UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-Q





(Mark
One)


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





For the
quarterly period ended September 30, 2007





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





For the
transition period from _ _ _ _ _ _ _ _ _ _  to _ _ _ _ _ _ _ _ _
_





Commission
file number 0-27355





CIGMA
      METALS CORPORATION(Exact
      name of registrant as specified in its
charter)





Florida
            98-0203244(State
      or other jurisdiction of incorporation or organization)
            (IRS
      Employer Identification No.)





18, 80 Furmanova Str, Almaty, Republic of
      Kazakhstan(Address
      of principal executive offices)





+7 327 2611 026(Registrant’s
      telephone number, including area
code)





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





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


YES x NO
o





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


YES x NO o





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





Large
accelerated filer o
Accelerated filer o
Non-accelerated filer o (do not check if a
smaller reporting company)


Smaller
reporting company x





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


YES o NO
x





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





Indicate
by check mark, whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by
court.


YES o NO
o








APPLICABLE
ONLY TO CORPORATE ISSUERS





Indicate
the number of shares outstanding of each of the issuer’s classes of common
equity, as of the latest practicable date: 53,500,000 shares of Common Stock
were outstanding as of February 17, 2010.












CIGMA METALS CORPORATION


This
quarterly report contains statements that plan for or anticipate the future and
are not historical facts. In this Report these forward looking statements are
generally identified by words such as “anticipate,” “plan,” “believe,” “expect,”
“estimate,” and the like. Because forward looking statements involve future
risks and uncertainties, these are factors that could cause actual results to
differ materially from the estimated results. These risks and uncertainties are
detailed in Part 1 – Financial Information - Item 1. “Financial Statements” and
Item 2. “Management’s Discussion and Analysis of Financial Condition and Results
of Operations.”





The
Private Securities Litigation Reform Act of 1995, which provides a “safe harbor”
for such statements, may not apply to this Report.








PART
      1 – FINANCIAL INFORMATIONItem
      1.
            
            Financial
      StatementsInterim Consolidated Balance Sheets September 30, 2007
      (unaudited) and December 31, 2006
            
            3Interim Consolidated Statements of Operations (unaudited)
      Three and nine months ended September 30, 2007 and 2006; and for the
      period from January 13, 1989 (Inception) to September 30,
      2007
            
            4Interim Consolidated Statements of Cash Flows (unaudited) Nine
      months ended September 30, 2007 and 2006 and for the period from January
      13, 1989 (Inception) to September 30, 2007
            
            5Notes to Interim Consolidated Financial
      Statements(unaudited)
            
            6Item
      2.
            
            Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
            
            14Item
      3.
            
            Quantitative and Qualitative Disclosures About Market
      Risk
            
            25Item
      4T.
            
            Controls and Procedures
            
            25PART
      II – OTHER INFORMATIONItem
      1.
            
            Legal Proceedings
            
            27Item
      1A.
            
            Risk Factors
            
            27Item
      2.
            
            Unregistered Sales of Equity Securities and Use of
      Proceeds
            
            27Item
      3.
            
            Defaults Upon Senior Securities
            
            27Item
      4.
            
            Submission of Matters to a Vote of Security
      Holders
            
            27Item
      5.
            
            Other Information
            
            27Item
      6.
            
            Exhibits
            
            27SIGNATURES
            
            28


2
 Table of Contents




Item 1.
Financial Statements





CIGMA METALS CORPORATION(An
      exploration stage enterprise)Consolidated
      Balance SheetsSeptember
      30, 2007 and December 31, 2006(Expressed
      in U.S. Dollars)September
      30
            
            
            December
      312007
            
            
            2006(Unaudited)ASSETSCurrentCash
            
            $
            1,686,796
            
            
            $
            3,082,432Available-for-sale
      securities
            
            
            131,653
            
            
            
            166,309Prepaid
      expenses and other assets
            
            
            59,026
            
            
            
            -Total
      current assets
            
            
            1,877,475
            
            
            
            3,248,741Equipment,
      net
            
            
            119,341
            
            
            
            -Mineral
      properties
            
            
            2,678,174
            
            
            
            -Total
      assets
            
            $
            4,674,990
            
            
            $
            3,248,741LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable and accrued expenses
            
            $
            55,232
            
            
            $
            54,915Accounts
      payable - related party
            
            
            14,278
            
            
            
            -Total
      current liabilities
            
            
            69,510
            
            
            
            54,915Long-term
      debt
            
            
            1,168,818
            
            
            
            -Total
      liabilities
            
            
            1,238,328
            
            
            
            54,915Non-controlling
      interest
            
            
            652,872
            
            
            
            -Stockholders'
      EquityCommon
      stockAuthorized100,000,000
      common shares, par value $0.0001Issued
      and outstanding:39,900,000
      (2006 - 39,500,000) common shares
            
            
            3,990
            
            
            
            3,950Additional
      paid in capital
            
            
            6,947,454
            
            
            
            6,714,494Accumulated
      deficit during the development stage
            
            
            (4,117,510
            )
            
            
            (3,509,130
            )Accumulated
      other comprehensive income (loss)
            
            
            (50,144
            )
            
            
            (15,488
            )Stockholders'
      equity
            
            
            2,783,790
            
            
            
            3,193,826Total
      liabilities and stockholders' equity (deficiency)
            
            $
            4,674,990
            
            
            $
            3,248,741





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




3
 Table of Contents





CIGMA METALS CORPORATION(An
      exploration stage enterprise)Consolidated
      Statements of Operations(Expressed
      in U.S. Dollars)
            
            Cumulative(Unaudited)
            
            January
      13
            
            
            Three
      months
            
            
            Three
      months
            
            
            Nine
      months
            
            
            Nine
      months1989
      (inception)
            
            
            Ended
            
            
            Ended
            
            
            Ended
            
            
            EndedSeptember
      30
            
            
            September
      30
            
            
            September
      30
            
            
            September
      30
            
            
            September
      302007
            
            
            2007
            
            
            2006
            
            
            2007
            
            
            2006ExpensesAdministrative
      and general
            
            $
            361,359
            
            
            $
            55,124
            
            
            $
            28,664
            
            
            $
            77,968
            
            
            $
            90,724Exploration
      costs-
      HaldeyGold Project - partnership
            
            
            796,261
            
            
            
            -
            
            
            
            145,266
            
            
            
            -
            
            
            
            193,266-
      HaldeyGold Project - other
            
            
            185,126
            
            
            
            -
            
            
            
            13,518
            
            
            
            -
            
            
            
            49,257-
      Tugojakovsk Project
            
            
            453,821
            
            
            
            -
            
            
            
            8,000
            
            
            
            -
            
            
            
            288,000-
      Kazakhstan
            
            
            290,773
            
            
            
            17,456
            
            
            
            -
            
            
            
            290,773
            
            
            
            -Interest,
      bank charges and foreign currency exchange losses
            
            
            17,536
            
            
            
            648
            
            
            
            1,262
            
            
            
            3,648
            
            
            
            3,174Professional
      fees
            
            
            550,824
            
            
            
            19,138
            
            
            
            46,740
            
            
            
            92,707
            
            
            
            114,155Property
      investigation costs
            
            
            119,717
            
            
            
            -
            
            
            
            3,546
            
            
            
            -
            
            
            
            7,525Management
      and consulting fees
            
            
            1,229,209
            
            
            
            79,683
            
            
            
            52,770
            
            
            
            220,884
            
            
            
            154,997Loss
      before other items
            
            
            4,004,626
            
            
            
            172,049
            
            
            
            299,766
            
            
            
            685,980
            
            
            
            901,098Other
      income (loss)Writedown
      of available-for-sale securities
            
            
            (148,180
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Writedown
      of investment in partnership interest
            
            
            (190,601
            )
            
            
            -
            
            
            
            (36,317
            )
            
            
            -
            
            
            
            (48,317
            )Interest
      income
            
            
            221,379
            
            
            
            11,566
            
            
            
            41,568
            
            
            
            73,082
            
            
            
            69,769Total
      other income (loss)
            
            
            (117,402
            )
            
            
            11,566
            
            
            
            5,251
            
            
            
            73,082
            
            
            
            21,452Net
      loss before non-controlling interest
            
            
            (4,122,028
            )
            
            
            (160,483
            )
            
            
            (294,515
            )
            
            
            (612,898
            )
            
            
            (879,646
            )Non-controlling
      interest
            
            
            4,518
            
            
            
            -
            
            
            
            -
            
            
            
            4,518
            
            
            
            -Net
      income (loss) for the period
            
            $
            (4,117,510
            )
            
            $
            (160,483
            )
            
            $
            (294,515
            )
            
            $
            (608,380
            )
            
            $
            (879,646
            )Basic
      and diluted loss per share
            
            
            
            
            
            $
            (0.00
            )
            
            $
            (0.01
            )
            
            $
            (0.02
            )
            
            $
            (0.02
            )Weighted
      average number of common shares outstanding
            
            
            
            
            
            
            39,700,000
            
            
            
            39,500,000
            
            
            
            39,570,588
            
            
            
            35,645,074





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




4
 Table of Contents





CIGMA METALS CORPORATION(An
      exploration stage enterprise)Consolidated
      Statements of Cash Flows(Expressed
      in U.S. Dollars)
            
            Cumulative(Unaudited)
            
            January
      13
            
            
            Nine
      months
            
            
            Nine
      months1989
      (inception)
            
            
            Ended
            
            
            Endedto
      September 30,
            
            
            September
      30
            
            
            September
      302007
            
            
            2007
            
            
            2006Cash
      flows used in operating activitiesNet
      loss for the period
            
            $
            (4,117,510
            )
            
            $
            (608,380
            )
            
            $
            (879,646
            )Adjustments
      to reconcile net loss to net cash used in operating
    activities-
      depreciation
            
            
            5,898
            
            
            
            5,898
            
            
            
            --
      stock compensation expense on stock option grants
            
            
            366,844
            
            
            
            -
            
            
            
            --
      issuance of common stock for mineral property rights
            
            
            600
            
            
            
            -
            
            
            
            --
      expenses satisfied with issuance of common stock
            
            
            234,000
            
            
            
            233,000
            
            
            
            --
      partnership exploration costs
            
            
            1,125,711
            
            
            
            -
            
            
            
            481,266-
      writedown of investment in partnership interest
            
            
            190,601
            
            
            
            -
            
            
            
            48,317-
      writedown of available for sale securities
            
            
            148,180
            
            
            
            -
            
            
            
            --
      minority interest in income (loss) of subsidiary
            
            
            (4,518
            )
            
            
            (4,518
            )
            
            
            -Changes
      in operating assets and liabilities, net of acquired
      subsidiary-
      decrease (increase) in prepaid expenses and other assets
            
            
            (58,724
            )
            
            
            (58,724
            )
            
            
            --
      increase (decrease) in accounts payables and accrued
      liabilities
            
            
            34,048
            
            
            
            (20,867
            )
            
            
            (34,768
            )-
      increase (decrease) in accounts payable related party
            
            
            14,278
            
            
            
            14,278
            
            
            
            -Net
      cash used in operating activities
            
            
            (2,060,592
            )
            
            
            (439,313
            )
            
            
            (384,831
            )Cash
      flows used in investing activities-
      purchase equipment
            
            
            (125,239
            )
            
            
            (125,239
            )
            
            
            --
      investment in available-for-sale securities
            
            
            (329,977
            )
            
            
            -
            
            
            
            --
      investment in partnership interest
            
            
            (1,316,312
            )
            
            
            -
            
            
            
            (529,583
            )-
      acquisition of mineral property costs
            
            
            (2,000,000
            )
            
            
            (2,000,000
            )
            
            
            -Net
      cash used in investing activities
            
            
            (3,771,528
            )
            
            
            (2,125,239
            )
            
            
            (529,583
            )Cash
      flows from financing activities-
      issuance of common stock
            
            
            6,350,000
            
            
            
            -
            
            
            
            4,000,000-
      loan proceeds
            
            
            1,158,873
            
            
            
            1,158,873Net
      cash provided by financing activities
            
            
            7,508,873
            
            
            
            1,158,873
            
            
            
            4,000,000Effect
      of exchange rate changes on cash and cash equivalents
            
            
            10,043
            
            
            
            10,043
            
            
            
            -Increase
      (decrease) in cash and cash equivalents
            
            
            1,686,796
            
            
            
            (1,395,636
            )
            
            
            3,085,586Cash,
      beginning of year
            
            
            -
            
            
            
            3,082,432
            
            
            
            250,170Cash,
      end of period
            
            $
            1,686,796
            
            
            $
            1,686,796
            
            
            $
            3,335,756





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





5
 Table of Contents




Notes to
Interim Consolidated Financial Statements (Unaudited)




1.
            Nature
      of Business and Going Concern




Cigma
Metals Corporation ("the Company") was formed on January 13, 1989 under the laws
of the State of Florida as Cigma Ventures Corporation. On April 17, 1999 the
Company changed its name to Cigma Metals Corporation and is in the business of
location, acquisition, exploration and, if warranted, development of mineral
properties.  The Company’s focus is on the exploration and development
of its exploration properties located in the Pavlodar Oblast Region in
Kazakhstan and the Tomsk Oblast Region, of the Russian Federation. The Company
has not yet determined whether its properties contain mineral reserves that may
be economically recoverable and has not generated any operating revenues to
date.




These
unaudited consolidated financial statements have been prepared in accordance
with generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business.  The general
business strategy of the Company is to acquire mineral properties either
directly or through the acquisition of operating entities.   The
Company has incurred recurring operating losses since inception, has not
generated any operating revenues to date and used cash of $439,313 from
operating activities in 2007. The Company requires additional funds to meet its
obligations and maintain its operations.  These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in this regard are to raise equity financing through private
or public equity investment in order to support existing operations and expand
its business. There is no assurance that such additional funds will be available
to the Company when required or on terms acceptable to the Company. These
unaudited consolidated financial statements do not include any adjustments that
might result from this uncertainty.




2.
            Significant
      Accounting Policies




We follow
accounting standards set by the Financial Accounting Standards Board, commonly
referred to as the “FASB.”  The FASB sets generally accepted accounting
principles (GAAP) that we follow to ensure we consistently report our financial
condition, results of operations, and cash flows.  References to GAAP
issued by the FASB in these footnotes are to the FASB Accounting Standards
Codification, referred to as codification or “ASC.”  The FASB finalized the
codification effective for periods ending on or after September 15,
2009.





(a)
            Principles
      of Accounting




The
interim period unaudited consolidated financial statements have been prepared by
the Company pursuant to the rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC") and include the accounts of the Company and its
wholly-owned subsidiary, Cigma Metals BVI Limited (“Cigma BVI”) and its 90%
subsidiary share in Dostyk LLP. Collectively, they are referred to herein as
"the Company". Significant inter-company accounts and transactions have been
eliminated in consolidation. Cigma BVI is inactive. Certain information and
footnote disclosures normally included in consolidated financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to such SEC rules and
regulations. The interim period unaudited consolidated financial statements
should be read together with the audited consolidated financial statements and
accompanying notes included in the Company's consolidated audited financial
statements for the years ended December 31, 2006 and 2005. In the opinion of the
Company, the unaudited consolidated financial statements contained herein
contain all adjustments (consisting of a normal recurring nature, with the
exception of the impairment adjustment discussed below in "Long-Lived Assets
Impairment") necessary to present a fair statement of the results of the interim
periods presented.





6
 Table of Contents





2.
            Significant
      Accounting Policies   (continued)




(b)
            Accounting
      Estimates




The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates and assumptions.




(c)
            Cash
      Equivalents




Cash
equivalents comprise certain highly liquid instruments with a maturity of three
months or less when purchased. The Company did not have any cash equivalents at
September 30, 2007 and December 31, 2006. No amounts were paid for income taxes
or interest in 2007 or 2006.




(d)
            Marketable
      Securities




The
Company's available-for-sale securities consist of shares of common stock of
three publicly traded companies at September 30, 2007 and 2006, and are stated
at fair value. The cost of these securities is $181,797 at September 30, 2007
(2006 - $181,797) and the net unrealized holding loss of $50,144 and (2006 -
$15,488) is included in accumulated other comprehensive income (loss) at
September 30, 2007. If a loss in value in the available-for-sale securities is
considered to be other than temporary, it is recognized in the determination of
net income. All unrealized holding losses at September 30, 2007 are on
securities that have a fair market value of $131,653 at September 30, 2007. Cost
is based on the specific identification method for the individual securities to
determine realized gains or losses.




Fair
values determined by Level 1 inputs utilize quoted prices (unadjusted) in
active markets for identical assets or liabilities.  The following
table presents information about the Company’s financial assets that have been
measured at fair value as of September 30, 2007 and December 31, 2006, and
indicates the fair value hierarchy of the valuation inputs utilized to determine
such fair value.




Description
            
            Fair
      Value at September 30, 2007
            
            
            Quoted
      Prices in Active Markets (Level 1)Assets:Cash
            
            $
            1,686,796
            
            
            $
            1,686,796Available-for-sale
      securities
            
            
            131,653
            
            
            
            131,653Assets
      measured at fair value at September 30, 2007
            
            $
            1,818,449
            
            
            $
            1,818,449







Description
            
            Fair
      Value at December 31, 2006
            
            
            Quoted
      Prices in Active Markets (Level 1)Assets:Cash
            
            $
            3,082,432
            
            
            $
            3,082,432Available-for-sale
      securities
            
            
            166,309
            
            
            
            166,309Assets
      measured at fair value at December 31, 2006
            
            $
            3,248,741
            
            
            $
            3,248,741




7
 Table of Contents




2.
            Significant
      Accounting Policies   (continued)




(e)
            Equipment




Depreciation
is based on the estimated useful lives of the assets and is computed using the
straight-line method.  Equipment is recorded at
cost.  Depreciation is provided over the following useful
lives:




Vehicles
            10
      years


Office
      equipment, furniture and fixtures
            2
      to 5 years





(f)
            Mineral
      Properties and Exploration Expenses





The
Company accounts for its mineral properties on a cost basis whereby all direct
costs, net of pre-production revenue, relative to the acquisition of the
properties are capitalized.  All sales and option proceeds received
are first credited against the costs of the related property, with any excess
credited to earnings. Once commercial production has commenced, the net costs of
the applicable property will be charged to operations using the
unit-of-production method based on estimated proven and probable recoverable
reserves. The net costs related to abandoned properties are charged to
operations.





Exploration
costs are charged to operations as incurred until such time that proven reserves
are discovered. From that time forward, the Company will capitalize all costs to
the extent that future cash flow from mineral reserves equals or exceeds the
costs deferred. Exploration activities conducted jointly with others are
reflected at the Company's proportionate interest in such
activities.





The
Company reviews the carrying values of its mineral properties on a regular basis
by reference to the project economics including the timing of the exploration
and/or development work, the work programs and the exploration results
experienced by the Company and others. The review of the carrying value of any
producing property will be made by reference to the estimated future operating
results and net cash flows. When the carrying value of a property exceeds its
estimated net recoverable amount, provision is made for the decline in value.
The deferred costs will be amortized over the recoverable reserves when a
property reaches commercial production. As of September 30, 2007 and December
31, 2006, the Company did not have proven reserves.





The
recoverability of the amounts shown for mineral properties is dependent on the
confirmation of economically recoverable reserves, confirmation of the Company’s
interest in the underlying mineral claims, the ability of the Company to obtain
the necessary financing to successfully complete their development and the
attainment of future profitable operations or proceeds from
disposition.





Estimated
costs related to site restoration programs during the commercial development
stage of the property are accrued over the life of the project.




(g)
            Share-Based
      Payment




The
Company accounts for share-based payments under the fair value method of
accounting for stock-based compensation consistent with GAAP.




Under the
fair value recognition provisions of this statement, stock-based compensation
cost is measured at the grant date based on the fair value of the award and is
recognized as expense on a straight-line basis over the requisite service
period, which is generally the vesting period.





8
 Table of Contents





2.
            Significant
      Accounting Policies   (continued)




(h)
            Foreign
      Currency Translations and
Transactions




The
Company's reporting currency is the U.S. Dollar.  Dostyk LLP is a
foreign operation and its functional currency is the Kazakhstan Tenge (Tenge).
Certain contractual obligations in these consolidated financial statements are
stated in Kazakhstan Tenges. The Kazakhstan Tenge to U.S. dollar exchange rate
at September 30, 2007 was U.S. $0.008462 to 1 Tenge.




The
Company translates foreign assets and liabilities of its subsidiaries, other
than those denominated in U.S. dollars, at the rate of exchange at the balance
sheet date. Revenues and expenses are translated at the average rate of exchange
throughout the year. Gains or losses from these translations are reported as a
separate component of other comprehensive income (loss) until all or a part of
the investment in the subsidiaries is sold or liquidated. The translation
adjustments do not recognize the effect of income tax because the Company
expects to reinvest the amounts indefinitely in operations.




Transaction
gains and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the local functional currency are included
in interest, bank charges, and foreign exchange loss in the consolidated
statements of operations and were not material in 2007 or 2006 or in the
cumulative period ending September 30, 2007.




(i)
            Concentration
      of Credit Risk




The
Company places its cash with high credit quality financial institutions in
Canada and Kazakhstan. The Company had funds deposited in banks beyond the
insured limits as of September 30, 2007 and December 31, 2006.





(j)
            Long-Lived
      Assets Impairment




Long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable, in accordance with
GAAP. An impairment loss would be recognized when the carrying amount of an
asset exceeds the estimated undiscounted future cash flows expected to result
from the use of the asset and its eventual disposition.




The
amount of the impairment loss to be recorded is calculated by the excess of the
asset's carrying value over its fair value.  Fair value is generally
determined using a discounted cash flow analysis. The Company has not recognized
any impairment losses through September 30, 2007.




(k)
            Comprehensive
      income




The
Company has adopted, Reporting
Comprehensive Income, which establishes standards for reporting and
display of comprehensive income, its components and accumulated balances. The
Company is disclosing this information on its Consolidated Statement of
Stockholders’ Equity (Deficiency). Comprehensive income comprises equity except
those resulting from investments by owners and distributions to
owners.





Accumulated
other comprehensive income consists of the following at September 30, 2007 and
December 31, 2006:





Components
      of comprehensive income (loss)
            
            September
      30,
              2007
            
            
            December
      31,
              2006Net
      income (loss) for the period
            
            $
            (608,380
            )
            
            $
            (1,545,617
            )Foreign
      currency translation adjustments
            
            
            -
            
            
            
            -Unrealized
      gains (loss) on available-for-sale securities
            
            
            (50,144
            )
            
            
            (15,488
            )Total
      comprehensive income (loss)
            
            $
            (658,524
            )
            
            $
            (1,561,105
            )




9
 Table of Contents




2.
            Significant
      Accounting Policies   (continued)




(l)
            Fair
      Value of Financial Instruments and
Risks




Fair
value estimates of financial instruments are made at a specific point in time,
based on relevant information about financial markets and specific financial
instruments.  As these estimates are subjective in nature, involving
uncertainties and matters of significant judgment, they cannot be determined
with precision.  Changes in assumptions can significantly affect
estimated fair value.




The
carrying value of cash, accounts payable and accrued expenses, accounts payable
– related parties, and loan payable approximate their fair value because of the
short-term nature of these instruments. Available for sale securities are
recorded at the current market value.




Management
is of the opinion that the Company is not exposed to significant interest or
credit risks arising from these financial instruments.




The
Company operates outside of the United States of America (primarily in
Kazakhstan) and is exposed to foreign currency risk due to the fluctuation
between the currency in which the Company operates in and the U.S.
dollar.




(m)
            Income
      Taxes




The
Company has adopted ASC 740, Accounting for Income Taxes,
which requires the Company to recognize deferred tax liabilities and assets for
the expected future tax consequences of events that have been recognized in the
Company's financial statements or tax returns using the liability
method.  Under this method, deferred tax liabilities and assets are
determined based on the differences between the financial statement carry
amounts and tax bases of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to
reverse.




In July
2006, the Financial Accounting Standards Board (“FASB”) issued an interpretation
which clarifies the accounting for uncertainty in income taxes recognized in a
company’s financial statements in accordance with GAAP. This interpretation
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken in a tax
return.  It also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition.




Recognition
criterion to a tax provision is effective for fiscal years beginning after
December 15, 2006.  The adoption of this interpretation did not have a
material impact on the Company’s results of operations or financial
position.  As such, the Company has not recorded any liabilities for
uncertain tax positions or any related interest and penalties.  The
Company’s tax returns are open to audit for the years ending December 31, 2003
to 2007.




(n)
            Earnings
      (Loss) Per Share




Earnings
(loss) per share is computed by dividing net income or loss available to common
stockholders by the weighted average number of common shares outstanding during
the year including common stock issued effective the date committed. Diluted
loss per common share is computed by dividing net loss by the sum of (a) the
basic weighted average number of shares of common stock outstanding during the
period and (b) additional shares that would have been issued and potentially
dilutive securities and is equivalent to basic loss per share for 2007 and 2006
because potentially dilutive securities were anti-dilutive due to the net losses
incurred in each year. Potentially dilutive securities outstanding consist of
800,000 stock options for 2007 (2006 – 900,000) and 8,000,000 warrants for 2007
(2006 – 8,000,000).


10
 Table of Contents





2.
            Significant
      Accounting Policies   (continued)




(o)
            New
      Accounting Pronouncements




In June
2007, the Emerging Issues Task Force of the FASB issued EITF Issue
No. 07-3, Accounting for
Nonrefundable Advance Payments for Goods or Services to be Used in Future
Research and Development Activities, which is effective for fiscal years
beginning after December 15, 2007. This requires that nonrefundable advance
payments for future research and development activities be deferred and
capitalized. Such amounts will be recognized as an expense as the goods are
delivered or the related services are performed. The Company does not expect the
adoption of EITF 07-3 to have a material impact on its financial
results.




3.
            Equipment




September 30,
              2007
            
            
            December
      31,
              2006Machinery
      and Equipment
            
            $
            51,309
            
            
            $
            -Transport
      Vehicles
            
            
            67,534
            
            
            
            -Other
      Fixed Assets
            
            
            5,623
            
            
            
            -Computer
      Software
            
            
            772125,239
            
            
            
            -Accumulated
      depreciation
            
            
            (5,898
            )
            
            
            -$
            119,341
            
            
            $
            -





The
majority of equipment held at September 30, 2007 is located in
Kazakhstan.




4.
            Loan
      Payable




The
Company’s subsidiary Dostyk had a loan payable to Eureka Mining PLC. The loan is
unsecured, non- interest bearing with repayment to begin when the Company shall
begin to generate profit as a direct or non direct result of exploration. On
March 15, 2007, the Company and Eureka signed an Assignment Agreement under
which the Company assumed responsibility for repayment of all amounts due under
the loan. The Company does not expect to generate funds from Dostyk’s operations
during the next five years to make any principal repayments on the loan. No
repayment of principal, interest and default interest has been made under the
Agreement. The loan balance at September 30, 2007 is $1,168,818 (2006 -
$0).





5.
            Available-for-sale
      securities





Cost$
            
            
            GrossUnrealizedGains$
            
            
            GrossUnrealized(Losses)$
            
            
            Net
      AccumulatedUnrecognizedGains (Losses)$
            
            
            MarketValue$December
      31, 2006, equity securities
            
            
            181,797
            
            
            
            36,504
            
            
            
            (51,992
            )
            
            
            (15,488
            )
            
            
            166,309Change
      during the period
            
            
            -
            
            
            
            14,612
            
            
            
            (49,268
            )
            
            
            (34,656
            )
            
            
            (34,656
            )September
      30, 2007, equity securities
            
            
            181,797
            
            
            
            51,116
            
            
            
            (101,260
            )
            
            
            (50,144
            )
            
            
            131,653





6.
            Common
      stock





During
the quarter ended September 30, 2007 the Company had not issued any new common
stock. In June 2007 the Company issued 200,000 common shares valued at $96,000
as a finder’s fee in consideration for arranging property acquisitions in
Kazakhstan.





In March
2006, the Company offered, on a no minimum basis, up to an aggregate of
3,500,000 Units at a price of US $1.00 per Unit. Each Unit shall be comprised of
one (1) pre-forward split share of the Company’s common stock US $0.0001 par
value per share and one (1) pre-forward split stock purchase warrant, each
warrant entitling the holder to purchase one (1) additional common share of the
Company at a price of US $1.35 per share for a period of one (1) year from the
closing date of the placement and at a price of US $1.50 per share for a period
of one (1) year commencing on the first anniversary of the Closing
Date.  All amounts with respect to this offering, other than par
value, are subject to adjustment pursuant to the 2:1 forward stock split. The
total amount received was $4,000,000.





11
 Table of Contents




6.
            Common
      stock (cont’d)





On April
7, 2006, the Company’s Board of Directors approved a 2:1 forward stock split
effective May 15, 2006 which was subject to regulatory approval which was
received on May 19, 2006.The par value and the
number of authorized but unissued shares of the Company’s common stock was not
changed as a result of the forward stock split.





Private
Placements


During
the quarter ended March 31, 2006 the Company issued 800,000 common shares for
cash of $300,000 which was received in the year ended December 31,
2005.





On May
12, 2006 the Company completed a private placement to non-affiliated offshore
investors of 6,540,000 Units priced at $0.50 per unit for a total consideration
of $3,270,000 pursuant to the exemption from registration requirements of the
Securities Act of 1933 as amended afforded by Regulation S as promulgated by the
Act. Each Unit is comprised of one share of the Company’s common stock US
$0.0001 par value per share and one stock purchase warrant, each warrant
entitling the holder to purchase one additional common share of the Company at a
price of US $0.675 per share for a period of one year from the closing date of
the placement and at a price of US $0.75 per share for a period of one year
commencing on the first anniversary of the Closing Date.





On May
26, 2006 the Company completed a private placement to non-affiliated offshore
investors of 1,460,000 Units priced at $0.50 per Unit for a total consideration
of $730,000 pursuant to the exemption from registration requirements of the
Securities Act of 1933 as amended afforded by Regulation S as promulgated by the
Act. Each Unit is comprised of one share of the Company’s common stock US
$0.0001 par value per share and one (1) stock purchase warrant, each warrant
entitling the holder to purchase one additional common share of the Company at a
price of US $0.675 per share for a period of one year from the closing date of
the placement and at a price of US $0.75 per share for a period of one year
commencing on the first anniversary of the Closing Date.





7.
            Share
      Purchase Warrants





A summary
of the Company’s warrants outstanding at September 30, 2007 and December 31,
2006 and changes during the nine months ended September 30, 2007 is presented
below:




Number
      of warrants to
              Purchase
      shares
            
            
            Weighted
              Average
              Exercise
      PriceBalance,
      December 31, 2006
            
            
            8,000,000
            
            
            $
            0.713Warrants
      granted in 2007
            
            
            -
            
            
            
            -Balance,
      September 30, 2007
            
            
            8,000,000
            
            
            $
            0.713




1.
            Each
      warrant entitling the holder to purchase one additional common share of
      the Company at a price of US $0.675 per share for a period of one year
      from the May 12, 2006, closing date of the placement, and at a price of US
      $0.75 per share for a period of one year commencing on the first
      anniversary of the Closing Date.





2.
            Each
      warrant entitling the holder to purchase one additional common share of
      the Company at a price of US $0.675 per share for a period of one year
      from the May 26, 2005, closing date of the placement, and at a price of US
      $0.75 per share for a period of one year commencing on the first
      anniversary of the Closing Date




12
 Table of Contents




8.
            Related
      Party Transactions





Related
party transactions not disclosed elsewhere in these consolidated financial
statements include:





a.
            During
      the nine months ended September 30, 2007 Consulting Fees of $133,000 (nine
      months ended September 30, 2006 - $118,750) were incurred by the Company.
      The transactions were recorded at the exchange amount, being the value
      established and agreed to by the related
  parties.





b.
            Included
      in accounts payable - related parties at September 30, 2007 is $14,278
      (2006 - $0) payable to directors of the Company and its subsidiary for
      consulting fees and various expenses incurred on behalf of the
      Company





9.
            Mineral
      Properties Dostyk LLP – Maykubensk area in the Pavodar Oblast of the
      Republic of Kazakhstan





During
2007 we have been evaluating our property holdings in order to determine whether
to implement exploration programs on our existing properties or to acquire
interests in new properties.





In
January 2007, the Company entered in an agreement with Eureka Mining PLC, a
company registered in the United Kingdom, to acquire an ownership interest in
the Dostyk Limited Liability Partnership, (the “Partnership” or "Dostyk"). The
Partnership holds the exploration rights to explore 14,000 square kilometers in
the Maykubensk area in the Pavodar Oblast of the Republic of Kazakhstan for
precious and base metals.





Under the
terms of the agreement with Eureka Mining PLC, the Company acquired a 51%
interest in the Partnership by paying US $300,000 (paid January 25, 2007) into
the charter capital of the Partnership. The acquisition is accounted for using
purchase accounting. As a result of the purchase, the Company acquired control
of Dostyk and consolidated the financial results of Dostyk including
consideration of a non-controlling interest. In June 2007, the Company increased
its ownership in the Partnership from 51% to 71% by contributing a further US
$700,000 (paid June 13, 2007) to the Partnership’s charter capital. On September
14, 2007, the Company increased its ownership interest in the Partnership from
71% to 90% by contributing a further US $1,000,000 to the Partnership’s charter
capital. In February 2008 the Company increased its ownership in the Partnership
from 90% to 100% by paying US $400,000 (paid February 13, 2008) to the owners of
the Partnership.





The
Company’s results of operations include Dostyk’s results of operations since the
date of acquisition. Pro forma results for the pre-consolidation period are not
presented as they are not materially different from the Company’s historical
consolidated financial statements.





As of
September 30, 2007 and December 31, 2007, the Company held a 90% interest in
Dostyk. The aggregate cost of the acquisition through September 30, 2007 was
$2,000,000. The following represents a summary of the assets acquired and the
liabilities assumed during the year. Assets and liabilities at the dates of
acquisition have been translated from Dostyk’s functional currency, the
Kazakhstan Tenge (“Tenge”). The average effective exchange rate used was US$
0.008462 to 1 Tenge.





Cash
            
            $
            1,040,115Prepaids
      and other assets
            
            
            39,540Mineral
      properties
            
            
            2,676,096Equipment
            
            
            119,341Accounts
      payable and accrued expenses
            
            
            (46,806
            )Long-term
      debt
            
            
            (1,168,818
            )Minority
      interest
            
            
            (659,468
            )Purchase
      price paid in 2007
            
            $
            2,000,000





During
January 2010, subject to shareholder approval, the Company agreed to sell its
ownership interest in its Kazakhstan subsidiary to a third party for $1,500,000
and other consideration.  The total value of the potential consideration to
be received has not been determined.  The only significant asset owned by
the subsidiary is the mineral exploration license described in these financial
statements.  Management continues to believe that the value of the mineral
property owned by the subsidiary has not been impaired, however an agreement for
the sale of the subsidiary for less than its carrying value of $2,509,597 as of
January 2010, would be an indication of impairment and result in the Company
recording a loss on the sale.





13
 Table of Contents




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





(A)
            General





This
portion of the Quarterly Report provides management's discussion and analysis of
the financial condition and results of operations to enable a reader to assess
material changes in financial condition and results of operations as at and for
the nine months ended September 30, 2007, in comparison to the corresponding
prior-year period. This MD&A has been prepared as of February 17, 2010. This
MD&A is intended to supplement and complement the unaudited interim
consolidated financial statements and notes thereto, prepared in accordance with
US GAAP, for the nine months ended September 30, 2007 and 2006 (collectively,
the "Financial Statements"), which are included in this Quarterly Report. The
reader is encouraged to review the Financial Statements in conjunction with your
review of this MD&A. This MD&A should be read in conjunction with both
the annual audited consolidated financial statements for the year ended December
31, 2006 and the related annual MD&A included in the December 31, 2006 Form
10-K on file with the US Securities and Exchange Commission. Certain notes to
the Financial Statements are specifically referred to in this MD&A and such
notes are incorporated by reference herein. All dollar amounts in this MD&A
are in US dollars, unless otherwise specified.





For the
purposes of preparing this MD&A, we consider the materiality of information.
Information is considered material if: (i) such information results in, or would
reasonably be expected to result in, a significant change in the market price or
value of Cigma Metals Corporation's shares; or (ii) there is a substantial
likelihood that a reasonable investor would consider it important in making an
investment decision or if it would significantly alter the total mix of
information available to investors. Materiality is evaluated by reference to all
relevant circumstances, including potential market sensitivity.




This
document contains numerous forward-looking statements relating to our
business.  The United States Private Securities Litigation Reform Act
of 1995 provides a “safe harbor” for certain forward-looking
statements.  Operating, exploration and financial data, and other
statements in this document are based on information we believe reasonable, but
involve significant uncertainties as to future gold and silver prices, costs,
ore grades, estimation of gold and silver reserves, mining and processing
conditions, changes that could result from our future acquisition of new mining
properties or businesses, the risks and hazards inherent in the mining
business  (including environmental hazards, industrial accidents,
weather or geologically related conditions),  regulatory and
permitting matters,  and risks inherent in the ownership and operation
of, or investment in, mining properties or businesses in foreign countries.
Actual results and timetables could vary significantly from the estimates
presented. Readers are cautioned not to put undue reliance on forward-looking
statements. We disclaim any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information, future
events or otherwise.




We are a
mineral exploration company engaged in the exploration of base, precious metals
and industrial minerals worldwide.  We were incorporated under the
laws of the State of Florida on January 13, 1989, under the name "Cigma Ventures
Corp."





We have
no revenues, have sustained losses since inception, have been issued a going
concern opinion by our auditors and rely upon the sale of our securities to fund
operations. We will not generate revenues even if any of our exploration
programs indicate that a mineral deposit may exist on our properties.
Accordingly, we will be dependent on future financings in order to maintain our
operations and continue our exploration activities. Funds raised in fiscal 2007
and 2006 were used for exploration of our properties and general
administration.





(B)
            Significant
      developments during the Nine months ended September 30, 2007 and
      Subsequent Events




During
2007 we have been evaluating our property holdings in order to determine whether
to implement exploration programs on our existing properties or to acquire
interests in new properties.





14
 Table of Contents




In
January 2007, the Company entered in an agreement with Eureka Mining PLC, a
company registered in the United Kingdom, to acquire an ownership interest in
the Dostyk Limited Liability Partnership, (the “Partnership” or "Dostyk"). The
Partnership holds the exploration rights to explore 14,000 square kilometers in
the Maykubensk area in the Pavodar Oblast of the Republic of Kazakhstan for
precious and base metals.





Under the
terms of the agreement with Eureka Mining PLC, the Company acquired a 51%
interest in the Partnership by paying US $300,000 (paid January 25, 2007) into
the charter capital of the Partnership. The acquisition is accounted for using
purchase accounting. As a result of the purchase, the Company acquired control
of Dostyk and consolidated the financial results of Dostyk including
consideration of a non-controlling interest. In June 2007, the Company increased
its ownership in the Partnership from 51% to 71% by contributing a further US
$700,000 (paid June 13, 2007) to the Partnership’s charter capital. On September
14, 2007, the Company increased its ownership interest in the Partnership from
71% to 90% by contributing a further US $1,000,000 to the Partnership’s charter
capital. In February 2008 the Company increased its ownership in the Partnership
from 90% to 100% by paying US $400,000 (paid February 13, 2008) to the owners of
the Partnership.





The
Company’s results of operations include Dostyk’s results of operations since the
date of acquisition. Pro forma results for the pre-consolidation period are not
presented as they are not materially different from the Company’s historical
consolidated financial statements.





As of
September 30, 2007 and December 31, 2007, the Company held a 90% interest in
Dostyk. The aggregate cost of the acquisition through September 30, 2007 was
$2,000,000. The following represents a summary of the assets acquired and the
liabilities assumed during the year. Assets and liabilities at the dates of
acquisition have been translated from Dostyk’s functional currency, the
Kazakhstan Tenge (“Tenge”). The average effective exchange rate used was US$
0.008462 to 1 Tenge.





Cash
            
            $
            1,040,115Prepaids
      and other assets
            
            
            39,540Mineral
      properties
            
            
            2,676,096Equipment
            
            
            119,341Accounts
      payable and accrued expenses
            
            
            (46,806
            )Long-term
      debt
            
            
            (1,168,818
            )Minority
      interest
            
            
            (659,468
            )Purchase
      price paid in 2007
            
            $
            2,000,000





During
the three month period ended March 31, 2008, the Company acquired an additional
10% interest in Dostyk for a purchase price of US$400,000. At that date, the
balance of non-controlling interest was in excess of the purchase price by
$166,499. This amount was credited against the capitalized balance in mineral
properties. As of that date, the Company owned 100% of Dostyk.





The 2008
acquisition of the remaining 10% interest in Dostyk was accounted for using the
purchase method. The aggregate allocation of purchase price to mineral
properties was $2,509,597.





(C)
            Exploration
      and Development





We
conduct our exploration and property acquisition activities from our head
office, which is located at 18, 80 Furmanova Str, Almaty, Republic of
Kazakhstan. The telephone number is +7 327 2611 026





Our
general business strategy is to acquire mineral properties either directly or
through the acquisition of operating entities.  Our continued
operations and the recoverability of mineral property costs is dependent upon
the existence of economically recoverable mineral reserves, confirmation of our
interest in the underlying properties, our ability to obtain necessary financing
to complete the development and upon future profitable production.





We are
currently concentrating our exploration activities in Kazakhstan.





15
 Table of Contents




Since
1989 we have acquired and disposed of a number of properties. We have not been
successful in any of our exploration efforts to establish reserves on any of the
properties that we owned or in which we have or have had an
interest.





Our
properties are in the exploration stage only and are without a known body of
mineral reserves. Development of the properties will follow only if satisfactory
exploration results are obtained. Mineral exploration and development involves a
high degree of risk and few properties that are explored are ultimately
developed into producing mines.  There is no assurance that our
mineral exploration and development activities will result in any discoveries of
commercially viable bodies of mineralization. The long-term profitability of our
operations will be, in part, directly related to the cost and success of our
exploration programs, which may be affected by a number of factors.





Russian
Federation





Haldeevskaya
License





The
Haldeevskaya exploration license covers an area of 576 km2 and is located
approximately 16 kilometers NE from Tomsk via paved highway. Excellent
infrastructure is currently in place, including, maintained tarmac access roads,
high tension power lines at 500 kilowatts per line, gravel vehicular access
roads over the project area with close-spaced, 100 meter, cut lines over the
target areas. The area is also close to the railheads in Tomsk, with links to
the Trans Siberian Railway, and all infrastructures associated with a regional
centre.





Geology
of Haldeevskaya area is represented by the mid Devonian volcanogenic-sedimentary
sediments of the Mitrofan suite, terrigenous (“black shale”) sediments of the
Jurginsk, Pachinsk, Salamat suites of upper Devonian, and the Yarsk,
Lagernosadsk stratus of the lower Carboniferous age.  The rock
formations are deformed into the linear folds with the north-north-eastern
strike and they are cut by the series of longitudinal, lateral and diagonal
fractures of different type and order.  The area is located at the
front zone of the Tomsk thrust above the granitoid intrusions that are inferred
by geophysics. Dolerite and Monzonite dikes intrude Paleozoic rocks forming the
series of dike zones with a north-western trend with an echelon-like arrangement
of some dikes and their groups.  Mineralisation is focussed into areas
associated with the thrusting. Towards the end of 19th and first half of the
20th centuries the region was one of the most prolific gold mining spots in
Russia. The coarse gold was panned from the Tom river and the numerous drainage
systems around the city of Tomsk. In late 1980 Geosphera made its first gold
discoveries in hard rock.  As a result of the  geochemical
and geophysical surveys a series of 6 highly prospective gold soil anomalies
have been outlined   Of the 6 large anomalies the area currently
considered the most perspective are the Semiluzhenskoye, Verkhnekamensk and
Sukhorechenskoye prospects.  The Verkhnekamensk anomaly is located in
the eastern part of the Haldeiskaja license on the tectonic contact between the
clay shales and volcanics. As a result of the litho-geochemical, geological and
geophysical studies, conducted by Cigma, two mineralized zones of east-west
strike have been outlined and plotted at 1:20,000. These zones were traced
across the area for 3 kilometres with widths ranging from 250 to 700 meters.
Within these zones 3 anomalies were found and appear prospective for gold
mineralization. The first diamond drilling program has outlined vast areas of
hydrothermal alteration, preliminary mineralogical investigations have
discovered free gold in drill core from the upper part of the mineralization
zone.





Tugojakovsk
      License





The
Tugojakovsk exploration license covers an area of 164 km2 and
is located 25 kilometers SE from the regional centre of Tomsk via paved highway.
An excellent infrastructure is in place including excellent sealed roads, close
access to railheads and the infrastructure associated with the regional centre
of Tomsk.





The
geology of Tugojakovsk area is represented by the sedimentary rock formations of
Carboniferous age composed of carbonaceous shales, siltstones and sandstones
united under the common term "black shale". The rocks are deformed into linear
folds and cut by the series of longitudinal, lateral and diagonal faults. The
dolerite and monzonite dikes intrude Palaeozoic rocks forming a series of dike
zones controlling quartz stock works with gold mineralization.





16
 Table of Contents




The
Baturinsk occurrence, located within the Tugojakovsk license is composed of a
series silicified shear zones (mylonite zones) consisting of numerous, locally
intense, small quartz veinlets carrying gold. The surrounding geological units
are composed of mineralized carbonaceous shales.





Republic of
      Kazakhstan





Dostyk Area, Pavlodar
      Oblast





The
Company through its 91% subsidiary Dostyk Ltd holds high potential Maykubinsk
exploration and mining license located in Pavlodar Oblast Region in Kazakhstan
and two mineral exploration licenses in the Tomsk Oblast Region, of the Russian
Federation. In 2007 the Company was focused on exploration on Maykubinsk license
in Kazakhstan due to advanced exploration stage of this area and high potential
to discovery large-scale gold-copper porphyry deposits.  The Company’s
strategy is to concentrate its investigations into: (i) Existing operations
where an infrastructure already exists; (ii) Properties presently being
developed and/or in advanced stages of exploration which have potential for
additional discoveries; and (iii) Grass-roots exploration
opportunities.





The
region’s economy of Central Kazakhstan is predicated on mining, power generation
and agriculture. Mining consists of giant coal mining at Karaganda, Ekibastuz
and Maikube, mining of polymetallic, gold-rich volcanogenic massive sulphide
deposits at Abyz, Maikain, Alpys and Souvenir. Roads and trails criss-cross the
region to serve the agriculture and mining areas. Numerous high-tension power
lines radiate out of several power generation stations in Ekibastuz to serve
Kazakhstan and for power export to Russia.





Regional Geology and
mineralization





Central
Kazakhstan geological structure is represented by strong folded and dislocated
Cambrian-Ordovician submarine volcanic and sedimentary rocks, covered by
Silurian-Devonian sediments and Devonian felsitic volcanic suites with a whole
series of stocks, dikes and sills of various ages. Late Paleozoic rocks are
represented by Carboniferous and Jurassic marine and continental
suites.





Mineral
deposits are related in time and space to the various lithologies:


Gold-rich
      volcanogenic massive sulphide (VMS) deposits associated with Ordovician
      submarine volcanic rocks.


Porphyry
gold-copper deposits associated with altered sub-volcanic dioritic intrusives
presumable of Ordovician age.





Epithermal
gold deposits associated with quartz veins and quartz-sulphide stockworks in
Ordovician, Devonian and Permian intrusives of diorite to granite
composition.


Lead-zinc
mineralization associated with Silurian-Devonian siltstone and carbonate
beds.


Coal
deposits associated with Carboniferous marine and deltaic sedimentary
rocks.


Titanium
and zirconium-rich sands in Late Carboniferous beach sands.


Bauxite
and nickel laterite deposits formed from modern weathering of Paleozoic
limestones and Cambrian ultramafic rocks.





License and Contract
commitments





License
#785 of Central Kazakhstan area dated January 8, 1996 and Subsoil Contract #
759, dated Oct 11, 2001 belongs to Dostyk Ltd. Contract is valid until Jan 8,
2021. Exploration period expires on Dec 31, 2009. Dostyk has currently submitted
to Kazakh Government an application for exploration extension till Dec 2011. The
area of contract territory is at the present 2,774 sq km. The contract territory
will be returned to the State by December 2011 except areas, which Dostyk would
claim as commercial discoveries i.e. those prospects on which Kazakh style
resources of C1-C2 categories would be proved.





After
reviewing historical data and first drilling results, the exploration works in
2007 were focused mainly on following prospects: Beskauga, Berezki East,
Quartzite Gorka, Ushtogan and Anino-Nikolaevo.





17
 Table of Contents




March
2007 Quarter was a time of transfer of the Dostyk project from previous
owner to the Company. At the same time the Dostyk exploration team gathered
historical geological and exploration data to establish an exploration program
for 2007.





June 2007
Quarter





Exploration
works on Dostyk project commenced in April 2007 with drilling on Berezki East
and Quartzite Gorka Prospects.




Dostyk
      Total
            June
      30, 2007Volume
            USDDrilling
      (m)
            m
            4,240
            231,250Sample
      processing & assays
            sample
            4,430
            31,508Metallurgical
      tests
            sample
            
            0Surveys
            $
            
            320Data
      processing
            $
            
            1,296Consulting
      services, wages, taxes, administration & others
            $
            
            74,246TOTAL
            
            
            338,620








Works
      completed on each prospect in quarter June 2007Prospect
            Drill
      holes
            Meters
      drilled
            Sample
      processing
            Assays
            Geological
      mapping
            USDFire
      assay Au
            ICP
            km2Berezki
      East
            4
            1,458
            1,520
            1,520
            6,080
            0
            115,689Berezki
      Central
            2
            653
            660
            660
            2,640
            0
            64,652Quartzite
      Gorka
            8
            2,147
            2,250
            2,250
            9,000
            0
            158,279TOTAL
            14
            4,258
            4,430
            4,430
            17,720
            0
            338,620





Berezki
East Gold-Copper Prospect





Primary Geology &
      Infrastructure





Berezki
East is a part of a large-scale K-OZEK gold-copper-porphyry system with total
area of 15km2. The K-OZEK area is composed by strongly hydrothermaly altered
volcanic and intrusive formations with numerous geochemical gold-copper
anomalies. The gold-copper mineralization is associated with pyrite and
chalcopyrite within wide-spread zones of chlorite-epidotic
alteration.





Dostyk
project is located in the North Eastern region of Kazakhstan near the Russian
and Chinese border. Infrastructure is just perfect with roads and railways
crossing the license area. The region has been mined for gold, base metals,
nickel, coal and others. Power lines with voltage up to 1,150 kW cross the
project area.





Berezki
East is located 22km away from Ekibastuz with perfect roads connection, 19km by
sealed road and 3km by dirt road.  Ekibastuz is a town with 110,000
population, a regional centre with well developed leaving infrastructure. It is
the largest coal industry centre in Central Asia with number of power stations
supplying energy to entire Kazakhstan and Asian part of Russia.




18
 Table of Contents




Exploration works &
results





In 2007
the Company has completed 9 diamond drill holes (DDH) for a total of 3,122
meters with an average drill hole depth of 330 meters.




Berezki
      East 2007Volume
              USDDrill
      holes
              drill
      holes
              9meters
      drilled
              m
              3,122
              309,078samples
      treatment
              sample
              3,215Fire
      assays
              assay
              3,215
              68,241ICP
      assays
              assay
              12,860Geol
      mapping
              sq
      km
              5
              167Data
      processing & administration
              
              
              99,818Berezki
      East total cost 2007
              
              
              477,304


The most
representative interceptions were obtained along drilling fence F2.




·
            Drilling Fence
      F2. The drill holes of drilling fence F2 extended the results of
      the historical drilling by intercepting a bulk mineralization zone that is
      characterized by impressive grades for the porphyry systems, proximity to
      the surface and extension to the depth over
  300m:




o
            DDH Bz6, 112m grading
      1.11g/t gold and 0.2% copper from surface, including 17.2m at 4.07g/t gold
      and 0.29% copper and 21.9m at 1.96g/t gold and 0.1%
  copper




o
            DDH Bz7,78m grading
      0.59g/t gold and 0.12% copper from 70m, including 28m at 1.04g/t gold and
      0.18% copper





The
gold-copper mineralization remains open on both ends of the zones. The
mineralization is represented by the steeply dipping linear zone. It has been
traced down to a depth of 320 meters and remains open. The zone maintains a
consistent width from the top to the bottom of app. 70m and estimated length of
350 meters.





Primary Geology &
Infrastructure





Quartzite
Gorka is a part of a large-scale K-OZEK gold-copper-porphyry system with total
area of 15km2 .The
K-OZEK area is composed by strongly hydrothermaly altered volcanic and intrusive
formations with numerous geochemical gold-copper anomalies. The gold-copper
mineralization is associated with pyrite and chalcopyrite within wide-spread
zones of chlorite-epidotic alteration. Beside Quartzite Gorka the K-OZEK area
comprises five other high-prospective gold-copper deposits with exploration
potential over three million ounces of gold equivalent.





Quartzite
Gorka is located 19 km away from Ekibastuz and 5 km away from Berezki East
Prospect with same infrastructure as Berezki East.





Exploration works &
results





In 2007
the Company has completed 9 diamond drill holes (DDH) for a total of 2,548
meters. The drilling program was intended to explore both the lateral and
vertical extension of the gold-copper mineralization controlled by north-west
trending zone of hydrothermaly altered granodiorites. The most representative
interceptions were observed along drilling fences F3 and F7.





19
 Table of Contents




Quartzite
      Gorka 2007Volume
              USDDrill
      holes
              drill
      holes
              9meters
      drilled
              m
              2,548
              252,252samples
      treatment
              sample
              2,670Fire
      assays
              assay
              2,670
              56,669ICP
      assays
              assay
              10,680Geol
      mapping
              sq
      km
              5
              167Data
      processing & administration
              
              
              99,818Quartzite
      Gorka total cost 2007
              
              
              408,906


·
            Drilling
      Fence F3




The drill
holes from fence F3 confirmed the results of historical drilling and also
extended the mineralization beneath previous drilling and returned:




o
            DDH Q1, 144.6m grading
      0.42 g/t gold and 0.18% copper from 85.0m including 78m at 0.71 g/t gold
      and 0.3% copper from 85.0m




·
            Drilling
      Fence F7




The drill
holes (Q4, Q6, Q7) of fence F7 extended the mineralization zone to the South and
opened up great potential for the deposit by revealing extensive mineralization
zones where drill hole Q6 was almost completely stayed within the mineralization
and recorded the following interval:




o
            DDH Q6,238.0m grading
      0.2 g/t gold and 0.2% copper from
220.0m




o
            DDH Q4,101.4m grading
      0.35 g/t gold and 0.2% copper from 212.0m including 6.7m at 1.1 g/t gold
      and 0.2% copper from 180.0m




o
            DDH Q7,130.0m grading
      0.16 g/t gold and 0.06% copper from 160.0m and 9.6m grading 0.11 g/t gold
      and 0.03% copper from 15m




The
gold-copper mineralization remains open on strike and depth with estimated
length over 1,000m, a width 80 to120 meters and length in dip direction over
300m.





Beskauga
Gold-Copper Prospect





Primary Geology &
Infrastructure


Beskauga
is   a large gold-copper-porphyry system with an area of over 7
km2.  The
deposit area is composed by strongly hydrothermaly altered volcanic and
intrusive rocks with numerous geochemical gold-copper anomalies. The occurrence
belongs to steeply dipping zones of sericite-pyrophyllite-quartz metasomatites
and quartzites developed upon granodiorites intrusions of Late-Ordovician and
Devonian age. Host rocks are volcanogenic sedimentary stratum of Middle-Upper
Ordovician age. The gold-copper mineralization is represented by pyrite and
chalcopyrite, some places by molybdenite.





Beskauga prospect is located 25 km from
nearest rail way station and in vicinity from 1,150kW power
line.





20
 Table of Contents




Exploration works
      & results





The Company has carried out in 2007 on
Beskauga following works:





Beskauga
      2007Volume
              USDDrill
      holes
              drill
      holes
              16meters
      drilled
              m
              4,715
              466,785samples
      treatment
              sample
              4,510Fire
      assays
              assay
              4,510
              95,612ICP
      assays
              assay
              13,530Geol
      mapping
              sq
      km
              10
              334Data
      processing & administration
              
              
              99,818Beskauga
      total cost 2007
              
              
              662,549





The
drilling program of 2007 was targeting large geochemical anomalies of gold,
copper and molybdenum obtained by previous exploration. The drilling led to a
discovery of two large mineralization zones within aureole of hydrothermal
alteration on area over 7 km2. The
drilling confirmed over 2,000 meters of interrupted continuity for each
mineralization zone along strike with an average width of approximately 200
meters for the eastern zone and 60 meters for the western zone. The gold-copper
mineralization remains open on both ends of the zones. The mineralization is
characterized by a steep dipping. It has been traced down to a depth of 400
meters and remains open. Both zones maintain a consistent width from the top to
the bottom and vary only from one exploration fence to another from 70 to 440
meters in the eastern zone and 25m to 100m in the western zone.


The most
representative interceptions were obtained along drilling fences F11 and
F12.





Drilling Fence
F11




The drill
holes of drilling fence F11 extended the results of the historical drilling by
intercepting a bulk mineralization zone that is characterized by impressive
dimensions:




­-
            Length
      over 2,000m


­-
            Width
      over 440m


­-
            Length
      in dip direction over 350m




o
            DDH Bg1,263.9m grading
      0.40g/t gold and 0.20% copper from 38m, including 71.9m at 0.50g/t gold
      and 0.23% copper




o
            DDH Bg2,286.8m grading
      0.39g/t gold and 0.17% copper from 38m, including 64m at 0.61g/t gold and
      0.22% copper




·
            Drilling Fence
      F12




On fence
F12the drill
holes have intersected down to a depth of 400 meters an extensive mineralization
zone consisting of three bodies. The total width of mineralization zone is 280
meters.




o
            DDH Bg3,66.7m at
      0.77g/t gold and 0.70% copper from
38.0m




o
            DDH Bg6,61.7m grading
      0.19g/t gold and 0.12% copper from 37m and 98.6m grading 0.13g/t gold and
      0.11% copper from 122m




The
results of works 2007 was a discovery of bulk low-grade gold-copper
mineralization with extension over 1.5km and a length in dip direction over
350m. The mineralization remains open on strike and depth.





21
 Table of Contents




September 2007
Quarter





Works
      completed on each prospect in quarter September 2007Prospect
            Drill
      holes
            Meters
      drilled
            Sample
      processing
            Assays
            Geological
      mapping
            USDFire
      assay Au
            ICP
            km2Berezki
      East
            1
            306
            315
            315
            1,260
            5
            88,635Quartzite
      Gorka
            1
            401
            420
            420
            1,680
            5
            101,873Anino-Nikolayevo
            23
            4,482
            4,535
            4,535
            18,140
            10
            645,642Beskauga
            5
            1,367
            1,300
            1,300
            3,900
            10
            228,826TOTAL
            30
            6,556
            6,570
            6,570
            24,980
            30
            1,064,976




In
September 2007 quarter the company continued drilling on Berezki East, Quartzite
Gorka, Beskauga prospects and commenced drilling on Anino-Nikolaevo
prospect.





Anino-Nikolaevo
      (AN) Copper-Gold Prospect





Primary Geology &
      Infrastructure





Anino-Nikolaevo
is represented by two sections Anino & Nikolaevo located in same fault zone
and distanced from each other by 2.5km.


The Anino
mineralization is situated in a linear zone of brecciaed and silicified andesite
tuffs. The length of the zone at the surface is 230m by width 5 to 20m. Strong
malachite mineralization is presented at the surface and in historical trenches
and shallow pits.


Anino-Nikolaevo
is located 93km from Ekibastuz town and only 3km from bitumen road and high
voltage power line.





Exploration works &
results





The
interesting results have been achieved only in 2 out of 11 drill holes. DDH#2 on
Fence #2 has obtained and interval of 16.5 m at 2.65% copper. DDH #4 on Fence #3
has intersected 63m at 1.25% copper and was apparently drilled in dip direction.
The entire length of traced mineralization was only 70m. Thus the Anino zone is
represented by pocket-like copper accumulations and therefore is not interested
for further exploration.





Nikolaevo
zone is represented by bulk pyrite mineralization in andesite tuffs. Quite high
gold grades (up to 17g/t) were defined in grab and channel samples from historic
trenches. The company has drilled 12 diamond drill holes to trace these gold
grades. However in all drill holes the gold grades varied from 0.05g/t to 0.6g/t
only. Apparently high gold grades at the surface are related to sporadic gold
accumulations in weathering crust.





Anino-Nikolayevo
      2007Volume
              USDDrill
      holes
              drill
      holes
              23meters
      drilled
              m
              4,482
              443,718samples
      treatment
              sample
              4,535Fire
      assays
              assay
              4,535
              96,142ICP
      assays
              assay
              18,140Geol
      mapping
              sq
      km
              10
              334Data
      processing & administration
              
              
              99,818Anino-Nikolayevo
      total cost 2007
              
              
              640,012




22
 Table of Contents




(D)
            Results
      of Operations





Nine
Months Ended September 30, 2007 versus Nine Months Ended September 30,
2006





For the
nine months ended September 30, 2007 we recorded a net loss of $608,380 (2006
net loss - $879,646) or $0.02 per share (2006 - $0.02).





Expenses
– For the nine months ended September 30, 2007 we recorded expenses of $685,980
(2006 - $901,098). This amount includes, professional fees - accounting $14,373
(2006 - $20,049) and legal $78,334 (2006 - $94,106). Management and consulting
fees were $220,884 (2006 - $154,997), interest, bank charges and foreign
currency exchange losses for September 30, 2007 were $3,648 (2006 – 3,174).
There were no property investigation costs for September 30, 2007, however in
2006 there were costs of $7,525.





For the
nine months ended September 30, 2007 we recorded exploration expenses of
$290,773 (2006 - $530,523). The following is a breakdown of the exploration
expenses by property: Maykubinsk license, Kazakhstan $290,773 (2006 - $0) and
Tomsk Oblast, Russian Federation $0 (2006 - $530,523).





Depreciation
expense – For the nine months ended September 30, 2007 we recorded depreciation
expense of $5,898 (2006 - $0).





(E)
            Capital
      Resources and Liquidity





September
30, 2007 versus September 30, 2006





At
September 30, 2007, we had cash of $1,686,796 (2006 - $3,335,756) and working
capital of $1,807,965 (2006 working capital - $3,491,250) respectively. Total
liabilities as of September 30, 2007 were $1,238,328 as compared to $9,112 on
September 30, 2006, an increase of $1,229,216.





Our
general business strategy is to acquire mineral properties either directly or
through the acquisition of operating entities. Our consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles in the United States of America and applicable to a going concern
which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. As discussed in note 1 to the
financial statements, the Company has incurred recurring operating losses since
inception, has not generated any operating revenues to date and used cash of
$439,313 from operating activities in 2007. The Company requires additional
funds to meet its obligations and maintain its operations.  We do not
have sufficient working capital to (i) pay our administrative and general
operating expenses through September 30, 2008 and (ii) to conduct our
preliminary exploration programs. Without cash flow from operations, we may need
to obtain additional funds (presumably through equity offerings and/or debt
borrowing) in order, if warranted, to implement additional exploration programs
on our properties. While we may attempt to generate additional working capital
through the operation, development, sale or possible joint venture development
of its properties, there is no assurance that any such activity will generate
funds that will be available for operations.  Failure to obtain such
additional financing may result in a reduction of our interest in certain
properties or an actual foreclosure of its interest. We have no agreements or
understandings with any person as to such additional financing.




Our
exploration properties have not commenced commercial production and we have no
history of earnings or cash flow from its operations. While we may attempt to
generate additional working capital through the operation, development, sale or
possible joint venture development of its property, there is no assurance that
any such activity will generate funds that will be available for
operations.





During
the next 12 months we intend to raise additional funds through equity offerings
and/or debt borrowing to meet its administrative/general operating expenses and
to conduct work on our exploration properties. There is, of course, no assurance
that we will be able to do so.





23
 Table of Contents




The
exploration program of Year 2007 has aimed broad review of a large 14,600 sq km
Maikubinsk license area to select most prospective targets for further
exploration.





Out from
over 140 occurrences and mineralized areas the Company has selected 10 prospects
with four of them as top priority prospects:





·
            Beskauga,


·
            Berezki
      East,


·
            Quartzite
      Gorka,


·
            Ushtogan
      Anino-Nikolaevo





Since all
of the prospects undergo in Soviet times preliminary exploration, the Company
has established an exploration program targeting the most advanced prospects by
diamond drilling, intense sampling, metallurgical and mineralogical
studies.





Dostyk
      Exploration Program 2007Program
            Units
            Q-ty
            Price
            Total
      US$Diamond
      drilling
            m
            15,000
            102.89
            1,543,350core
      samples splitting, crushing, pulverization
            sample
            15,000
            11.00
            165,000Assays
            analyse
            17,100
            7.00
            119,700Metallurgical
      test
            sample
            1
            2,850.00
            2,850Resource
      estimation, Kaz standard
            prospect
            2
            8,250.00
            16,500Transportation
            month
            12
            11,000.00
            132,000Subtotal
      drilling+assays+resource
            $
            
            
            1,979,400Exploration
      staff salary
            $
            
            
            83,809Other
      on-site expenses
            $
            
            
            16,282Total
      exploration works
            $
            
            
            2,079,491Overheads
            $
            
            
            30,292Other
      administration expenses
            $
            
            
            66,000Sub
      total
            $
            
            
            2,175,783Sundries
      5 %
            $
            
            
            108,789Total
            $
            
            
            2,284,572




The
accounting policies and methods we utilize in the preparation of our unaudited
consolidated financial statements determine how we report our financial
condition and results of operations and may require our management to make
estimates or rely on assumptions about matters that are inherently uncertain.
Our accounting policies are described in note 2 of our December 31, 2006 and
September 30, 2007 unaudited consolidated financial statements. Our accounting
policies relating to depreciation and amortization of property, plant and
equipment are critical accounting policies that are subject to estimates and
assumptions regarding future activities.




Depreciation
is based on the estimated useful lives of the assets and is computed using the
straight-line method.  Equipment is recorded at
cost.  Depreciation is provided over the following useful
lives:  vehicles 10 years and office equipment, furniture and fixtures
2 to 5 years.





Exploration
costs are charged to operations as incurred until such time that proven reserves
are discovered. From that time forward, the Company will capitalize all costs to
the extent that future cash flow from mineral reserves equals or exceeds the
costs deferred. The deferred costs will be amortized over the recoverable
reserves when a property reaches commercial production. As at September 30, 2007
and December 31, 2006, the Company did not have proven reserves.





Exploration
activities conducted jointly with others are reflected at the Company's
proportionate interest in such activities.





24
 Table of Contents




Costs
related to site restoration programs are accrued over the life of the
project.





US GAAP
requires us to consider at the end of each accounting period whether or not
there has been an impairment of the capitalized property, plant and equipment.
This assessment is based on whether factors that may indicate the need for a
write-down are present. If we determine there has been impairment, then we would
be required to write-down the recorded value of its property, plant and
equipment costs which would reduce our earnings and net assets.





(G)
            Off-balance
      Sheet Arrangements and Contractual
Obligations





We do not
have any off-balance sheet arrangements or contractual obligations that are
likely to have or are reasonably likely to have a material current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that have not been disclosed in our financial statements.




Item 3.
            Qualitative
      and Quantitative Disclosures About Market
Risk





Our
exposure to market risk is confined to our cash equivalents and short-term
investments. We invest in high-quality financial instruments; primarily money
market funds, federal agency notes, and US Treasury obligations, with the
effective duration of the portfolio within one year which we believe are subject
to limited credit risk. We currently do not hedge interest rate exposure. Due to
the short-term nature of our investments, we do not believe that we have any
material exposure to interest rate risk arising from our
investments.





Item 4T.
            Controls
      and Procedures




Attached
as exhibits to this Interim Report on Form 10-Q are certifications of
our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), which
are required pursuant to Rule 13a-14 of the Exchange Act. This “Controls and
Procedures” section of this Interim Report on Form 10-Q includes information
concerning the controls and controls evaluation referenced in the
certifications. This section of the Interim Report on Form 10-Q should be read
in conjunction with the certifications for a more complete understanding of the
matters presented.




We
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this Interim
Report on Form 10-Q. Disclosure controls and procedures are designed to ensure
that information required to be disclosed in our reports filed under the
Exchange Act, such as this Interim Report on Form 10-Q is recorded, processed,
summarized and reported within the time periods specified by the SEC. Disclosure
controls are also designed to ensure that such information is accumulated and
communicated to our management, including the CEO and CFO, as appropriate, to
allow timely decisions regarding required disclosure.




Based on
the evaluation, our Chief Executive Officer and Chief Financial
Officer, after evaluating the effectiveness of our “disclosure controls and
procedures” (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), have
concluded that, subject to the inherent limitations noted in this Part II,
Item 4, as of September 30, 2007, our disclosure controls and procedures
were not effective due to the existence of several material weaknesses in our
internal control over financial reporting, as discussed below.





Limitations
on Effectiveness of Controls





Our
management, including our Chief Executive Officer and Chief
Financial Officer, does not expect that our disclosure controls or our
internal control over financial reporting will prevent all errors and all fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of a simple
error or mistake. Additional controls can be circumvented by the individual acts
of some persons, by collusion of two or more people, or by management override
of the controls. The design of any system of controls also is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.





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 Table of Contents




Material
Weaknesses Identified





In
connection with the preparation of our consolidated financial statements for the
period ended September 30, 2007, certain significant deficiencies in internal
control became evident to management that represent material weaknesses,
including,





(i)
            Lack
      of a sufficient number of independent directors for our board and audit
      committee.  We currently only have one independent director on
      our board, which is comprised of two directors, and on our audit
      committee, which is comprised of two directors. As a publicly-traded
      company, we should strive to have a majority of our board of directors be
      independent.


(ii)
            Lack
      of an independent financial expert on our audit committee.  We
      currently do not have an independent audit committee financial expert on
      our audit committee as defined by the SEC.  Pursuant to Section
      407, we are required to disclose whether we have at least one "audit
      committee financial expert" on our audit committee in addition to whether
      the expert is independent of management. Since we do not have an
      independent audit committee financial expert, we have disclosed this fact;
      however, it is still the expectation that we obtain a financial expert on
      our audit committee.


(iii)
            Insufficient
      segregation of duties in our finance and accounting functions due to
      limited personnel.  During the period ended September 30, 2007,
      we had one person on staff at our executive office and two persons at our
      Kazakhstan office that performed nearly all aspects of our financial
      reporting process, including, but not limited to, access to the underlying
      accounting records and systems, the ability to post and record journal
      entries and responsibility for the preparation of the financial
      statements.  This creates certain incompatible duties and a lack
      of review over the financial reporting process that would likely result in
      a failure to detect errors in spreadsheets, calculations, or assumptions
      used to compile the financial statements and related disclosures as filed
      with the SEC.  These control deficiencies could result in a
      material misstatement to our interim or annual consolidated financial
      statements that would not be prevented or
  detected.


(iv)
            Insufficient
      corporate governance policies.  Although we have a code of
      ethics which provides broad guidelines for corporate governance, our
      corporate governance activities and processes are not always formally
      documented.  Specifically, decisions made by the board to be
      carried out by management should be documented and communicated on a
      timely basis to reduce the likelihood of any misunderstandings regarding
      key decisions affecting our operations and
  management.





Plan
for Remediation of Material Weaknesses





We intend
to take appropriate and reasonable steps to make the necessary improvements to
remediate these deficiencies. We intend to consider the results of our
remediation efforts and related testing as part of our year-end 2007 assessment
of the effectiveness of our internal control over financial
reporting.




We have
implemented certain remediation measures and are in the process of designing and
implementing additional remediation measures for the material weaknesses
described in this Quarterly Report on Form 10-Q. Such remediation activities
include the following:




•
            We
      continue to recruit one or more additional independent board members to
      join our board of directors.  We continue to recruit at least
      one additional financial expert to join as an independent board member and
      as an audit committee member.




•
            In
      addition, we will continue to update the documentation of our internal
      control processes, including formal risk assessment of our financial
      reporting processes.




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 Table of Contents




Changes
in Internal Controls over Financial Reporting





There
were no significant changes in the Company’s internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the most recent fiscal quarter that materially affected, or
are reasonably likely to materially affect, our internal control over financing
reporting.








PART
II. OTHER
INFORMATION





Item 1.
            Legal
      Proceedings





We are
not party to any litigation, and have no knowledge of any pending or threatened
litigation against us.





Item 1A.
            Risk
      Factors





Not
      Applicable





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





Not
Applicable





Item 3.
            Defaults
      Upon Senior Securities





Not
Applicable





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





Not
Applicable





Item 5.
            Other
      Information





None.





Item 6.
            Exhibits





3.1.1
            Certificate
      of Incorporation incorporated by reference to the registration statement
      on Form 10SB filed on September 16, 1999 (SEC File No. 000-27355
      99712713). *





3.1.2
            Certificate
      of Amendment to the Certificate of Incorporation incorporated by reference
      to the Form 10SB12G filed on September 16, 1999 (SEC File No. 000-27355
      99712713).*





3.2.1
            By-laws
      incorporated by reference to the Form 10SB12G filed on September 16, 1999
      (SEC File No. 000-27355 99712713).
*





10.1.1
            Haldeevskaya
      Joint Activity Agreement dated August 30, 2004, incorporated by reference
      to the Form 10-KSB filed on June 6, 2006 (SEC File No.
      000-27355-06888704). *





10.1.2
            Amendment
      to Haldeevskaya Joint Activity Agreement dated April 22, 2005,
      incorporated by reference to the Form 10-KSB filed on June 6, 2006 (SEC
      File No. 000-27355-06888704). *





10.1.3
            Amendment
      to Haldeevskaya Joint Activity Agreement dated December 31, 2005,
      incorporated by reference to the Form 10-KSB filed on June 6, 2006 (SEC
      File No. 000-27355-06888704). *





10.1.4
            Amendment
      to Haldeevskaya Joint Activity Agreement dated July 7, 2006, incorporated
      by reference to the Form 10-QSB filed on August 14, 2006 (SEC File No.
      000-27355-061028644). *





27
 Table of Contents




10.2.1
            Tugoyakovka
      Joint Activity Agreement dated June 17, 2005, incorporated by reference to
      the Form 10-KSB filed on June 6, 2006 (SEC File No. 000-27355-06888704).
      *





10.2.2
            Amendment
      to Tugoyakovka Joint Activity Agreement dated December 31, 2005,
      incorporated by reference to the Form 10-KSB filed on June 6, 2006 (SEC
      File No. 000-27355-06888704). *





10.2.3
            Amendment
      to Tugoyakovka Joint Activity Agreement dated July 7, 2006, incorporated
      by reference to the Form 10-QSB filed on August 14, 2006 (SEC File No.
      000-27355-061028644). *





31.1
            Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      302 of the Sarbanes-Oxley Act of
2002





32.1
            Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002





99.1
            Corporate
      Governance Principles, incorporated by reference to the registration
      statement on Form 10KSB filed on November 4, 2004 SEC File No. 000-27355
      041117794). *





*
Previously filed





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Cigma Metals CorporationRegistrantDate:February
      17, 2010
            BY:
            /s/ Agustin Gomez de
  SeguraAgustin
      Gomez de SeguraDirectorDate:
      February 17,
      2010
            BY:
            /s/ Waldemar MuellerWaldemar
      MuellerDirector







28