |      |   | **X** |   |   |   |   |   |   |   |
| **10**   | **Sample Preparation/Analysis**  |      |   |   | **X** |   |   | **X** | **X** | **X** |   |
| **11**   | **Report**                       |      |   |   |   |   |   |   |   |   | **X** |

 

 

 

 

Expense Schedule

 

 
| **ITEM** |                            | **#**   | **Cost/wk** | **# Wks** | **$US/day**    | **Total $US** | **Comments**    |
|----------|---------------------------------|---------|-------------|-----------|----------------|---------------|-----------------|
| **1**    | **Senior Geologist**            | **1**   | **$1400**   | **6**     | **$200**       | **$8400**     |            |
| **2**    | **Junior Geologist**            | **2**   | **$875**    | **6**     | **$125**       | **$10500**    |            |
| **3**    | **Labourers**                   | **6**   | **$140**    | **6**     | **$7**         | **$5040**     |            |
| **4**    | **Stream sample Analysis**      | **50**  |        |      | **$20/sample** | **$1000**     | **ICP+AuFA**    |
| **5**    | **Soil sample analysis**        | **50**  |        |      | **$20/sample** | **$1000**     | **ICP+AuFA**    |
| **6**    | **Underground sample analysis** | **200** |        |      | **$20/sample** | **$4000**     | **ICP+AuFA**    |
| **7**    | **Trenching/backhoe**           | **1**   | **$1500**   | **1**     | **$45/hr**     | **$1500**     | **RetroCAT100** |
| **8**    | **Food**                        | **9**   | **$180**    | **6**     | **$20**        | **$9720**     |            |
| **9**    | **Transportation**              | **1**   | **$400**    | **6**     |           | **$2400**     | **Campero 4X4** |
| **10**   | **Accommodation**               | **9**   | **$35**     | **6**     | **$5**         | **$1890**     |            |
| **11**   | **Office Management-local**     | **1**   | **$1000**   | **3**     |           | **$1000**     |            |
| **12**   | **Administration-Medellin**     | **1**   | **$1000**   | **12**    | **$4000/mo**   | **$6000**     |            |
|     | **TOTAL**                       |    |        |      |           | **$52,450**   |            |

The proposed program is exploratory in nature as there are no proven            reserves currently.

 

 

 

6

 

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History

Historically gold has been mined in the country since pre-Columbian            times. Exploration of the Sierra Nevada de Santa Marta area, along the north coast of            the country, was conducted by Alonso de Ojeda, one of the companions of Columbus. His            work revealed the large amounts of precious metals held by the local Indians and led to            the rapid Spanish colonization of the west coast and interior of South America. Much of            Colombia was thus conquered and a number of towns established by 1539. Pasto was            founded in 1537. From that time the population has spread out along the major river            valleys, searching for land to cultivate and precious metals to mine, eventually            reaching the valleys of tributaries of the Rio Pacual, where the town of Sotomayor was            established. There are no government records of historical mining activity in the area            of the Golondrina property

The            Golondrina property was acquired by Colombian mining company Barro Blanco S.A Barro            Blanco S.A. also acquired the Nueva Esparta property which lies approximately 4            kilometres to the east. Several other properties exist in the area of these two            properties. Latingold optioned several properties from Barro Blanco S.A. and carried            out exploration on those properties. This work included surface and underground mapping            and sampling, as well as a Lithium-Bismuth surface geochemical survey. In 1998            Latingold abandoned its option.

Property Geology

The            Golondrina Gold-Silver property is underlain by Dagua Group fine-grained layered            quartzites (siliceous clastic sediments) of Cretaceous age. These contain minor basalt            flows and diabase dikes of the same age. Intruded into these sediments is a small (2 km            X 0.5 km) biotite-hornblende tonalite body of Tertiary age. It is associated with the            larger Vergel STock, which is found 7 kilometers to the northwest. The intrusion has a            100 meter wide hornfelsed contact aureole against the sediments.

Mineralization on the Golondrina Project is confined to milky white            quartz veins which contain disseminated sulphides. These sulphides include pyrite,            chalcopyrite (copper) and galena (lead). Vein widths range between 5 and 50            centimeters.

We            have not found any other mineral properties either for staking or purchasing but will            seek other mineral properties during the next year so to diversify our holdings. Any            staking and/or purchasing of mineral properties may involve the issuance of substantial            blocks of our shares. We have no intentions of purchasing for cash or other            considerations any mineral properties from our officers and/or directors.

***The Whale Mine Claims***

Acquisition and Location

On            October 22, 2004 entered into a purchase and sale agreement with Multimetal Mining            Corp. of Las Vegas, to acquire a 100% interest in two mineral claims collectively known            as the Whale Mine property which consist of two state mineral claims comprising of 40            acres. A “mineral claim” refers to a specific section of land over which a            title holder owns rights to exploration in the ground. These claims are registered in            the name of Multimetal Mining Corp. and are in good standing. In order to maintain            title to the While Mine claims subsequent to this date, we must conduct at least $100            in exploration on each claim per year and file proof of labor with the State by            September 1 of each successive year. In addition, a maintenance fee of $100 per annum            is required by the Federal Bureau of Land Management.

Multimetal Mining Corp. holds these claims on our behalf. Multimetal            Mining Corp. does not retain any right to the claims. There are no underlying interests            in the property

The            Whale Mine claims are located in the Yellow Pine Mining District, Nevada, located 30            miles southwest of Las Vegas, Nevada and approximately six miles west of Goodsprings of            the western slopes of the Spring Mountains.

The            typically desert climate makes for relatively high temperatures and low precipitation.            The property lies in a region of moderate rolling hills with local incised narrow            canyons. Elevations locally range from 3,200 feet to 4,300 feet. Vegetation consists            mainly of desert shrubs and cactus. Sources of water are available from valley            wells.

 

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Specifics of the claims are as follows:

 
| **Claim                        Name** | **Mining                        District**           | **Co-ordinates**                                                                      |
|---------------------------------------|------------------------------------------------------|---------------------------------------------------------------------------------------|
| Whale 1                               | Yellow Pine, Clark                        County, NV | 35 Degree 48’                        N Latitude115 Degree 31’ W Longitude |
| Whale 2                               | Yellow Pine, Clark                        County, NV | 35 Degree 48’                        N Latitude115 Degree 31’ W Longitude |

History

The            Whale Mine claims were first discovered in 1904. Between 1912 and 1943, a recorded            339,727 pounds of zinc, 40,642 pounds of lead and 202 ounces of silver were recovered            from the property. Since 1964, the area has been mainly dormant. In 1981, the property            and surrounding area were explored by VLF-EM and geochemical surveys but results were            unavailable.

There is no equipment or other infrastructure facilities located on the            Whale Mine claims.

VLF-EM surveys consist of two separate surveys: very low frequency and            electromagnetic surveys. Very low frequency surveys use radio waves to determine            whether rocks on a mineral property conduct electricity.

Almost all of the precious and base metals that we seek are above            average conductors of electricity and will affect VLF readings. Electro magnetic            surveys involve measuring the strength of the earth’s magnetic field. Variations            in the magnetic readings on a property may indicate the increased likelihood of            precious or base minerals in the area.

Geochemical surveys consist of the collection of chip samples and grab            samples from property areas with the most potential to host economically significant            mineralization based on past exploration results. Grab samples are soil samples or            pieces of rock that appear to contain precious metals such as gold and silver, or            industrial metals such as zinc and lead. All samples gathered will be sent to a            laboratory where they are crushed and analyzed for metal content.

There is no exploration currently being conducted on the Whale Mine            claims. We expect to commence an initial phase of exploration on the claims in the            summer or fall of 2007. To date, we have not incurred any exploration expenditures on            the claims. We made a cash payment of $3,000 to the owner of the claims in order to            acquire them.

Property Geology

The            principal ores of the Whale Mine claims are the oxidized zinc, lead and silver ores.            They contain smithsonite, cerussite and galena with small amounts of other minor ores            with variable silver contents. Smithsonite, also known as zinc carbonate, is a zinc            bearing rock that is typically green in color. Cerussite, or lead carbonate, is a            dense, clear, lead-bearing rock. Galena, or lead sulfide, is a silver-gray, silver and            lead ore. Some galena occurrences may contain up to 1% silver in place of            lead.

Geological Assessment Report

We            retained Mr. William G. Timmins, a professional engineer, to complete an initial            evaluation of the property and to prepare a geological summary report on the Whale Mine            property. He most recently attended the property in August 2004.

Based on his review of data relating to the Whale Mine property, Mr.            Timmins concluded that the Whale Mine property warrants further exploration, given the            previous discovery of significant grades of zinc, lead and silver mineralization. He            recommends a two-phase exploration program to further evaluate the Property.

Phase I would consist of compiling past exploration data and sampling            areas of the property that were previously explored. Sampling consists of a consulting            geologist gathering soil or pieces of rock that appear to contain precious metals such            as gold and silver. All samples gathered are sent to a laboratory where they are            crushed and analyzed for

 

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metal content. By analyzing past exploration data relating to the            property, our consulting geologist will be able to identify specific areas of the            claims that have the greatest potential to host economic mineralization. Subsequent            exploration will be focused on such areas.

Phase II would consist of geological mapping and geophysical test            surveys. Geological mapping involves plotting previous exploration data relating to the            Whale Mine Property on a map in order to determine the best property locations to            conduct subsequent exploration work.

Geophysical surveying is the search for mineral deposits by measuring            the physical property of near-surface rocks, and looking for unusual responses caused            by the presence of mineralization. Electrical, magnetic, gravitational, seismic and            radioactive properties are the ones most commonly measured. These surveys will provide            us with information about the rocks that lie below that surface of the property and            allow us to determine whether certain mineralization found on the exposed rocks may            continue at depth.

Accessibility

Access to the area is by Interstate Highway 15 from Las Vegas southwest            to Jean. Goodsprings is accessible by paved road from Jean, a distance of seven miles            to the northwest, travel west along a paved road for about six miles towards the            village of Sandy, then a short dirt road to the main workings of the            property.

Infrastructure

There is no power source located on the Whale Mine claims. We will need            to use portable generators if we require a power source for the exploration of the            property.

Budget

Approximate costs for the recommended two phase program are as            following:

 
| Phase One:                             |              |
|----------------------------------------|-------------------|
|                                   |              |
| Geological Mapping:               | $10,000.00   |
| Geological geophysical surveys:   | $5,000.00    |
| Trenching and Sampling:           | $10,000.00   |
| Mobilization and Demobilization:  | $3,000.00    |
| Reports, Maps, etc:               | $2,000.00    |
| Lodging, etc:                     | $2,000.00    |
| Contingency:                      | $4,000.00    |
|                                   |              |
| Total Phase I Costs:              | $36,000.00   |
|                                   |              |
| Phase Two:                        |              |
|                                   |              |
| Diamond Drilling:                 |              |
| Estimated: 2000 Ft @ $35Ft        | $70,000.00   |
| Mobilization and Demobilization:  | $10,000.00   |
| Reports, Assays, etc:             | $10,000.00   |
| Contingency:                      | $15,000.00   |
|                                   |              |
| Total Phase II Costs:             | $105,000.00  |
|                                   |              |
| Total Program Costs:              | $141,000.00  |

Phase one of the recommended geological program will be funded from            borrowings . Most of the fees during phase one will be for the initial mapping, surveys            and sampling on the property. In order to proceed with the Phase two exploration            program, we will need to raise additional capital. We anticipate that additional            funding will be required in the form of equity financing from the sale of our common            stock. However, we cannot provide investors with any

 

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assurance that we will be able to raise sufficient funding from the sale            of our common stock to fund the second phase of the exploration program. We do not have            any arrangements in place for any future equity financing.

We            intend to retain William Timmins, a professional geologist, to undertake the proposed            exploration on the Whale Mine claims given his familiarity with the property area. We            do not have any verbal or written agreement regarding the retention of Mr. Timmins for            this exploration program, though he has indicated that if he is available, he is            prepared to provide his services. Mr. Timmins will provide us with the potential costs            for compliance and environmental costs when he prepares his report.

Compliance with Government Regulation 

We            will be required to comply with all regulations, rules and directives of governmental            authorities and agencies applicable to the exploration of minerals in the United States            generally, and in Nevada specifically.

We            will have to sustain the cost of reclamation and environmental mediation for all            exploration work undertaken. The amount of these costs is not known at this time as we            do not know the extent of the exploration program that will be undertaken beyond            completion of the currently planned work programs. Because there is presently no            information on the size, tenor, or quality of any resource or reserve at this time, it            is impossible to assess the impact of any capital expenditures on earnings or our            competitive position in the event a potentially economic deposit is            discovered.

If            we enter into production, the cost of complying with permit and regulatory environment            laws will be greater than in the exploration phases because the impact on the project            area is greater. Permits and regulations will control all aspects of any production            program if the project continues to that stage because of the potential impact on the            environment. Examples of regulatory requirements include:

 
|   | – | Water discharge will have to meet water                        standards;                                                                                                             |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | – | Dust generation will have to be minimal or otherwise re-                        mediated;                                                                                                  |
|   | – | Dumping of material on the surface will have to be re-                        contoured and re-vegetated;                                                                                  |
|   | – | An assessment of all material to be left on the                        surface  will need to be environmentally benign;                                                               |
|   | – | Ground water will have to be monitored for any                        potential  contaminants;                                                                                        |
|   | – | The socio-economic impact of the project will have to                        be  evaluated and if deemed negative, will have to be re- mediated;                        and,          |
|   | – | There will have to be  an  impact                         report  of  the  work  on  the  local fauna                        and flora.  |

***Financial Condition, Liquidity and Capital            Resources***

Our            principal capital resources have been through the issuance of common stock, although we            may use shareholder loans, advances from related parties, or borrowing in the            future.

At            July 31, 2007, we had working capital deficit of ($885,771), compared to a working            capital deficit of ($423,838) as at July 31, 2006.

At            July 31, 2007, our total current assets were $12,335 which consisted of cash and            prepaid expenses, compared to total current assets of $110,644as at July 31,            2006.

At            July 31, 2007, our total current liabilities were $898,106, including $620,000 from a            financing received without issuing common stock, compared to total current liabilities            of $534,482 as at July 31, 2006.

For            the three month period ended July 31, 2007, we posted losses of $87,652 compared to            $116,817 for the three months ended July 31, 2006.

For            the six month period ended July 31, 2007, we posted losses of $134,377 compared to            $172,080 for the six months ended July 31, 2006 and to $588,506 since            incorporation.

At            July 31, 2007, we had cash on hand of $ 2,835 compared to $108,644 as at July 31,            2006.

 

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*Cash Requirements*

We            will require additional funds to implement our growth strategy in exploration            operations. These funds may be raised through equity financing, debt financing, or            other sources, which may result in further dilution in the equity ownership of our            shares. There is still no assurance that we will be able to maintain operations at a            level sufficient for an investor to obtain a return on his investment in our common            stock. Further, we may continue to be unprofitable.

*Going Concern*

Due            to our being an exploration stage company and not having generated revenues, in their            Notes to our financial statements for the year ended January 31, 2007, our independent            auditors included an explanatory paragraph regarding concerns about our ability to            continue as a going concern.

We            have historically incurred losses, and through July 31, 2007 have incurred losses of $            588,506 from our inception. Because of these historical losses, we will require            additional working capital to develop our business operations. We intend to raise            additional working capital through private placements, public offerings, bank financing            and/or advances from related parties or shareholder loans.

The            continuation of our business is dependent upon obtaining further financing and            achieving a break even or profitable level of operations. The issuance of additional            equity securities by us could result in a significant dilution in the equity interests            of our current or future stockholders. Obtaining commercial loans, assuming those loans            would be available, will increase our liabilities and future cash            commitments.

There are no assurances that we will be able to either (1) achieve a            level of revenues adequate to generate sufficient cash flow from operations; or (2)            obtain additional financing through either private placements, public offerings and/or            bank financing necessary to support our working capital requirements. To the extent            that funds generated from operations and any private placements, public offerings            and/or bank financing are insufficient, we will have to raise additional working            capital. No assurance can be given that additional financing will be available, or if            available, will be on terms acceptable to us. If adequate working capital is not            available we may not increase our operations.

These conditions raise substantial doubt about our ability to continue            as a going concern. The financial statements do not include any adjustments relating to            the recoverability and classification of asset carrying amounts or the amount and            classification of liabilities that might be necessary should we be unable to continue            as a going concern.

***Risks Associated With Our Business***

*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 $2,835 and working capital deficit of $985,771 as of the            period ended July 31, 2007. We currently do not generate revenues from our operations.            Our business plan calls for substantial investment and

 

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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 annual 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 year            ended January 31, 2007 was $454,129. We have incurred additional losses for the six            month period ended July 31, 2007 of $134,377. We recognize that if we are unable to            generate significant revenues from our activities, we will not be able to earn profits            or continue operations. Based upon current plans, we also expect to incur significant            operating losses in the future. We cannot guarantee that we will be successful in            raising capital to fund these operating losses or generate revenues in the future. We            can provide investors with no assurance that we will generate any operating revenues or            ever achieve profitable operations. If we are unsuccessful in addressing these risks,            our business will most likely fail and our investors could lose their            investment.

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

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

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

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

*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

 

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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.

*There are no known reserves of minerals on our mineral claims and we            cannot guarantee that we will find any commercial quantities of            minerals.*

We            have not found mineral reserves on our claims and there can be no assurance that any of            the mineral claims we are exploring contain commercial quantities of any minerals. Even            if we identify commercial quantities of minerals in any of our claims, there can be no            assurance that we will be able to exploit the reserves or, if we are able to exploit            them, that we will do so on a profitable basis.

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

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

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

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

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

The            exploration of valuable minerals involves numerous hazards. As a result, we may become            subject to liability for such hazards, including pollution, cave-ins and other hazards            against which we cannot insure or against which we may elect not to insure. The payment            of such liabilities may have a material adverse effect on our financial            position.

*Our independent certified public accounting firm, in their Notes to            the audited financial statements for the year ended January 31, 2007 states that there            is a substantial doubt that we will be able to continue as a going            concern.*

Our            independent certified public accounting firm, Infante & Company, state in their            Notes to the audited financial statements for the year ended January 31, 2007, 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.

*Because the probability of an individual prospect ever having            reserves is extremely remote, any funds spent on exploration will probably be            lost.*

The            probability of an individual prospect ever having reserves is extremely remote. In all            probability our properties do not contain any reserves. As such, any funds spent on            exploration will probably be lost which result in a loss of your investment.

*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.

 

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

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

***Risks Associated with Our Common Stock***

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

Our            common stock is quoted on the OTC Bulletin Board service of the National Association of            Securities Dealers. 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 the shares.

*Our stock is a penny stock. Trading of our stock may be restricted by            the SEC’s penny stock regulations and the NADSD’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.

 

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In            addition to the “penny stock” rules promulgated by the Securities and            Exchange Commission, the NASD 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 NASD believes that there is a high probability that speculative low priced            securities will not be suitable for at least some customers. The NASD requirements make            it more difficult for broker-dealers to recommend that their customers buy our common            stock, which may limit your ability to buy and sell our stock.

***Other Risks***

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

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

*Trends, Risks and Uncertainties*

We            have sought to identify what we believe to be the most significant risks to our            business, but we cannot predict whether, or to what extent, any of such risks may be            realized nor can we guarantee that we have identified all possible risks that might            arise. Investors should carefully consider all of such risk factors before making an            investment decision with respect to our common stock.
| **Item 3.** | **Disclosure Controls and Procedures** |
|-------------|----------------------------------------|

As            required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of            the effectiveness of the design and operation of our company’s disclosure            controls and procedures as of the end of the period covered by this quarterly report,            July 31, 2007. This evaluation was carried out under the supervision and with the            participation of our company’s management, including our company’s            president and chief executive officer. Based upon that evaluation, our company’s            president and chief executive officer concluded that our company’s disclosure            controls and procedures are effective as at the end of the period covered by this            report. There have been no significant changes in our company’s internal controls            or in other factors, which could significantly affect internal controls subsequent to            the date we carried out our evaluation.

Disclosure controls and procedures are controls and other procedures            that are designed to ensure that information required to be disclosed in our            company’s reports filed or submitted under the Exchange Act is recorded,            processed, summarized and reported, within the time periods specified in the Securities            and Exchange Commission’s rules and forms. Disclosure controls and procedures            include, without limitation, controls and procedures designed to ensure that            information required to be disclosed in our company’s reports filed under the            Exchange Act is accumulated and communicated to management, including our            company’s president and chief executive officer as appropriate, to allow timely            decisions regarding required disclosure

**PART II - OTHER INFORMATION**
| **Item 1.** | **Legal Proceedings.** |
|-------------|------------------------|

We            know of no material, active 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.

 

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

On            February 1, 2006 we entered into an agreement with Primecap Resources Inc. and Nueva            California S.A. concerning the acquisition of an interest in the Risaraldo La            Golondrina D14-082 property located in Narino, Colombia. On March 5, 2006, we entered            into an Assignment Agreement dated effective February 28, 2006 (the “Definitive            Agreement”), with Primecap Resources Inc., of Las Vegas, Nevada, (Primecap),            concerning the acquisition of Primecap’s option (the “Option”), to            acquire a 100% interest in the Risaldo La Golondrina D14-082 mineral property located            in Narino, Colombia (the “Property”). Primecap had been granted the Option            by Nueva California S.A., of Medellin, Colombia, pursuant to the terms and conditions            of a Heads of Agreement dated August 23, 2004 (the “HOA”).

Pursuant to the terms of the Definitive Agreement, we issued 2,500,000            shares of our capital stock to Nueva California. In issuing the shares, we relied on            the exemption from registration requirements of the United States Securities Act of            1933, as amended, provided by Regulation S promulgated thereunder.

On            March 13, 2006, our board of directors approved an eight (8) for one (1) forward stock            split of our authorized, issued and outstanding common stock. The forward stock split            became effective with the Secretary of State of Nevada on March 24, 2006. As a result,            our authorized capital increased from 69,000,000 shares of common stock with a par            value of $0.001 and 1,000,000 Preferred “A” stock with a par value of            $0.001 to 552,000,000 shares of common stock with a par value of $0.001 and 1,000,000            Preferred “A” stock with a par value of $0.001. Our issued and outstanding            share capital increased from 7,739,500 shares of common stock to 51,816,000 shares of            common stock.
| **Item 3.** | **Defaults Upon Senior Securities.** |
|-------------|--------------------------------------|

None.
| **Item 4.** | **Submission of Matters to a Vote of Security                        Holders.** |
|-------------|---------------------------------------------------------------------------------|

None.
| **Item 5.** | **Other Information.** |
|-------------|------------------------|

On            April 1, 2006 we appointed James Sikora and Gordon Samson to our Board of Directors as            President and Chief Financial Officer respectively.

Effective September 1, 2006 Mr. Gordon Samson resigned as the Chief            Financial Officer of the Company. The Board of Directors appointed Mr. Julio De Leon as            Chief Financial Officer on September 1, 2006.

On            September 1, 2006 De Leon & Company, P.A. resigned as our independent accountant            and the Company appointed Infante & Company as our independent accountant ( see 8-K            dated September 1, 2006 which was filed on September 5, 2006).

 

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**Item 6. Exhibits.**

*Exhibits required by Item 601 of Regulation S-B*
| Exhibit                        Number | Description                                                                                                                                                                                                                                                                        |
|---------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(3)**                               | **(i) Articles of                        Incorporation; and (ii) Bylaws**                                                                                                                                                                                                          |
| 3.1                                   | Articles of                        Incorporation (incorporated by reference from our Form SB-2 Registration                        Statement, filed on March 24, 2005).                                                                                                            |
| 3.2                                   | Bylaws                        (incorporated by reference from our Form SB-2 Registration Statement, filed                        on March 24, 2005).                                                                                                                               |
| 3.3                                   | Certificate of                        Change (incorporated by reference from our Current Report on Form 8-K,                        filed on March 24, 2006).                                                                                                                      |
| **(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                                  | Consulting                        Agreement dated April 1, 2006 between our company and Gordon Samson                        (incorporated by reference from our Current Report on Form 8-K, filed on                        April 20, 2006)                                       |
| 10.7                                  | 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).                               |
| 10.8                                  | Consulting                        Agreement dated September 1, 2006 between our company and Julio De                        Leon                                                                                                                                                   |
| **(31)**                              | **302                        Certification**                                                                                                                                                                                                                                       |
| 31.1*                                 | Section 302                        Certification under Sarbanes-Oxley Act of 2002 of James Sikora.                                                                                                                                                                                 |
| 31.2*                                 | Section 302                        Certification under Sarbanes-Oxley Act of 2002 of Julio De Leon.                                                                                                                                                                                |
| **(32)**                              | **906                        Certification**                                                                                                                                                                                                                                       |
| 32.1*                                 | Section 906                        Certification under Sarbanes-Oxley Act of 2002 of James Sikora.                                                                                                                                                                                 |
| 32.2*                                 | Section 906                        Certification under Sarbanes-Oxley Act of 2002 of Julio De Leon.                                                                                                                                                                                |

*Filed            herewith

 

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**SIGNATURES**

In            accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this            report to be signed on its behalf by the undersigned, thereunto duly            authorized.

 

**TAO            MINERALS INC.**

By:/s/ James Sikora

President and Director

Principal Executive Officer

Date:            9/13/07

By:/s/ Julio De Leon

Chief            Financial Officer and Director

Principal Financial Officer

Date:            9/13/07

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

By:/s/ James Sikora

President and Director

Principal Executive Officer

Date:            9/13/07

By:/s/ Julio De Leon

Chief            Financial Officer and Director

Principal Accounting Officer

Date:            9/13/07

 

 

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