##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549





FORM 10-Q







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

For the Quarterly Period Ended June 30, 2009.



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------





AURELIO RESOURCE CORPORATION

(Exact name of registrant as specified in
its charter)







|                                                               |  |                       |  |                                     
|-------------------------------------------------------------- |  | --------------------- |  | ------------------------------------
|Nevada                                                         |  | 000-50931             |  | 33-1086828                          
|(State or other jurisdiction of incorporation or organization) |  | (Commission File No.) |  | (I.R.S. Employer Identification No.)



|                                                       |  |           
|------------------------------------------------------ |  | ----------
|Suite 202, 12345 W Alameda Parkway, Lakewood, Colorado |  | 80228     
|(Address of principal executive offices)               |  | (Zip Code)

(303) 795 - 3030

(Registrants telephone number, including area code)





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 the filing requirements for at least the past 90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

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



|                        |  |   |  |                   |  |  
|----------------------- |  | - |  | ----------------- |  | -
|Large Accelerated Filer |  |  ̈ |  | Accelerated Filer |  |  ̈
|                        |  |   | 
|Non-Accelerated Filer   |  |  ̈ |  | Smaller Reporting |  | x

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

As of August 14, 2009 the registrant had 97,239,127 common shares outstanding.









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##### Table of Contents

AURELIO RESOURCE CORPORATION.

FORM 10-Q

FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 2009

TABLE OF CONTENTS



|                               |  |                                                                                                                                          |  |         
|------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                               |  |                                                                                                                                          |  | PAGE NO.
|Part I  Financial Information |  |                                                                                                                                         
|                               |  |                                                                                                                                         
|Item 1.                        |  | Unaudited Consolidated Financial Statements                                                                                              |  |         
|                               |  |                                                                                                                                         
|a.                             |  | Unaudited Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008                                                          |  | 3       
|                               |  |                                                                                                                                         
|b.                             |  | Unaudited Consolidated Statements of Operations for the six months ended June 30, 2009 and 2008 and from February 19, 2004 (Inception)   |  | 4       
|                               |  |                                                                                                                                         
|c.                             |  | Unaudited Consolidated Statement of Stockholders Equity (Deficit) from February 19, 2004 (Inception) through June 30, 2009              |  | 5       
|                               |  |                                                                                                                                         
|d.                             |  | Unaudited Consolidated Statements of Cash Flows for the three months ended June 30, 2009 and 2008 and from February 19, 2004 (Inception) |  | 7       
|                               |  |                                                                                                                                         
|e.                             |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                                           |  | 9       
|                               |  |                                                                                                                                         
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                    |  | 24      
|                               |  |                                                                                                                                         
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                               |  | 28      
|                               |  |                                                                                                                                         
|Item 4.                        |  | Controls and Procedures                                                                                                                  |  | 28      
|                               | 
|Part II  Other Information    |  |                                                                                                                                         
|                               |  |                                                                                                                                         
|Item 1.                        |  | Legal Proceedings                                                                                                                        |  | 29      
|                               |  |                                                                                                                                         
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                              |  | 29      
|                               |  |                                                                                                                                         
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                                          |  | 29      
|                               |  |                                                                                                                                         
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                                                      |  | 29      
|                               |  |                                                                                                                                         
|Item 5.                        |  | Other Information                                                                                                                        |  | 29      
|                               |  |                                                                                                                                         
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                                                         |  | 29      
|                               | 
|Signatures                     |  | 29                                                                                                                                      



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##### Table of Contents

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                 |  |               |            |   |               |   |            |  
|------------------------------------------------------------------------------------------------ |  | ------------- | ---------- | - | ------------- | - | ---------- | -
|                                                                                                 |  | June 30, 2009 |            |   | Dec. 31, 2008 |  
|                                                                                                 |  | (unaudited)   |            |   |               |  
|ASSETS                                                                                           |  |               |            |   |               |   |            |  
|Current assets                                                                                   |  |               |            |   |               |   |            |  
|Cash                                                                                             |  | $             | 353,267    |   |               | $ | 103,793    |  
|Receivable from Telifonda                                                                        |  |               | 257,349    |   |               |   | 216,689    |  
|Prepaid expenses and other                                                                       |  |               | 52,749     |   |               |   | 50,376     |  
|                                                                                                 |  |               |            |   |               |   |            |  
|Total current assets                                                                             |  |               | 663,365    |   |               |   | 370,858    |  
|                                                                                                 |  |               |            |   |               |   |            |  
|Mining claims                                                                                    |  |               | 3,818,767  |   |               |   | 4,240,470  |  
|Equipment, net                                                                                   |  |               | 53,203     |   |               |   | 89,389     |  
|                                                                                                 |  |               |            |   |               |   |            |  
|                                                                                                 |  |               | 3,871,970  |   |               |   | 4,329,859  |  
|                                                                                                 |  |               |            |   |               |   |            |  
|Total Assets                                                                                     |  | $             | 4,535,335  |   |               | $ | 4,700,717  |  
|                                                                                                 |  |               |            |   |               |   |            |  
|LIABILITIES & STOCKHOLDERS EQUITY                                                               |  |               |            |   |               |   |            |  
|Current liabilities                                                                              |  |               |            |   |               |   |            |  
|Accounts payable and accrued expenses                                                            |  | $             | 70,104     |   |               | $ | 170,872    |  
|Accounts payable-related parties                                                                 |  |               |           |   |               |   | 218,481    |  
|Short term note payable                                                                          |  |               |           |   |               |   | 2,000,000  |  
|Current portion of long-term debt                                                                |  |               |           |   |               |   | 798,166    |  
|                                                                                                 |  |               |            |   |               |   |            |  
|Total current liabilities                                                                        |  |               | 70,104     |   |               |   | 3,187,519  |  
|                                                                                                 |  |               |            |   |               |   |            |  
|Long-term debt                                                                                   |  |               |           |   |               |   | 1,664,000  |  
|                                                                                                 |  |               |            |   |               |   |            |  
|Total Liabilities                                                                                |  |               | 70,104     |   |               |   | 4,851,519  |  
|                                                                                                 |  |               |            |   |               |   |            |  
|Stockholders Equity                                                                             |  |               |            |   |               |   |            |  
|Common stock, $0.001 par value; 400,000,000 shares authorized; 97,049,195 issued and outstanding |  |               | 97,049     |   |               |   | 40,417     |  
|Preferred stock, $0.01 par value; 87,500,000 shares authorized; 0 issued and outstanding         |  |               |           |   |               |   |           |  
|Warrants                                                                                         |  |               | 98,333     |   |               |   | 321,813    |  
|Additional paid in capital                                                                       |  |               | 11,854,028 |   |               |   | 7,244,506  |  
|Deficit accumulated during the exploration stage                                                 |  |               | (7,572,149 | ) |               |   | (7,740,859 | )
|Cumulative effect of currency translation                                                        |  |               | (12,030    | ) |               |   | (16,679    | )
|                                                                                                 |  |               |            |   |               |   |            |  
|Total Stockholders Equity                                                                       |  |               | 4,465,231  |   |               |   | (150,802   | )
|                                                                                                 |  |               |            |   |               |   |            |  
|Total Liabilities and Stockholders Equity                                                       |  | $             | 4,535,335  |   |               | $ | 4,700,717  |  
|                                                                                                 |  |               |            |   |               |   |            |  

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



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##### Table of Contents

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                     |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|---------------------------------------------------- |  | ------------------------------ | ---------- | - | ------------------------------ | - | ---------- | ---------------------------- |  | - | ---------------------------- | - |  | -------------------------------------------- | ---------- | - |  | - | ---------- | -
|                                                     |  | Three MonthsEndedJune 30, 2009 |            |   | Three MonthsEndedJune 30, 2008 |   |            | Six MonthsEndedJune 30, 2009 |  |   | Six MonthsEndedJune 30, 2008 |   |  | Feb. 19, 2004(Inception)ThroughJune 30, 2009 |           
|Revenue                                              |  | $                              |           |   |                                | $ |           |                              |  | $ |                             |   |  | $                                            |           |   |  | $ |           |  
|                                                     |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Expenses:                                            |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Depreciation                                         |  |                                | 2,317      |   |                                |   | 4,023      |                              |  |   | 5,590                        |   |  |                                              | 7,722      |   |  |   | 37,808     |  
|General and administrative                           |  |                                | 60,250     |   |                                |   | 247,670    |                              |  |   | 144,138                      |   |  |                                              | 202,351    |   |  |   | 2,419,253  |  
|Mineral property expenditures                        |  |                                | 16,140     |   |                                |   | 125,002    |                              |  |   | 62,119                       |   |  |                                              | 248,214    |   |  |   | 2,195,281  |  
|Professional fees                                    |  |                                | 92,550     |   |                                |   | 205,728    |                              |  |   | 229,111                      |   |  |                                              | 337,993    |   |  |   | 1,812,802  |  
|                                                     |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|                                                     |  |                                | 171,257    |   |                                |   | 582,423    |                              |  |   | 440,958                      |   |  |                                              | 796,280    |   |  |   | 6,465,144  |  
|                                                     |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Loss from operations                                 |  |                                | (171,257   | ) |                                |   | (582,423   | )                            |  |   | (440,958                     | ) |  |                                              | (796,280   | ) |  |   | (6,465,144 | )
|Other income (expense)                               |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Other income                                         |  |                                | 12,545     |   |                                |   |           |                              |  |   | 28,516                       |   |  |                                              |           |   |  |   | 88,164     |  
|Interest income                                      |  |                                | 25,201     |   |                                |   | 4,107      |                              |  |   | 25,221                       |   |  |                                              | 8,525      |   |  |   | 53,685     |  
|Other expense                                        |  |                                | (76        | ) |                                |   |           |                              |  |   | (96                          | ) |  |                                              |           |   |  |   | (96        | )
|Loss on debentures                                   |  |                                |           |   |                                |   |           |                              |  |   |                             |   |  |                                              |           |   |  |   | (407,714   | )
|Loss on sale of assets                               |  |                                |           |   |                                |   |           |                              |  |   | (1,476,789                   | ) |  |                                              |           |   |  |   | (1,476,789 | )
|Interest expense                                     |  |                                | (175,100   | ) |                                |   | (449,328   | )                            |  |   | (196,122                     | ) |  |                                              | (857,261   | ) |  |   | (1,593,193 | )
|Income (loss) before provision for income tax        |  |                                | (175,100   | ) |                                |   | (1,027,644 | )                            |  |   | (2,071,785                   | ) |  |                                              | (1,645,016 | ) |  |   | (9,812,644 | )
|                                                     |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Provision for income tax                             |  |                                |           |   |                                |   |           |                              |  |   |                             |   |  |                                              |           |   |  |   |           |  
|Net income (loss)                                    |  |                                | (308,687   | ) |                                |   | (1,027,644 | )                            |  |   | (2,060,228                   | ) |  |                                              | (1,645,016 | ) |  |   | (9,801,087 | )
|Other comprehensive income (loss) - net of tax       |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Foreign currency translation gains (losses)          |  |                                | 4,676      |   |                                |   | 598        |                              |  |   | 4,649                        |   |  |                                              | 252        |   |  |   | (12,030    | )
|                                                     |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Comprehensive income (loss)                          |  |                                | (304,011   | ) |                                |   | (1,027,046 | )                            |  |   | (2,060,228                   | ) |  |                                              | (1,644,764 | ) |  |   | (9,801,087 | )
|                                                     |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Net income (loss) per share                          |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|(Basic and fully diluted)                            |  |                                | (0.01      | ) |                                |   | (0.03      | )                            |  |   | (0.04                        | ) |  |                                              | (0.04      | ) |  |   |            |  
|                                                     |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Weighted average number of common shares outstanding |  |                                | 55,105,899 |   |                                |   | 40,132,922 |                              |  |   | 49,761,357                   |   |  |                                              | 38,989,659 |   |  |   |            |  
|                                                     |  |                                |            |   |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  

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



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##### Table of Contents

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)



|                                                                |        |              |   |        |   |         |                          |  |                                          |   |  |                                        |           |  |                                   |            |   |  |   |        |   |  |   |           |  
|--------------------------------------------------------------- | ------ | ------------ | - | ------ | - | ------- | ------------------------ |  | ---------------------------------------- | - |  | -------------------------------------- | --------- |  | --------------------------------- | ---------- | - |  | - | ------ | - |  | - | --------- | -
|                                                                |        | Common Stock |   |        |   |         | AdditionalPaid-inCapital |  | DeficitAccumulatedDuringExplorationStage |   |  | CumulativeEffect ofCurrencyTranslation |           |  | TotalStockholdersEquity(Deficit) |           
|                                                                | Shares |              |   | Amount |   |         | Warrants                 |  |                                          |   | 
|Balance, February 19, 2004 (date of inception)                  |        |             |   |        | $ |        |                          |  | $                                        |  |  | $                                      |          |  | $                                 |           |   |  | $ |       |   |  | $ |          |  
|Common stock issued for cash at $0.002 per share, March 2004    |        | 13,000,000   |   |        |   | 13,000  |                          |  |                                          |  |  |                                        | 7,000     |  |                                   |           |   |  |   |       |   |  |   | 20,000    |  
|Common stock issued for cash at $0.004 per share, April 2004    |        | 18,200,000   |   |        |   | 18,200  |                          |  |                                          |  |  |                                        | 51,800    |  |                                   |           |   |  |   |       |   |  |   | 70,000    |  
|Common stock issued for cash at $0.03 per share, May 2004       |        | 201,500      |   |        |   | 202     |                          |  |                                          |  |  |                                        | 5,998     |  |                                   |           |   |  |   |       |   |  |   | 6,200     |  
|Net loss                                                        |        |             |   |        |   |        |                          |  |                                          |  |  |                                        |          |  |                                   | (14,607    | ) |  |   |       |   |  |   | (14,607   | )
|                                                                |        |              |   |        |   |         |                          |  |                                          |   |  |                                        |           |  |                                   |            |   |  |   |        |   |  |   |           |  
|Balance,May 31, 2004                                            |        | 31,401,500   |   |        |   | 31,402  |                          |  |                                          |  |  |                                        | 64,798    |  |                                   | (14,607    | ) |  |   |       |   |  |   | 81,593    |  
|Net loss                                                        |        |             |   |        |   |        |                          |  |                                          |  |  |                                        |          |  |                                   | (60,698    | ) |  |   |       |   |  |   | (60,698   | )
|                                                                |        |              |   |        |   |         |                          |  |                                          |   |  |                                        |           |  |                                   |            |   |  |   |        |   |  |   |           |  
|Balance,May 31, 2005                                            |        | 31,401,500   |   |        |   | 31,402  |                          |  |                                          |  |  |                                        | 64,798    |  |                                   | (75,305    | ) |  |   |       |   |  |   | 20,895    |  
|Net loss                                                        |        |             |   |        |   |        |                          |  |                                          |  |  |                                        |          |  |                                   | (36,750    | ) |  |   |       |   |  |   | (36,750   | )
|                                                                |        |              |   |        |   |         |                          |  |                                          |   |  |                                        |           |  |                                   |            |   |  |   |        |   |  |   |           |  
|Balance,May 31, 2006                                            |        | 31,401,500   |   |        |   | 31,402  |                          |  |                                          |  |  |                                        | 64,798    |  |                                   | (112,055   | ) |  |   |       |   |  |   | (15,855   | )
|Common stock returned for cancellation                          |        | (12,965,000  | ) |        |   | (12,965 | )                        |  |                                          |  |  |                                        | 12,965    |  |                                   |           |   |  |   |       |   |  |   |          |  
|Common stock issued for acquisition of Subsidiaries             |        | 10,000,000   |   |        |   | 10,000  |                          |  |                                          |  |  |                                        | 440,000   |  |                                   |           |   |  |   |       |   |  |   | 450,000   |  
|Common stock issued for cash at $0.40 per share, September 2006 |        | 4,000,000    |   |        |   | 4,000   |                          |  |                                          |  |  |                                        | 1,596,000 |  |                                   |           |   |  |   |       |   |  |   | 1,600,000 |  
|Common stock options issued                                     |        |             |   |        |   |        |                          |  |                                          |  |  |                                        | 168,000   |  |                                   |           |   |  |   |       |   |  |   | 168,000   |  
|Net loss                                                        |        |             |   |        |   |        |                          |  |                                          |  |  |                                        |          |  |                                   | (957,221   | ) |  |   | (1,580 | ) |  |   | (958,801  | )
|                                                                |        |              |   |        |   |         |                          |  |                                          |   |  |                                        |           |  |                                   |            |   |  |   |        |   |  |   |           |  
|Balance, December 31, 2006                                      |        | 32,436,500   |   |        |   | 32,437  |                          |  |                                          |  |  |                                        | 2,281,763 |  |                                   | (1,069,276 | ) |  |   | (1,580 | ) |  |   | 1,243,344 |  
|                                                                |        |              |   |        |   |         |                          |  |                                          |   |  |                                        |           |  |                                   |            |   |  |   |        |   |  |   |           |  

(Continued On Following Page)



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##### Table of Contents

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY (DEFICIT)

(Continued From Previous Page)



|                                                     |        |              |        |         |        |  |                          |          |   |                                          |   |            |                                        |  |   |                                   |   |  |   |         |   |  |   |            |  
|---------------------------------------------------- | ------ | ------------ | ------ | ------- | ------ |  | ------------------------ | -------- | - | ---------------------------------------- | - | ---------- | -------------------------------------- |  | - | --------------------------------- | - |  | - | ------- | - |  | - | ---------- | -
|                                                     |        | Common Stock |        | Warrant |        |  | AdditionalPaid-inCapital |          |   | DeficitAccumulatedDuringExplorationStage |   |            | CumulativeEffect ofCurrencyTranslation |  |   | TotalStockholdersEquity(Deficit) |  
|                                                     | Shares |              | Amount |         |        |  |                          |         
|Balance, December 31, 2006, from prior page          |        | 32,436,500   |        |         | 32,437 |  |                          |         |   |                                          |   | 2,281,763  |                                        |  |   | (1,069,276                        | ) |  |   | (1,580  | ) |  |   | 1,243,344  |  
|Issuance of stock options                            |        |             |        |         |       |  |                          |         |   |                                          |   | 405,500    |                                        |  |   |                                  |   |  |   |        |   |  |   | 405,500    |  
|Issued for cash                                      |        | 1,476,555    |        |         | 1,477  |  |                          |         |   |                                          |   | 1,327,423  |                                        |  |   |                                  |   |  |   |        |   |  |   | 1,328,900  |  
|Issued for services                                  |        | 584,100      |        |         | 584    |  |                          |         |   |                                          |   | 462,671    |                                        |  |   |                                  |   |  |   |        |   |  |   | 463,255    |  
|Exercise of stock options                            |        | 150,000      |        |         | 150    |  |                          |         |   |                                          |   | 118,350    |                                        |  |   |                                  |   |  |   |        |   |  |   | 118,500    |  
|Net loss                                             |        |             |        |         |       |  |                          |         |   |                                          |   |           |                                        |  |   | (3,379,987                        | ) |  |   | (1,675  | ) |  |   | (3,381,662 | )
|                                                     |        |              |        |         |        |  |                          |          |   |                                          |   |            |                                        |  |   |                                   |   |  |   |         |   |  |   |            |  
|Balance, December 31, 2007                           |        | 34,647,155   |        |         | 34,648 |  |                          |         |   |                                          |   | 4,595,707  |                                        |  |   | (4,449,263                        | ) |  |   | (3,255  | ) |  |   | 177,837    |  
|Issued for cash                                      |        | 3,333,334    |        |         | 3,333  |  |                          | 321,813  |   |                                          |   | 674,854    |                                        |  |   |                                  |   |  |   |        |   |  |   | 1,000,000  |  
|Issuance of stock options                            |        |             |        |         |       |  |                          |         |   |                                          |   | 28,101     |                                        |  |   |                                  |   |  |   |        |   |  |   | 28,101     |  
|Issued for services at $0.36 per share               |        | 1,899,300    |        |         | 1,899  |  |                          |          |   |                                          |   | 682,089    |                                        |  |   |                                   |   |  |   |         |   |  |   | 683,988    |  
|Issued for services at $0.28 per share               |        | 267,855      |        |         | 268    |  |                          |         |   |                                          |   | 74,732     |                                        |  |   |                                  |   |  |   |        |   |  |   | 75,000     |  
|Forfeiture of stock options                          |        |             |        |         |       |  |                          |         |   |                                          |   | (348,500   | )                                      |  |   |                                  |   |  |   |        |   |  |   | (348,500   | )
|Discount on issuance of debentures                   |        |             |        |         |       |  |                          |         |   |                                          |   | 1,275,018  |                                        |  |   |                                  |   |  |   |        |   |  |   | 1,275,018  |  
|Beneficial conversion feature of debentures          |        |             |        |         |       |  |                          |         |   |                                          |   | 224,982    |                                        |  |   |                                  |   |  |   |        |   |  |   | 224,982    |  
|Issued in exchange for office rent                   |        | 58,053       |        |         | 58     |  |                          |         |   |                                          |   | 8,195      |                                        |  |   |                                  |   |  |   |        |   |  |   | 8,253      |  
|Issued in exchange for leasehold improvements        |        | 210,993      |        |         | 211    |  |                          |         |   |                                          |   | 29,328     |                                        |  |   |                                  |   |  |   |        |   |  |   | 29,539     |  
|Net loss                                             |        |             |        |         |       |  |                          |         |   |                                          |   |           |                                        |  |   | (3,291,596                        | ) |  |   | (13,424 | ) |  |   | (3,305,020 | )
|                                                     |        |              |        |         |        |  |                          |          |   |                                          |   |            |                                        |  |   |                                   |   |  |   |         |   |  |   |            |  
|Balance, December 31, 2008                           |        | 40,416,690   |        |         | 40,417 |  |                          | 321,813  |   |                                          |   | 7,244,506  |                                        |  |   | (7,740,859                        | ) |  |   | (16,679 | ) |  |   | (150,802   | )
|Issued for services at $0.03 per share               |        | 4,222,223    |        |         | 4,222  |  |                          |         |   |                                          |   | 122,445    |                                        |  |   |                                  |   |  |   |        |   |  |   | 126,667    |  
|Sale of subsidiary                                   |        |             |        |         |       |  |                          |         |   |                                          |   |           |                                        |  |   | 2,228,938                         |   |  |   |        |   |  |   | 2,228,938  |  
|Net loss                                             |        |             |        |         |       |  |                          |         |   |                                          |   |           |                                        |  |   | (1,751,541                        | ) |  |   | (27     | ) |  |   | (1,751,568 | )
|                                                     |        |              |        |         |        |  |                          |          |   |                                          |   |            |                                        |  |   |                                   |   |  |   |         |   |  |   |            |  
|Balance,March 31, 2009 (unaudited)                   |        | 44,638,913   |        | $       | 44,639 |  | $                        | 321,813  |   |                                          | $ | 7,366,951  |                                        |  | $ | (7,263,462                        | ) |  | $ | (16,706 | ) |  | $ | 453,235    |  
|                                                     |        |              |        |         |        |  |                          |          |   |                                          |   |            |                                        |  |   |                                   |   |  |   |         |   |  |   |            |  
|Issued for services at $0.0842 per share             |        | 380,418      |        |         | 380    |  |                          |         |   |                                          |   | 31,660     |                                        |  |   |                                  |   |  |   |        |   |  |   | 32,040     |  
|Issued for services at $0.057 per share              |        | 789,474      |        |         | 790    |  |                          |         |   |                                          |   | 42,211     |                                        |  |   |                                  |   |  |   |        |   |  |   | 45,000     |  
|Issued for services at $0.029 per share              |        | 1,551,723    |        |         | 1,552  |  |                          |         |   |                                          |   | 43,448     |                                        |  |   |                                  |   |  |   |        |   |  |   | 45,000     |  
|Issued for services at $0.10 per share               |        | 522,000      |        |         | 522    |  |                          |         |   |                                          |   | 51,678     |                                        |  |   |                                  |   |  |   |        |   |  |   | 52,200     |  
|Issued for exploration properties at $0.08 per share |        | 47,500,000   |        |         | 47,500 |  |                          |         |   |                                          |   | 3,752,500  |                                        |  |   |                                  |   |  |   |        |   |  |   | 3,800,000  |  
|Issued for cash                                      |        | 1,666,667    |        |         | 1,667  |  |                          |         |   |                                          |   | 165,000    |                                        |  |   |                                  |   |  |   |        |   |  |   | 166,667    |  
|Revaluation of warrants                              |        |             |        |         |       |  |                          | (223,480 | ) |                                          |   | 398,580    |                                        |  |   |                                  |   |  |   |        |   |  |   | 175,100    |  
|Net loss                                             |        |             |        |         |       |  |                          |         |   |                                          |   |           |                                        |  |   | (308,687                          | ) |  |   | 4,676   |   |  |   | (304,011   | )
|Balance, June 30, 2009 (unaudited)                   |        | 97,049,195   |        | $       | 97,050 |  |                          | 98,333   |   |                                          |   | 11,854,028 |                                        |  |   | (7,572,149                        | ) |  |   | (12,030 | ) |  |   | 4,465,231  |  
|                                                     |        |              |        |         |        |  |                          |          |   |                                          |   |            |                                        |  |   |                                   |   |  |   |         |   |  |   |            |  

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



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##### Table of Contents

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                                     |  |                                |   |  |                                |   |  |                              |   |  |                              |   |  |                                              |  
|---------------------------------------------------------------------------------------------------- |  | ------------------------------ | - |  | ------------------------------ | - |  | ---------------------------- | - |  | ---------------------------- | - |  | -------------------------------------------- | -
|                                                                                                     |  | Three MonthsEndedJune 30, 2009 |   |  | Three MonthsEndedJune 30, 2008 |   |  | Six MonthsEndedJune 30, 2009 |   |  | Six MonthsEndedJune 30, 2008 |   |  | Feb. 19, 2004(Inception)ThroughJune 30, 2009 |  
|Cash Flows From Operating Activities:                                                                |  |                                |   |  |                                |   |  |                              |   |  |                              |   |  |                                              |  
|Net loss                                                                                             |  | (308,687                       | ) |  | (1,027,644                     | ) |  | (2,060,228                   | ) |  | (1,645,016                   | ) |  | (9,801,087                                   | )
|Adjustments to reconcile comprehensive loss to net cash provided by (used for) operating activities: |  |                                |   |  |                                |   |  |                              |   |  |                              |   |  |                                              |  
|Depreciation                                                                                         |  | 2,317                          |   |  | 4,023                          |   |  | 5,590                        |   |  | 7,722                        |   |  | 37,808                                       |  
|Stock-based compensation                                                                             |  | 174,240                        |   |  | 75,000                         |   |  | 206,280                      |   |  | 438,254                      |   |  | 1,214,030                                    |  
|Interest, amortization of discount on debentures                                                     |  |                               |   |  | 393,756                        |   |  |                             |   |  | 543,757                      |   |  | 867,304                                      |  
|Loss on extinguishment of debentures                                                                 |  |                               |   |  |                               |   |  |                             |   |  |                             |   |  | 407,714                                      |  
|Beneficial conversion feature of debentures                                                          |  |                               |   |  |                               |   |  |                             |   |  | 224,982                      |   |  | 224,982                                      |  
|Rent expense                                                                                         |  |                               |   |  |                               |   |  | 2,177                        |   |  |                             |   |  | 10,430                                       |  
|Stock in exchange for mining claim                                                                   |  | 3,800,000                      |   |  |                               |   |  | 3,800,000                    |   |  |                             |   |  | 3,800,000                                    |  
|Value adjustment of warrants                                                                         |  | 175,100                        |   |  |                               |   |  | 175,100                      |   |  |                             |   |  | 175,100                                      |  
|                                                                                                     |  |                                |   |  |                               
|Changes in current assets and liabilities                                                            |  |                                |   |  |                                |   |  |                              |   |  |                              |   |  |                                              |  
|Receivable from Telifonda                                                                            |  | 8,174                          |   |  |                               |   |  | (40,660                      | ) |  |                             |   |  | (257,349                                     | )
|Prepaid expenses, advances and security deposits                                                     |  | (42,018                        | ) |  | (54,784                        | ) |  | (2,373                       | ) |  | (55,452                      | ) |  | (52,749                                      | )
|Reclamation bond - MAN claims                                                                        |  |                               |   |  |                               |   |  |                             |   |  | 33,171                       |   |  |                                             |  
|Accounts payable and accrued expenses                                                                |  | (46,026                        | ) |  | 6,907                          |   |  | (100,768                     | ) |  | (307,149                     | ) |  | 73,940                                       |  
|Accounts payable - related parties                                                                   |  | (122,090                       | ) |  | (27,254                        | ) |  | (123,828                     | ) |  | (537,626                     | ) |  | 562,492                                      |  
|                                                                                                     |  |                                |   |  |                                |   |  |                              |   |  |                              |   |  |                                              |  
|Net Cash provided by / (used for) operating activities                                               |  | 3,641,010                      |   |  | (629,996                       | ) |  | 1,861,290                    |   |  | (1,296,817                   | ) |  | (2,737,385                                   | )
|                                                                                                     |  |                                |   |  |                                |   |  |                              |   |  |                              |   |  |                                              |  
|                                                                                                     |  |                                |   |  |                               
|Cash Flows From Investing Activities                                                                 |  |                                |   |  |                                |   |  |                              |   |  |                              |   |  |                                              |  
|Purchase of mining claims - net                                                                      |  | (3,801,567                     | ) |  | (276,643                       | ) |  | (2,040,463                   | ) |  | (321,643                     | ) |  | (5,679,247                                   | )
|Purchase of fixed assets - net                                                                       |  | (1,557                         | ) |  | (6,514                         | ) |  | 28,393                       |   |  | (6,718                       | ) |  | (37,074                                      | )
|Sale of subsidiary                                                                                   |  |                               |   |  |                               |   |  | 2,228,938                    |   |  |                             |   |  | 2,228,938                                    |  
|                                                                                                     |  |                                |   |  |                                |   |  |                              |   |  |                              |   |  |                                              |  
|Net cash provided by / (used for) investing activities                                               |  | (3,803,124                     | ) |  | (283,157                       | ) |  | 216,868                      |   |  | (328,361                     | ) |  | (3,487,383                                   | )
|                                                                                                     |  |                                |   |  |                                |   |  |                              |   |  |                              |   |  |                                              |  

(Continued On Following Page)



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##### Table of Contents

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Continued
From Previous Page)



|                                                        |  |                                |           |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|------------------------------------------------------- |  | ------------------------------ | --------- | ------------------------------ | - | ---------- | ---------------------------- |  | - | ---------------------------- | - |  | -------------------------------------------- | ---------- | - |  | - | ---------- | -
|                                                        |  | Three MonthsEndedJune 30, 2009 |           | Three MonthsEndedJune 30, 2008 |   |            | Six MonthsEndedJune 30, 2009 |  |   | Six MonthsEndedJune 30, 2008 |   |  | Feb. 19, 2004(Inception)ThroughJune 30, 2009 |           
|Cash Flows From Financing Activities:                   |  |                                |           |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Proceeds from sale of convertible debentures            |  | $                              |          |                                | $ |           |                              |  | $ |                             |   |  | $                                            | 1,500,000  |   |  | $ | 1,500,000  |  
|Bridge loan from shareholder                            |  |                                |          |                                |   |           |                              |  |   | (2,000,000                   | ) |  |                                              |           |   |  |   |           |  
|Issue notes for property acquisition                    |  |                                |          |                                |   |           |                              |  |   |                             |   |  |                                              |           |   |  |   | 2,714,000  |  
|Debt principal repayment                                |  |                                |          |                                |   | (2,404     | )                            |  |   |                             |   |  |                                              | (258,576   | ) |  |   | (532,271   | )
|Proceeds from short-term borrowings                     |  |                                |          |                                |   |           |                              |  |   |                             |   |  |                                              |           |   |  |   | 250,000    |  
|Repayment of convertible debentures                     |  |                                |          |                                |   |           |                              |  |   |                             |   |  |                                              |           |   |  |   | (1,500,000 | )
|Proceeds form exercise of stock options                 |  |                                |          |                                |   |           |                              |  |   |                             |   |  |                                              |           |   |  |   | 118,500    |  
|Issuance of common stock for cash                       |  |                                | 166,667   |                                |   |           |                              |  |   | 166,667                      |   |  |                                              | 1,000,000  |   |  |   | 4,039,836  |  
|                                                        |  |                                |           |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|                                                        |  |                                |           |                                |  
|Net cash provided by / (used for) financing activities  |  |                                | 166,667   |                                |   | (2,404     | )                            |  |   | (1,833,333                   | ) |  |                                              | 2,241,424  |   |  |   | 6,590,065  |  
|                                                        |  |                                |           |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|                                                        |  |                                |           |                                |  
|Effect of exchange rate changes on cash                 |  |                                | 4,676     |                                |   | 598        |                              |  |   | 4,649                        |   |  |                                              | 252        |   |  |   | (12,030    | )
|                                                        |  |                                |           |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|                                                        |  |                                |           |                                |  
|Net increase / (decrease) in cash                       |  |                                | 9,229     |                                |   | (914,959   | )                            |  |   | 249,474                      |   |  |                                              | 616,498    |   |  |   | 353,267    |  
|                                                        |  |                                |           |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|                                                        |  |                                |           |                                |  
|Cash at the beginning of the period                     |  |                                | 344,038   |                                |   | 1,799,867  |                              |  |   | 103,793                      |   |  |                                              | 268,410    |   |  |   |           |  
|                                                        |  |                                |           |                                |  
|Cash at the end of the period                           |  | $                              | 353,267   |                                | $ | 884,908    |                              |  | $ | 353,267                      |   |  | $                                            | 884,908    |   |  | $ | 353,267    |  
|                                                        |  |                                |           |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|                                                        |  |                                |           |                                |  
|Schedule Of Non-Cash Investing And Financing Activities |  |                                |           |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Acquisition of Minera Milenium, S.A. de C.V.            |  | $                              |          |                                | $ |           |                              |  | $ |                             |   |  | $                                            |           |   |  | $ | (46        | )
|Acquisition of Aurelio Resources, Inc.                  |  |                                |          |                                |   |           |                              |  |   |                             |   |  |                                              |           |   |  |   | 450,000    |  
|Mineral properties                                      |  |                                | 3,801,567 |                                |   | 1,290,643  |                              |  |   | 2,040,463                    |   |  |                                              | 1,335,643  |   |  |   | 8,042,037  |  
|Less note payable                                       |  |                                |          |                                |   | (1,014,000 | )                            |  |   |                             |   |  |                                              | (1,014,000 | ) |  |   | (2,454,000 | )
|Fixed asset purchases                                   |  |                                | 1,557     |                                |   | 6,545      |                              |  |   |                             |   |  |                                              | 7,053      |   |  |   | 122,016    |  
|Less long-term debt                                     |  |                                |          |                                |   |           |                              |  |   |                             |   |  |                                              |           |   |  |   | (25,453    | )
|Supplemental Disclosure                                 |  |                                |           |                                |   |            |                              |  |   |                              |   |  |                                              |            |   |  |   |            |  
|Cash paid for interest                                  |  | $                              | 21,022    |                                | $ | 37,500     |                              |  | $ | 21,022                       |   |  | $                                            | (14,293    | ) |  | $ | (87,072    | )
|Cash paid for income taxes                              |  |                                |          |                                |   |           |                              |  |   |                             |   |  |                                              |           |   |  |   |           |  

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



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##### Table of Contents

AURELIO RESOURCE CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Aurelio Resource Corporation (the Company or Aurelio) have been prepared by management in accordance with generally
accepted accounting principles for interim financial information and with the regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation of their financial position as of March 31, 2009 and the results of
their operations and cash flows for the three and six months ended March 31 and June 30, 2009 and 2008 have been included.

While management
believes the disclosures presented are adequate to prevent misleading information, it is suggested that the accompanying unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements and the
notes thereto contained in the Companys Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange Commission. The interim results of operations for the three and six months ended
March 31 and June 30, 2009 are not necessarily indicative of the results that may be expected for any other interim period of 2009 or for the year ending December 31, 2009.

Going Concern

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

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

From inception, February 19, 2004 through June 30,
2009, the Company generated a deficit from operations during the exploration stage of $9,812,644.

Net Loss Per Share

Basic loss per share is computed by dividing the net income by the weighted average number of common shares outstanding for the period. Diluted shares outstanding are
calculated factoring in stock options, and warrants outstanding, and their equivalents are included in diluted computations through the treasury stock method unless they are anti-dilutive. Convertible securities are included in diluted
computations through the if converted method unless they are anti-dilutive.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. A valuation allowance is required to the extent any deferred tax assets may not be realizable. While the Company has net operating loss (NOLs) carry-forwards related to certain tax jurisdictions, the Company has
limited or no NOLs in others.



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##### Table of Contents

As of June 30, 2009, the deferred tax asset related to the net operating loss carry forward was fully reserved by a
valuation allowance due to the uncertainty of the Company generating future taxable income.

Recently Issued Accounting Standards

In December 2007, the FASB issued FASB Statement No. 141R, Business Combinations (SFAS No. 141R) and FASB Statement No. 160, Non-controlling Interests in
Consolidated Financial Statements an amendment to ARB No. 51 (SFAS No. 160). SFAS No. 141R and No. 160 require most identifiable assets, liabilities, non-controlling interests, and goodwill acquired in a business combination to
be recorded at full fair value and require non-controlling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with non-controlling interest
holders. Both Statements are effective for periods beginning on or after December 15, 2008, and earlier adoption is prohibited. SFAS No. 141R will be applied to business combinations occurring after the effective date. SFAS No. 160
will be applied prospectively to all non-controlling interests, including any that arose before the effective date. The adoption of SFAS No. 141R and SFAS No. 160 did not have a material impact on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161),
which amends and expands the disclosure requirements of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), with the intent to provide users of financial statements with an
enhanced understanding of: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and (c) how
derivative instruments and related hedged items affect an entitys financial position, financial performance and cash flows. SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative
disclosures about fair value amounts of and gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative instruments. This statement applies to all entities and all derivative
instruments. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of SFAS No. 161 did not have a material impact on our consolidated
financial statements.

In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible
Assets (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill
and Other Intangible Assets (SFAS 142). The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair
value of the asset under SFAS 141(R) and other applicable accounting literature. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. The adoption of FSP FAS 142-3 did not have a material impact on our consolidated
financial statements.

In May 2008, the FASB issued Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash
upon Conversion(Including Partial Cash Settlement) (FSP 14-1), which clarifies the accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. FSP 14-1 requires
issuers to account separately for the liability and equity components of certain convertible debt instruments in a manner that reflects the issuers nonconvertible debt (unsecured debt) borrowing rate when interest cost is recognized. FSP 14-1
is effective for fiscal years beginning after December 15, 2008. The adoption of FSP 14-1 did not have a material impact on our consolidated financial statements.

2. MANAGEMENT OF FINANCIAL RISK

The Company is subject to a concentration of credit risk with all of its cash at
June 30, 2009 on deposit with JPMorgan Chase Bank, NA. The cash balance at quarter-end exceeded the FDIC insured limit of $250,000. Management considers that in view of the financial standing and nature of the operations of JPMorgan Chase Bank,
NA the risk of loss is small.



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3. FINANCIAL INSTRUMENTS

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

4. PROPERTY AND EQUIPMENT



|                        |  |                             |  |   |         |      |        |                         |   |                |        |   |       
|----------------------- |  | --------------------------- |  | - | ------- | ---- | ------ | ----------------------- | - | -------------- | ------ | - | ------
|                        |  |                             |  |   |         | Cost |        | AccumulatedDepreciation |   | Net Book Value
|As at June 30, 2009     |  |                             |  |   |         |      |        |                         |   |                |       
|Lakewood                |  | - office furniture          |  |   |         | $    | 11,943 |                         | $ | 4,408          |        | $ | 7,535 
|                        |  | - office equipment(1)       |  |   |         |      | 22,244 |                         |   | 10,797         |        |   | 11,447
|                        |  | - leasehold improvements    |  |   |         |      | 29,539 |                         |   | 738            |        |   | 28,801
|Mexico                  |  | - vehicles and equipment    |  |   |         |      | 8,908  |                         |   | 4,811          |        |   | 4,097 
|                        |  | - furniture and equipment   |  |   |         |      | 2,557  |                         |   | 1,234          |        |   | 1,323 
|Elfrida, AZ             |  | - vehicles and equipment(2) |  |   |         |      |       |                         |   |               |        |   |      
|                        |  |                             |  |   |         |      |        |                         |   |                |        |   |       
|Total:                  |  |                             |  | $ | 75,191  |      | $      | 21,988                  |   | $              | 53,203
|                        |  |                             |  |  
|As at December 31, 2008 |  |                             |  |   |         |      |        |                         |   |                |       
|Lakewood                |  | - office furniture          |  |   |         | $    | 11,943 |                         | $ | 3,555          |        | $ | 8,388 
|                        |  | - office equipment          |  |   |         |      | 47,769 |                         |   | 17,361         |        |   | 30,408
|                        |  | - leasehold improvements    |  |   |         |      | 29,539 |                         |   | 369            |        |   | 29,170
|Mexico                  |  | - vehicles and equipment    |  |   |         |      | 8,553  |                         |   | 3,587          |        |   | 4,966 
|                        |  | - furniture and equipment   |  |   |         |      | 2,455  |                         |   | 918            |        |   | 1,537 
|Elfrida, AZ             |  | - vehicles and equipment    |  |   |         |      | 20,200 |                         |   | 5,280          |        |   | 14,920
|                        |  |                             |  |   |         |      |        |                         |   |                |        |   |       
|Total:                  |  |                             |  | $ | 120,459 |      | $      | 31,070                  |   | $              | 89,389



|(1) | The reduction in Lakewood - office equipment cost, accumulated depreciation and net book value for the period ending June 30, 2009 reflect the sale of Bolsa Resources, Inc. on
February 18, 2009 and the resulting transfer of ownership of certain assets.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The reduction in Elfrida, AZ - vehicles and equipment cost, accumulated depreciation and net book value for the period ending June 30, 2009 reflect the sale of Bolsa Resources,
Inc. on February 18, 2009 and the resulting transfer of ownership of certain assets.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the above equipment, the Company
had capitalized costs relating to mining claims and other property in the amount of $3,818,767 and $4,240,470 at June 30, 2009 and December 31, 2008, respectively. Refer also to Note 6 regarding current property payment obligations. The
June 30, 2009 capitalized costs relating to mining claims and other property were greatly reduced as a result of the sale of Bolsa Resources, Inc. on February 18, 2009.

Depreciation expense was $2,317 and $5,590 for the three and six months ended June 30, 2009, was $4,023 and $7,722 for the comparable periods in 2008, and was $37,808 from Inception through June 30, 2009.

5. LONG-TERM DEBT

Long-term debt consists of the
following:



|                                   |  |               |   |                   |   |           |  
|---------------------------------- |  | ------------- | - | ----------------- | - | --------- | -
|                                   |  | June 30, 2009 |   | December 31, 2008 |  
|Bank debt(1)                       |  | $             |  |                   | $ | 8,166     |  
|Note payable  Courtland Claims(2) |  |               |  |                   |   | 950,000   |  
|Note payable  Rae Properties(3)   |  |               |  |                   |   | 754,000   |  
|Note payable  View Sites(4)       |  |               |  |                   |   | 750,000   |  
|                                   |  |               |   |                   |   |           |  
|Subtotal                           |  |               |  |                   |   | 2,462,166 |  
|Less: current portion              |  |               |  |                   |   | (798,166  | )
|                                   |  |               |   |                   |   |           |  
|Long-term portion                  |  | $             |  |                   | $ | 1,664,000 |  
|                                   |  |               |   |                   |   |           |  

| | 
| | 

| | (1) | The bank debt is payable to a bank, with the final payment due on or before September 20, 2009. The interest rate is 12.25% and the loan is cash collateralized. The bank debt
was repaid in full on March 9, 2009.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (2) | The note payable - Courtland Claims (which form part of the Hill Copper-Zinc Project) of $950,000 is an interest-only note that is payable in full on or before September 15,
2010, bears interest at 6% and is secured by a deed of trust on the underlying properties. This loan was assumed by Telifonda (Cayman) Ltd. on February 18, 2009 following completion of its acquisition of Bolsa Resources, Inc.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The note payable - Rae Properties (which form part of the Hill Copper-Zinc Project) of $754,000 is payable in three remaining semi-annual installments of $260,000, commencing in
April 2009, with the entire unpaid principal balance due April 17, 2010, bears interest at 7% and is secured by a deed of trust on the underlying properties. This loan was assumed by Telifonda (Cayman) Ltd. on February 18, 2009 following
completion of its acquisition of Bolsa Resources, Inc.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | The note payable - View Sites (which property is located to the southeast of the Hill Copper-Zinc Project) is payable in four semi-annual installments of $135,000, commencing April
2009 and a final payment of $210,000 on March 2011, bears interest at 8% and is secured by a deed of trust on the underlying properties. This loan was assumed by Telifonda (Cayman) Ltd. on February 18, 2009 following completion of its
acquisition of Bolsa Resources, Inc.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6. CONTRACTUAL OBLIGATIONS, CONTINGENT LIABILITIES AND COMMITMENTS



|                                                      |  |       |           |                 |   |             |  |             |         |                  |   |         |  |   |  
|----------------------------------------------------- |  | ----- | --------- | --------------- | - | ----------- |  | ----------- | ------- | ---------------- | - | ------- |  | - | -
|                                                      |  | Total |           | Less than1 year |   | 1 to 3years |  | 3 to 5years |         | More than5 years
|Contractual Obligations as of June 30, 2009           |  |       |           |                 |   |             |  |             |         |                  |   |         |  |   |  
|Unpatented BLM mining claims - annual renewal fees(1) |  | $     | 1,237,600 |                 | $ | 247,520     |  | $           | 495,040 |                  | $ | 495,040 |  | $ | 
|Gavilanes option payments(2)                          |  |       | 390,000   |                 |   | 55,000      |  |             | 335,000 |                  |   |        |  |   | 
|                                                      |  |       |           |                 |  
|Crescent Valley North (CVN) Lease(3)                  |  |       | 225,000   |                 |   | 35,000      |  |             | 85,000  |                  |   | 105,000 |  |   | 
|Horse Canyon (HC) Lease(4)                            |  |       | 175,000   |                 |   | 25,000      |  |             | 65,000  |                  |   | 85,000  |  |   | 
|Indian Creek (IC) Lease(5)                            |  |       | 175,000   |                 |   | 25,000      |  |             | 65,000  |                  |   | 85,000  |  |   | 
|Iron Butte Lease(6)                                   |  |       | 350,000   |                 |   | 50,000      |  |             | 130,000 |                  |   | 170,000 |  |   | 
|North Sleeper Lease(7)                                |  |       |          |                 |   |            |  |             |        |                  |   |        |  |   | 
|Robinson Creek (RC) Lease(8)                          |  |       | 175,000   |                 |   | 25,000      |  |             | 65,000  |                  |   | 85,000  |  |   | 
|Safford Canyon Lease(9)                               |  |       | 87,500    |                 |   | 17,500      |  |             | 35,000  |                  |   | 35,000  |  |   | 
|                                                      |  |       |           |                 |  
|Sands Spring Lease(10)                                |  |       | 220,000   |                 |   | 30,000      |  |             | 90,000  |                  |   | 100,000 |  |   | 
|Veta Grande Lease(11)                                 |  |       | 200,000   |                 |   | 25,000      |  |             | 75,000  |                  |   | 100,000 |  |   | 
|Lease of Lakewood, Colorado office(12)                |  |       | 89,412    |                 |   | 44,316      |  |             | 45,096  |                  |   |        |  |   | 
|Lease of Culican, Mexico office space(13)             |  |       | 516       |                 |   | 516         |  |             |        |                  |   |        |  |   | 



|(1) | Effective June 15, 2009 the Company completed the acquisition of a total of 1,820 unpatented mining claims located in Nevada from C3Resources, Inc. (C3), including 934 claims comprising the Cortez-Carlin Corridor project, which were staked by C3in 2008 and are not subject to any underlying lease or royalty agreements. For each of the
unpatented mining claims, there is an annual renewal fee of $140 per claim payable to the Bureau of Land Management, an agency of the U.S. Department of the Interior. These claim fees are payable annually, on or before August 31st(although certain of the Nevada projects require payments prior to August 31stpursuant to the terms of the underlying leases as detailed in Notes (3) thru
(11) below. The values in this entry have been adjusted to reflect the 52 claims at North Sleeper that are subject to a joint venture agreement (see note (7) below) and for which a third party has made the required claim payments.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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On June 30, 2009 the Company paid renewal fees of $125/claim for 44 unpatented mining claims at
Crescent Valley North, 44 claims at Safford Canyon, 11 claims at Indian Creek (IC) and 11 claims at Robinson Creek (RC). The remaining balance of $15/claim for each of these 110 claims were paid subsequent to the end of the reporting period.



|(2) | In addition to the total of the option payments for the purchase price of the three mining claims (covering approximately 1,000 hectares) making up the Gavilanes
property, the property is subject to a 3% net smelter return royalty in favor of Mr. Modesto Rivas Beltran of Culiacan, Sinaloa, Mexico.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As described in Note 12: Sale Of Assets To And Financing Agreement With A Shareholder, the Company has entered into (and shareholders have approved) the sale of a further 3% NSR royalty interest in the Gavilanes
property to Telifonda (Cayman) Ltd. This transaction is anticipated to close on or before December 31, 2009 and only upon receipt of full payment for the royalty interest will Aurelio convey an executed royalty agreement to the purchaser.



|(3) | The 172 unpatented lode mining claims comprising the Crescent Valley North (CVN) project that are situated in Sections 4 and 5, Township 30 North,
Range 51 East, and Sections 28, 29, 31, 32 and 33, Township 31 North, Range 51 East, in Eureka County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated August 25, 2008 between David Mathewson, as owner
(as assigned from KM Exploration, Ltd. by assignment of mining leases dated February 4, 2009), and C3Resources, Inc., as tenant (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 19, 2008).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of C3s rights and interests in the Lease were assigned to the Company on June 15, 2009.

The Crescent Valley North Lease contains the following material terms and conditions:



| | (i) | a term of twenty-five years and so long thereafter as minerals are mined, produced, explored or sold from the CVN Claims;
| | --- | -------------------------------------------------------------------------------------------------------------------------



| | (ii) | the lessee is required to make annual rental payments on each anniversary of the Lease starting at $30,000 upon signing (paid) and increasing to $60,000 on the sixth anniversary and
annually thereafter, provided however that every five years the payments shall be increased in proportion to any increase in the CPI(U) over the prior five-year period;
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the CVN claims are subject to a 4% NSR production royalty payable to David Mathewson, provided that the lessee has the sole and exclusive option to buy down the royalty from 4% to
2% by paying Mathewson a lump sum payment per royalty point of between $2 and $8 million depending upon the average price of gold for the thirty days preceding the exercise of the option as more particularly set out in the Lease; and,
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | prior to June 30th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the CVN claims are located to maintain the claims in
good standing.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | The 189 unpatented lode mining claims comprising the Horse Creek project that are situated in Sections 13, 22, 23, 24, 25, 26, 27, 35 and 36, Township
27 North, Range 49 East; Sections 19, 30 and 31, Township 27 North, Range 50 East; Section 1, Township 26 North, Range 49 East; and, Sections 6 and 7, Township 26 North, Range 50 East in Eureka County, Nevada and are subject to the terms and
conditions of an underlying lease agreement dated August 25, 2008 between David C. Knight (as assigned from KM Exploration, Ltd. by assignment of mining leases dated February 4, 2009), as owner, and C3Resources, Inc., as tenant (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated
September 5, 2008).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of C3s rights and interests in the Horse Creek Lease were assigned to the Company on June 15, 2009.

The Horse Creek Lease contains the following material terms and conditions:



| | (i) | a term of 25 years and so long thereafter as minerals are mined, produced, explored or sold from the claims;
| | --- | ------------------------------------------------------------------------------------------------------------



| | (ii) | the lessee is required to make annual rental payments on each anniversary of the Lease starting at $20,000 upon signing (paid) and increasing by $5,000 per year to $50,000 on the
6th anniversary and annually thereafter, provided, however, that every five years the payments shall be increased in proportion to any increase in the CPI(U) over the prior five-year period;
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (iii) | the Horse Creek claims are subject to a 4% NSR production royalty payable to KM Exploration, provided that the lessee has the sole and exclusive option to buy down the royalty from
4% to 2% by paying KM Exploration a lump sum payment per royalty point of between $2 and $8 million, depending upon the average price of gold for the 30 days preceding the exercise of the option as more particularly set out in the Lease; and,
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | prior to August 31st, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in
which the Horse Creek claims are located to maintain the claims in good standing.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | The 88 unpatented lode mining claims comprising the Indian Creek (IC) project that are situated in Sections 5 and 6, Township 27 North, Range 54 East,
and Sections 28, 29, 30, 31 and 32, Township 28 North, Range 54 East, in Elko County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated August 25, 2008 between David Mathewson (as assigned from KM
Exploration, Ltd. by assignment of mining leases dated February 4, 2009), as owner, and C3Resources, Inc. as lessee (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 19, 2008).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of C3s rights and interests in the Lease were assigned to the Company on June 15, 2009.

The Indian Creek Lease contains the following material terms and conditions:



| | (i) | the lessee is required to make annual rental payments on each anniversary of the Lease starting at $20,000 upon signing (paid) and increasing $5,000 per year to $50,000 on the sixth
anniversary and annually thereafter, provided however that every five years the payments shall be increased in proportion to any increase in the CPI over the prior five-year period;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the Indian Creek claims are subject to a 4% NSR production royalty payable to KM Exploration, provided that the lessee has the sole and exclusive option to buy down the royalty from
4% to 2% by paying KM a lump sum payment per royalty point of between $2 and $8 million depending upon the average price of gold for the thirty days preceding the exercise of the option as more particularly set out in the Lease; and,
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | prior to June 30th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the CVN claims are located to maintain the claims in
good standing.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | The 86 unpatented lode mining claims comprising the Iron Butte project that are situated in Sections 13 and 24, Township 26 North, Range 43 East, and
Sections 18 and 19, Township 26 North, Range 44 East, in Lander County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated August 25, 2008 between David C. Knight (as assigned from KM Exploration, Ltd. by
assignment of mining leases dated February 4, 2009), as owner, and C3Resources, Inc., as tenant (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 5, 2008).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of C3s rights and interests in the Iron Butte Lease were assigned to the Company on June 15, 2009.

The Iron Butte Lease contains the following material terms and conditions:



| | (i) | a term of 25 years and so long thereafter as minerals are mined, produced, explored or sold from the claims;
| | --- | ------------------------------------------------------------------------------------------------------------



| | (ii) | the lessee is required to make annual rental payments on each anniversary of the Lease starting at $40,000 upon signing (paid) and increasing by $10,000 per year to $100,000 on the
6th anniversary and annually thereafter, provided however that every five years the payments shall be increased in proportion to any increase in the CPI(U) over the prior five-year period;
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the Iron Butte claims are subject to a 4% NSR production royalty payable to KM Exploration, provided that the lessee has the sole and exclusive option to buy down the royalty from
4% to 2% by paying KM Exploration a lump sum payment per royalty point of between $2 and $8 million, depending upon the average price of gold for the 30 days preceding the exercise of the option as more particularly set out in the Lease; and,
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (iv) | prior to August 31st, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in
which the Iron Butte claims are located to maintain the claims in good standing.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | The 52 unpatented lode mining claims comprising the North Sleeper project that are situated in Sections 2, 3, 4, 9, 10, 11 and 33, Township 40 North,
Range 35 East in Humboldt County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated December 7, 2006 between CARACOL, as owner, and C3Resources, Inc., as tenant.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of C3s rights and interests in the North Sleeper Lease were assigned to the Company on June 15, 2009.

The Company, in turn, entered into a joint venture agreement with Montezuma Mines, Inc. (Montezuma Mines) on June 15, 2009; pursuant to
the terms of the joint venture agreement, Montezuma Mines assumed responsibility for the payments detailed in notes (ii) and (iv) below.

The North Sleeper Lease contains the following material terms and conditions:



| | (i) | a term of ten years, renewable for additional ten-year periods
| | --- | --------------------------------------------------------------



| | (ii) | the lessee is required to make annual rental payments on each anniversary of the Lease starting at $10,000 upon signing (paid) and increasing to $12,500 on the second anniversary
(paid); $15,000 on the third anniversary; $25,000 on the fourth anniversary and $50,000 annually thereafter, provided however that after five years the payments shall be increased in proportion to any increase in the CPI(U) subsequent to
December 31, 2006;
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the North Sleeper claims are subject to a 3% NSR production royalty payable to CARACOL, provided that the lessee has the sole and exclusive option to buy down the royalty from 3% to
1% by paying CARACOL a lump sum payment per royalty point of between $1.5 and $7 million, depending upon the average price of gold for the month preceding the exercise of the option as more particularly set out in the Lease; and,
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | prior to June 30th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in
which the North Sleeper claims are located to maintain the claims in good standing.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) | The 91 unpatented lode mining claims comprising the Robinson Creek (RC) project that are situated in Sections 24 and 25, Township 29 North, Range 54
East in Elko County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated August 25, 2008 between David Mathewson (as assigned from KM Exploration, Ltd. by assignment of mining leases dated February 4,
2009), as owner, and C3Resources, Inc. as lessee (as assigned from SY Resources
Acquisition, Inc. by assignment of mining leases dated September 19, 2008).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of C3s rights and interests in the Lease were assigned to the Company on June 15, 2009.

The Robinson Creek Lease contains the following material terms and conditions:



| | (i) | the lessee is required to make annual rental payments on each anniversary of the Lease starting at $20,000 upon signing (paid) and increasing $5,000 per year to $50,000 on the sixth
anniversary and annually thereafter, provided however that every five years the payments shall be increased in proportion to any increase in the CPI over the prior five-year period;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the Robinson Creek claims are subject to a 4% NSR production royalty payable to KM Exploration, provided that the lessee has the sole and exclusive option to buy down the royalty
from 4% to 2% by paying KM a lump sum payment per royalty point of between $2 and $8 million depending upon the average price of gold for the thirty days preceding the exercise of the option as more particularly set out in the Lease; and,
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 15 -



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| | (iv) | prior to June 30th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the CVN claims are located to maintain the claims in
good standing.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) | The 44 unpatented lode mining claims comprising the Safford Canyon project that are situated in Sections 8, 19, 20, 29 and 30, Township 31 North,
Range 51 East, in Eureka County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated November 30, 2006 between WFW Resources, LLC as owner, and C3Resources, Inc., as tenant (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 19,
2008).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of C3s rights and interests in the Safford Canyon Lease were assigned to the Company on June 15, 2009.

The Safford Canyon Lease contains the following material terms and conditions:



| | (i) | a term of ten years, extendable in five-year increments up to 40 years and so long thereafter as minerals are mined, produced, explored or sold from the WFW Claims;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | the lessee is required to make annual rental payments on each anniversary of the Lease starting at $6,000 upon signing (paid), $12,500 in years 2 thru 6, $17,500 in
years 7 thru 11 provided that the payments shall be adjusted in the 11thand
subsequent years to reflect increases in inflation and general costs of living.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the WFW claims are subject to a 3% NSR production royalty payable to WFWE Resources, provided that the lessee has the sole and exclusive option to buy down the royalty from 3% to 1%
by paying WFW Resources a lump sum payment per royalty point of between $1.5 and $7 million depending upon the average price of gold for the thirty days preceding the exercise of the option as more particularly set out in the Lease;
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | prior to June 30th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the Safford Canyon claims are located to maintain the
claims in good standing; and,
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (v) | at any time during the term of the lease, the lessor may purchase all 44 WFW claims for $20,000 per claim, thus eliminating the annual rental payments (the claims would remain
subject to the NSR production royalty).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(10) | The 78 unpatented lode mining claims comprising the Sand Springs project that are situated in Sections 3, 4, 9 and 10, Township 11 North, Range 21
East in Churchill County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated March 14, 2007 (as amended) between Randall Stoeberl (d/b/a RS Gold), as owner, and C3Resources, Inc., as tenant.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of C3s rights and interests in the Sands Springs Lease were assigned to the Company on June 15, 2009.

The Sand Springs Lease contains the following material terms and conditions:



| | (i) | a term of 25 years and so long thereafter as minerals are mined, produced, explored or sold from the claims;
| | --- | ------------------------------------------------------------------------------------------------------------



| | (ii) | the lessee is required to make annual rental payments on each anniversary of the Lease starting at $20,000 upon signing (paid), $10,000 on the second anniversary
(paid), $30,000 on the 3rdanniversary, $40,0000 on the 4thanniversary and $50,000 annually thereafter.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the Sand Springs claims are subject to a 3% NSR production royalty payable to RS Gold provided that the lessee has the sole and exclusive option to buy down the royalty from 3% to
1% by paying RS Gold a lump sum payment per royalty point of $1 million as more particularly set out in the Lease; and,
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | prior to August 31st, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in
which the Sand Springs claims are located to maintain the claims in good standing.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 16 -



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##### Table of Contents

|(11) | The 86 unpatented lode mining claims comprising the Veta Grande project that are situated in Sections 3, 4, 9 and 10, Township 11 North, Range 21 East
in Douglas County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated March 14, 2007 between CARACOL, as owner, and C3Resources, Inc., as tenant.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of C3s rights and interests in the Lease were assigned to the Company on June 15, 2009.

The Veta Grande Lease contains the following material terms and conditions:



| | (i) | a term of ten years, extendable for additional ten year periods;
| | --- | ----------------------------------------------------------------



| | (ii) | the lessee is required to make annual rental payments on each anniversary of the Lease starting at $20,000 upon signing (paid) and increasing to $25,000 on the 2nd(paid) through 4thanniversaries, and $50,000 annually thereafter;
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the Veta Grande claims are subject to a 3% NSR production royalty payable to CARACOL, provided that the lessee has the sole and exclusive option to buy down the royalty from 3% to
1% by paying CARACOL a lump sum payment per royalty point of between $1.5 and $7 million, depending upon the average price of gold for the month preceding the exercise of the option as more particularly set out in the Lease; and,
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | prior to June 30th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in
which the Veta Grande claims are located to maintain the claims in good standing.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(12) | Beginning in July 2008 the Company leased office space in Lakewood, Colorado. During the second 12 months of the lease, the Company is required to pay $3,693 per month, including
utilities, with an option to pay a total of $13,295 ($1,108 per month) of the second years rent in stock. In July 2009, the Company issued a total of $13,295 worth of restricted common shares in partial payment of the 2009-2010 rent
obligations. During the third year of the lease, the Companys monthly rent (including utilities) will be $3,758 and the Company will have the option to pay the equivalent of $1,503 of the rent per month in restricted common shares during the
third year of the lease.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | Lease of office space in Culiacan, Sinaloa, Mexico for P1,700 (approximately $129 per month based on prevailing exchange rates at June 30, 2009) with a commitment through
October 2009.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, should we produce precious or base metals on the Gavilanes property, we would have to pay a net smelter return
royalty as described in Note (2).

Our total rent expense (including those Bolsa-related rent expenses from January 1 through February 18, 2009)
for the three months ended March 31 and June 30, 2009 was $11,482 and $11,271 respectively.

7. STOCKHOLDERS EQUITY

May 2009 Private Placement Financing

On May 29, 2009 the Company
entered into a private placement financing agreement with Telifonda (Cayman) Ltd. (Telifonda), who subscribed to 1,666,667 shares at $0.10/share for net proceeds of $166,667. The financing closed on June 16, 2009 upon receipt of
funds.

This financing was in partial consideration for a revision to the original agreement between the Company and Telifonda to extend the due date of a
scheduled principal payment under the February 2009 Respite Agreement from May 31, 2009 until September 30, 2009 (See also Note 12 - Sale of Assets to and Financing Arrangement With a Shareholder).



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No fees or commissions were paid in conjunction with this financing.

Additional Shares Issued During The Period Ending June 30, 2009

On April 7, 2009 we issued a total of 380,418 common shares at a deemed price of $0.0842/share to Company officers, directors and consultants in partial consideration for consulting services during the first quarter of 2009, pursuant
to exemptions from registration as set out in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

On
April 20, 2009 we issued a total of 789,474 common shares at a deemed price of $0.057/share to Company officers and directors in partial consideration for consulting services during the third quarter of 2008, pursuant to exemptions from
registration as set out in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

On April 20, 2009 we issued a
total of 1,551,723 common shares at a deemed price of $0.029/share to Company officers and directors in partial consideration for consulting services during the fourth quarter of 2008, pursuant to exemptions from registration as set out in Rule 506
of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

On June 4, 2009 we issued a total of 90,000 common shares at a
deemed price of $0.10/share to Company officers, directors and consultants in partial consideration for consulting services during the second quarter of 2009, pursuant to exemptions from registration as set out in Rule 506 of Regulation D and/or
Section 4(2) of the Securities Act of 1933, as amended.

On June 4, 2009 we issued a total of 432,000 common shares at a deemed price of
$0.0842/share to Company officers, directors and consultants as a pre-payment of the equity portion of their respective consulting contracts for the period July 1, 2009 through December 31, 2010 pursuant to exemptions from registration as
set out in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

On June 15, 2009 we
issued a total of 47,500,000 restricted common shares valued at $0.08/share to C3Resources, Inc. in payment for ten gold and silver exploration projects in Nevada. These shares were issued pursuant to exemptions from registration as set out in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as
amended.

Series A and Series B Warrants

In
conjunction with a $1,500,000 convertible debenture financing entered into with private investors on February 26, 2008 (the debentures were repaid in full at their face value on October 1, 2008), we issued Series A and Series B common
share purchase warrants. Specifically, we issued (i) 3,750,000 Series A common share purchase warrants which shall have an initial exercise date of August 26, 2008 and will be exercisable for five years with an exercise price of $0.35 per
share of common stock and (ii) 4,999,997 Series B common share purchase warrants which were exercisable immediately upon issuance for 18 months with an exercise price of $0.35 per share of common stock. Subsequent to Closing, we paid a
finders fee of $90,000 in cash and 3% of the value of the transaction, or $45,000, payable in each of Series A and Series B warrants.

Pursuant to
the terms and conditions of the February 2008 Convertible Debenture Financing, the exercise price of the Series A and Series B warrants was re-set to $0.10 per share on May 29, 2009, resulting in an expense of $175,100 which was recorded as
interest expense for the three and six months ending June 30, 2009.

Telifonda Warrants

In conjunction with a $1 million equity financing entered into with Telifonda Ltd. on February 15, 2008 we issued 1,666,667 common share purchase warrants which were
exercisable immediately upon issuance for five years with an exercise price of $0.50 per share of common stock.



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Effective May 29, 2009 the Company and Telifonda mutually-agreed to adjust the exercise price of these warrants to
$0.10 per share of common stock, with an accelerated expiration date of May 29, 2010.

2007 Warrants

In conjunction with a $1,328,900 equity financing entered into with accredited investors on June 7, 2007 we issued 738,278 common share purchase warrants which were
exercisable immediately upon issuance for two years with an exercise price of $1.60 per share of common stock.

These warrants expired unexercised on
June 7, 2009.

8. STOCK-BASED COMPENSATION

The
Company adopted SFAS No. 123R, Share Based Payment (SFAS 123R), on January 1, 2006. SFAS 123R requires all share-based payments, including grants of stock options, to be recognized in the income statement as an
operating expense, based on their fair values.

Prior to adoption of SFAS 123R, Aurelio accounted for stock-based employee compensation under Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB). The Company has applied the modified prospective method in adopting SFAS 123R, and as a result, periods prior to the adoption of SFAS 123R
have not been restated.

The following summarizes the activity of the Companys stock options for the six months ended June 30, 2009:



|                               |  |         |  |                                |      |                                         |     |                          |   |  
|------------------------------ |  | ------- |  | ------------------------------ | ---- | --------------------------------------- | --- | ------------------------ | - | -
|                               |  | Shares  |  | Weighted AverageExercise Price |      | WeightedAverageRemainingContractualTerm |     | AggregateIntrinsic Value
|Number of shares under option: |  |         |  |                                |      |                                         |     |                          |   |  
|Outstanding at April 1, 2009   |  | 350,000 |  | $                              | 0.70 |                                         |     |                          |   |  
|Granted                        |  | 0       |  |                                | 0    |                                         |     |                          |   |  
|Exercised                      |  | 0       |  |                                | 0    |                                         |     |                          |   |  
|Forfeited or expired           |  | 0       |  |                                | 0    |                                         |     |                          |   |  
|                               |  |         |  |                                |      |                                         |     |                          |   |  
|Outstanding at June 30, 2009   |  | 350,000 |  | $                              | 0.70 |                                         | 1.0 |                          | $ | 
|                               |  |         |  |                                |      |                                         |     |                          |   |  
|Exercisable at June 30, 2009   |  | 350,000 |  | $                              | 0.70 |                                         | 1.0 |                          | $ | 
|                               |  |         |  |                                |      |                                         |     |                          |   |  

All outstanding options were fully vested as of June 30, 2009. There was no intrinsic value of any option as
all were out of the money as of June 30, 2009.

The Black-Scholes option pricing model is used by the Company to determine the weighted average fair
value of options and the value of the re-priced warrants. The fair value of options at date of grant and the assumptions utilized to determine such values are indicated as follows:



|                                |  |                           |  |      |  
|------------------------------- |  | ------------------------- |  | ---- | -
|                                |  | Six Months Ended June 30, | 
|                                |  | 2009                      |  | 2008 |  
|Expected life                   |  | 0.25 to 3.75 yrs          |  | 3 yr |  
|Risk-free interest rates        |  | 0.14 to 1.94%             |  | 4.60 | %
|Expected stock price volatility |  | 164%                      |  | 74   | %
|Expected dividend yield         |  |                          |  |     |  

Under SFAS 123R forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting
period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate. Under SFAS 123 and APB 25, the Company elected to account for forfeitures when awards were
actually forfeited, at which time all previous pro forma expense was reversed to reduce pro forma expense for that period.



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##### Table of Contents

9. INCOME TAXES

The
Company has net operating loss carry-forwards of approximately $7.7 million available for deduction against future years taxable income. This was fully reserved by a valuation allowance as of the quarter ended June 30, 2009, since the
realization of the net operating loss carry-forwards is doubtful. It is reasonably possible that our estimate of the valuation allowance will change. The operating loss carry-forwards will expire between 2019 and 2023.

10. RELATED PARTY TRANSACTIONS

During the year ended
December 31, 2008 and throughout the first and second quarters of 2009 Aurelio maintained consulting contracts with our president, company officers, directors and their wholly-owned companies, through which they provided services to our
company. For the three and six months ended June 30, 2009, Aurelio paid or accrued consulting fees of $63,338 and $110,210 in lieu of salaries to company officers and directors. Fees charged for consulting services were in the normal course of
business and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. Refer to Note 7.

Some of the Companys directors have interests in the various transactions with Telifonda (Cayman) Ltd. (see Note 7 - Stockholders Equity (May 2009 Private Placement Financing) and also Note 12 - Sale of Assets To And Financing
Arrangement With A Shareholder that are different from, or are in addition to, their interests as stockholders in the Company. These interests include the following:



| |  | Based on information filed in a Form 13D by Telifonda Holdings Co. Limited (Holdings) and DFG Master Hedge Fund Ltd. (DFG), Antony Warnaars
is responsible for the overall management and control of DFG. Holdings and Telifonda are both wholly-owned subsidiaries of DFG. Mr. Antony Warnaars is the son of Dr. Frederik Warnaars, Chairman of the board of directors of Aurelio.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Maarten D. Tjaden is employed by Diversica Financial Group B.V., an affiliate of DFG and Holdings.
|- |  | --------------------------------------------------------------------------------------------------

Telifonda, together with its affiliate DFG Master Hedge Fund Ltd. and certain advisory board members and related parties of Telifonda beneficially own or control an
estimated 4.6% of the issued and outstanding common stock of the Company. The Companys Board of Directors was aware of these additional interests and considered them when they approved the Stock Purchase Agreement, as amended, as well as the
May 2009 Private Placement Financing and Amendment to the February 18, 2009 Respite Agreement and Note.

11. SEGMENT INFORMATION

Through February 18, 2009 Company operated in two reportable segments, these being the exploration for copper and zinc on its Hill Copper-Zinc Project in Arizona,
and the exploration for gold on its Gavilanes Property in Mexico.

The Arizona business segment was sold to Telifonda (Cayman) Ltd. on February 18,
2009).

Between February 19, 2009 and June 14, 2009 the Company operated in one reportable business segment, namely, exploration for gold on its
Gavilanes Property in Mexico.

Effective June 15, 2009 the Company was once again operating in two reportable business segments,
these being on-going exploration for gold on the Gavilanes Property in Mexico, and ,exploration for gold and silver in Nevada on the ten projects acquired from C3Resources, Inc.



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Following is the segment information for the periods ending June 30th:



|                                                    |  |         |           |        |   |           |  |       |           |  |   |          
|--------------------------------------------------- |  | ------- | --------- | ------ | - | --------- |  | ----- | --------- |  | - | ---------
|                                                    |  | Arizona |           | Mexico |   | Corporate |  | Total
|As of and for the three months ended June 30, 2009:
|Revenue                                             |  | $       |          |        | $ |          |  | $     |          |  | $ |         
|Depreciation expense                                |  |         |          |        |   | 647       |  |       | 1,670     |  |   | 2,317    
|Mineral property expenditures                       |  |         |          |        |   | 1,223     |  |       | 14,917    |  |   | 16,140   
|Operating loss                                      |  |         |          |        |   | 6,755     |  |       | 164,502   |  |   | 171,257  
|Other income                                        |  |         |          |        |   |          |  |       | 12,545    |  |   | 12,545   
|Interest expense                                    |  |         |          |        |   |          |  |       | 175,100   |  |   | 175,100  
|Net loss                                            |  |         |          |        |   | 6,755     |  |       | 313,489   |  |   | 320,244  
|Additions to fixed assets                           |  |         |          |        |   |          |  |       |          |  |   |         
|Total assets                                        |  |         |          |        |   | 38,402    |  |       | 4,485,376 |  |   | 4,523,778
|As of and for the three months ended June 30, 2008: |  |         |           |        |   |           |  |       |           |  |   |          
|Revenue                                             |  |         |          |        |   |          |  |       |          |  |   |         
|Depreciation expense                                |  |         | 1,010     |        |   | 669       |  |       | 2,344     |  |   | 4,023    
|Mineral property expenditures                       |  |         | 122,910   |        |   | 2,092     |  |       |          |  |   | 125,002  
|Operating loss                                      |  |         | 192,456   |        |   | 10,132    |  |       | 379,835   |  |   | 582,423  
|Other income                                        |  |         | 1         |        |   |          |  |       | 4,106     |  |   | 4,107    
|Interest expense                                    |  |         | 28,849    |        |   |          |  |       | 420,479   |  |   | 449,328  
|Net loss                                            |  |         | 221,304   |        |   | 10,132    |  |       | 796,208   |  |   | 1,027,644
|Additions to fixed assets                           |  |         | 5,200     |        |   | 428       |  |       | 1,220     |  |   | 6,848    
|Total assets                                        |  |         | 3,374,445 |        |   | 18,572    |  |       | 914,666   |  |   | 4,307,683
|                                                    |  |         |           |       
|                                                    |  | Arizona |           | Mexico |   | Corporate |  | Total
|As of and for the six months ended June 30, 2009:  
|Revenue                                             |  | $       |          |        | $ |          |  | $     |          |  | $ |         
|Depreciation expense                                |  |         | 957       |        |   | 1,292     |  |       | 3,341     |  |   | 5,590    
|Mineral property expenditures                       |  |         | 14,855    |        |   | 32,347    |  |       | 14,917    |  |   | 62,119   
|Operating loss                                      |  |         | 14,264    |        |   | 41,715    |  |       | 384,979   |  |   | 440,958  
|Other income                                        |  |         | 10,500    |        |   |          |  |       | 18,016    |  |   | 28,516   
|Interest expense                                    |  |         | 20,810    |        |   |          |  |       | 175,312   |  |   | 196,122  
|Net loss                                            |  |         | 24,594    |        |   | 41,715    |  |       | 2,005,476 |  |   | 2,071,785
|Additions to fixed assets                           |  |         |          |        |   |          |  |       |          |  |   |         
|Total assets                                        |  |         |          |        |   | 38,402    |  |       | 4,485,376 |  |   | 4,523,778
|As of and for the six months ended June 30, 2008:   |  |         |           |        |   |           |  |       |           |  |   |          
|Revenue                                             |  |         |          |        |   |          |  |       |          |  |   |         
|Depreciation expense                                |  |         | 1,760     |        |   | 1,315     |  |       | 4,647     |  |   | 7,722    
|Mineral property expenditures                       |  |         | 223,782   |        |   | 24,432    |  |       |          |  |   | 248,214  
|Operating loss                                      |  |         | 307,334   |        |   | 39,217    |  |       | 449,729   |  |   | 796,280  
|Other income                                        |  |         | 2         |        |   |          |  |       | 8,523     |  |   | 8,525    
|Interest expense                                    |  |         | 43,126    |        |   |          |  |       | 814,135   |  |   | 857,261  
|Net loss                                            |  |         | 350,458   |        |   | 39,217    |  |       | 1,255,341 |  |   | 1,645,016
|Additions to fixed assets                           |  |         | 5,200     |        |   | 633       |  |       | 1,220     |  |   | 7,053    
|Total assets                                        |  |         | 3,374,445 |        |   | 18,572    |  |       | 914,666   |  |   | 4,307,683



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|                                                 |  |           |  |         |  |           |  |          
|------------------------------------------------ |  | --------- |  | ------- |  | --------- |  | ---------
|                                                 |  | Arizona   |  | Mexico  |  | Corporate |  | Total    
|As of and since Inception through June 30, 2009:
|Revenue                                          |  |          |  |        |  |          |  |         
|Depreciation expense                             |  | 6,237     |  | 6,918   |  | 24,653    |  | 37,808   
|Mineral property expenditures                    |  | 1,876,042 |  | 194,198 |  | 125,041   |  | 2,195,281
|Operating loss                                   |  | 2,233,900 |  | 299,542 |  | 3,931,702 |  | 6,465,144
|Other income                                     |  | 10,695    |  |        |  | 77,469    |  | 88,164   
|Interest expense                                 |  | 223,251   |  |        |  | 1,369,942 |  | 1,593,193
|Net loss                                         |  | 2,446,475 |  | 324,699 |  | 7,041,470 |  | 9,812,644
|Additions to fixed assets                        |  | 20,200    |  | 13,887  |  | 87,520    |  | 121,607  
|Total assets                                     |  |          |  | 38,402  |  | 4,485,376 |  | 4,523,778

12. SALE OF ASSETS TO AND FINANCING ARRANGEMENT WITH A SHAREHOLDER

Amended Stock Purchase Agreement and Sale of Assets

On
November 17, 2008, the Company entered into an Amended Stock Purchase Agreement (the Amended Agreement) with Telifonda (Cayman) Ltd. (Telifonda). Telifonda is a shareholder of the Company and has one representative on
the Companys current Board of Directors. On October 2, 2008, the Company had filed a current report on Form 8-K announcing that it had signed a letter of intent pursuant to which the Company had agreed to sell to Telifonda its
wholly-owned subsidiary, Bolsa Resources, Inc., which owns the Hill Copper-Zinc Project, and also to sell Telifonda a 3% Net Smelter Returns royalty in the Companys Gavilanes gold project. Finalization of these transactions was subject to the
approval of the Companys shareholders.

The total value of the transaction and the cash proceeds to ultimately be realized by the Company is $4
million.

The terms of the Amended Agreement became necessary in order for the Company to retain access to the cash being made available thereunder and
reflected the rapidly-deteriorating global economic outlook in the fourth quarter of 2008, as well as the difficult debt and equity markets conditions affecting junior mining companies. The Company also believes that these amended terms also better
reflect the fair values of the assets being sold to Telifonda.

Pursuant to the Amended Agreement and following shareholder approval, the Company sold all
of the outstanding common stock of Bolsa Resources, Inc. to Telifonda in exchange for $2,500,000 cash. The Company retained a 3% Net Smelter Return Royalty (NSR) on all future precious and base metal production from the Hill Copper-Zinc
Project (the Bolsa NSR).

All proceeds were accounted for using the cost recovery method and, accordingly, no gain was realized at the
February 18, 2009 closing date. The Company was also entitled to recover certain Bolsa-related carrying costs it incurred during the period from August 15, 2008 to February 18, 2009.

The Amended Agreement requires Telifonda to complete a Bankable Feasibility Study within four years of Closing. Upon completion of the Bankable Feasibility Study,
Telifonda would have a right to purchase the Bolsa NSR at fair market value on the terms set forth in the Amended Bolsa NSR Agreement.

Should Telifonda
fail to complete the Bankable Feasibility Study or otherwise maintain the 5,000+ acre land position, the Company retains the exclusive right to re-acquire the Hill Copper-Zinc Project by reimbursing Telifonda for its $2,500,000 investment and any of
its out-of-pocket expenditures.

The proposed transaction also requires Telifonda to fund Bolsa Resources, Inc. in the initial amount of $8 million to
facilitate further development of the Hill Copper-Zinc Project.

In addition to purchasing all of the common stock of Bolsa, under the terms of the Amended
Agreement, Telifonda has also agreed to purchase a 3% NSR interest in the Gavilanes gold project for $50,000 cash (the Minera NSR) prior to December 31, 2009 which is expected to result in a realized gain of the same amount. The
Company will retain the right to repurchase the Gavilanes NSR at fair market value on the terms set forth in the Gavilanes NSR Agreement. The Minera NSR Agreement was approved by shareholders as part of the overall Amended Agreement. As of
June 30, 2009, this agreement had not been executed.



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Bridge Loan Agreement

In connection with the Amended Agreement, on October 1, 2008 Telifonda advanced $2,000,000 to the Company (the Bridge Loan) that was repaid upon the closing of the transactions contemplated by the Amended Agreement by
offsetting the principal outstanding under the Bridge Loan against the cash consideration due under the Amended Agreement. The Bridge Loan was non-interest bearing, and was secured by all of the assets of the Company, including all shares of common
stock held by the Company in its two subsidiaries, as set forth in the related General Security Agreement.

Of the proceeds from the Bridge Loan,
$1,500,000 was used on October 1, 2008 to retire all outstanding Convertible Debentures as of September 30, 2008. The remaining proceeds will be used for working capital purposes.

Loan to The Company

As part of the overall transaction contemplated
by the Amended Agreement and approved by shareholders in February 2009, Telifonda agreed to loan $1.45 million to a newly-created subsidiary of the Company, AIEX Corporation (the NewCo Loan). The NewCo Loan Agreement will be an unsecured
loan and will be non-recourse to Aurelio. Interest will accrue at LIBOR + 3% over the term of the loan.

The Company intends to use the proceeds of the
NewCo Loan facility to fund further exploration of its assets, as well as for other property acquisitions and general working capital.

As of June 30,
2009 the NewCo Loan had not been funded.

Respite Agreement and Amendment of AIEX Loan Agreement

A Respite Agreement and Amendment of Loan Agreement was entered into on February 18, 2009 by and among Aurelio Resource Corporation (Aurelio), AIEX
Corporation (AIEX), a Colorado corporation that is a wholly-owned subsidiary of Aurelio, and Telifonda (Cayman) Ltd. (Telifonda).

Aurelio and Telifonda previously entered into a Stock Purchase Agreement dated September 30, 2008, as amended on November 17, 2008 (the Stock Purchase Agreement), and, in connection with the Stock Purchase Agreement
(as amended), Telifonda agreed to provide to Aurelio (or its subsidiary, AIEX) a non-resource loan in the principal amount of $1,450,000 (the AIEX Loan Amount), repayable in accordance with the terms of a Loan Agreement dated
February 19, 2009 between Telifonda and AIEX, (the AIEX Loan Agreement), as that agreement is further described in Section 2(b)(ii) of the Stock Purchase Agreement, as amended.

Simultaneous with the closing under the Stock Purchase Agreement (as amended), Telifonda also agreed to purchase a Net Smelter Royalty from Minera Milenium S.A. de C.V,
a Mexican corporation (Minera) a subsidiary of Aurelio (the Minera NSR) for a purchase price of $50,000 pursuant to a Net Smelter Return Royalty Agreement (as amended) between Minera and Aurelio (the Minera NSR Royalty
Agreement).

Also simultaneous with the closing under the Stock Purchase Agreement (as amended), in accordance with Section 2(e) of the Stock
Purchase Agreement (as amended), Telifonda agreed to reimburse certain expenditures made by Aurelio which the parties to the Respite Agreement agreed equals $265,523 (the Reimbursement Amount).

February 18, 2009 Respite Agreement and Note

In consideration
of (i) a reduction in the interest rate under the AIEX Loan Agreement and (ii) an agreement by the parties hereto to delay the obligation of Aurelio to deliver the Minera NSR Agreement until full payment and satisfaction by Telifonda of
its obligations under the Respite and Loan Agreement Amendment, Aurelio granted to Telifonda a respite of payment of the AIEX Loan Amount, the Minera Amount and the Reimbursement Amount in the aggregate amount of $1,765,522 (the Respite
Amount) as evidenced by a note dated February 18, 2009 in the principal amount of $1,765,522 (the Respite Note).



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The Reimbursement Amount plus all accrued and unpaid interest thereon shall be due and payable no later than May 31,
2009. The AIEX Loan Amount and the Minera Amount plus all accrued and unpaid interest thereon and the balance of any other unpaid amounts payable under the Respite Note, shall be due and payable no later than December 31, 2009.

Interest on the principal balance of the Respite Note shall be payable at the rate of (i) One Year LIBOR per annum, commencing on February 18, 2009, and
increasing to Year LIBOR plus 9% per annum commencing on the occurrence of, and during the continuance of, any Default as described in Section 2 of the Respite Note.

The Respite Agreement also provided for an amendment of Section 1(c) of the AIEX Loan Agreement such that interest on the principal balance of the AIEX Loan Note was reduced by 200 basis points to One Year LIBOR
plus 3% per annum.

Amendment to the February 18, 2009 Respite Agreement and Note

In partial consideration of an agreement by the Company to extend the due date of the payment due on May 31, 2009, Telifonda agreed to subscribe to a private
placement financing in the amount of $166,667 (see Note 7  Stockholders Equity).

Telifonda made an additional payment to Company on
June 16, 2009 totaling $33,333 of which $13,603 was credited against interest due on the Respite Note as of May 31, 2009 and $19,730 was applied to a reduction in principal of the Respite Note.

Per the May 29, 2009 Amended Respite Agreement and Note, Telifonda will be obligated to pay $245,792 in principal (plus accrued interest from July 1 -
September 30, 2009 on the Respite Note balance) to the Company on or before September 30, 2009, with the final $1,500,000 in principal (plus accrued interest) as scheduled on or before December 31, 2009.



|ITEM 2 | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
|------ | ----------------------------------------------------------

Forward Looking Statements

Certain statements in this Quarterly Report on Form 10-Q are forward-looking in nature. These statements can be
identified by the use of forward-looking terminology such as believes, expects, may, will, should, anticipates, or negative comparable terminology or by discussion of strategy.

The risks and uncertainties are discussed in greater detail in the Companys other filings with the Securities and Exchange Commission, including,
most recently, its Annual Report on Form 10-K. There may be additional risks of which the Company is not presently aware or that it currently believes are immaterial which could have an adverse impact its business. The Company makes no commitment to
revise or update any forward-looking statement in order to reflect events or circumstances that may change.

Sale of Assets to and Financing Arrangement
with a Shareholder

See Note 12 (Sale Of Assets To And Financing Arrangement With A Shareholder) on page 22 for a complete discussion of the
chronology and current status of the various agreements between the Company and Telifonda Cayman (Ltd).

Overview and Going Concern Considerations

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



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Our financial statements for the three and six months ended March 31 and June 30, 2009 and the year ended
December 31,2008 have been prepared with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions as noted below currently exist that
raise substantial doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the
Company be unable to continue as a going concern.

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

We
successfully raised $166,667 in equity financing during the period ending June 30, 2009, and we continued our property expenditures in the expectation of obtaining financing from one of a number of different leads we were pursuing. To date,
these efforts have been unsuccessful, and we are now examining several new alternatives discussed below. Meanwhile, we have reduced our overhead expenditures to conserve our cash.

We do not have any additional financing arranged beyond that described in Note 12 (re: Sale Of Assets And Financing Arrangement With A Shareholder), and we cannot provide any assurance that we will be able to raise
additional funding from the sale of our common stock or debt and, accordingly, there is a possibility that we may not be able to continue normal operations. In the absence of such financing, we will not be able to continue exploration of our mineral
claims and our business plan might not succeed. Even if we are successful in obtaining additional financing to fund the next phase of our exploration program, there is no assurance that we will obtain the funding necessary to pursue any advanced
exploration of our mineral claims following the completion of the work program. If we do not continue to obtain additional financing, we could be forced to sell or abandon some or all of our mineral claims and our plan of operations.

We may consider entering into joint venture arrangements to provide the required funding to develop some (or all) of our mineral claims. If we entered into a joint
venture arrangement, we would likely have to assign a percentage of our interest in our mineral claims to the joint venture partner. Even if we determined to pursue a joint venture partner, there is no assurance that any third-party would enter into
a joint venture agreement with us in order to fund exploration of our mineral claims.

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

Plan
of Operations

Our plan of operations for the next twelve-month period as outlined below is dependent on our obtaining additional financing under
reasonable terms and conditions.

We plan to undertake the operations outlined below utilizing our existing management and field personnel and will
contract for additional labor on a project basis as required. We do not anticipate making any major purchases or sales of plant and equipment as we intend to sub-contract the drilling programs and outsource the assaying, resource estimation,
engineering and metallurgical studies.

Nevada Projects

Between Closing (June 15, 2009) and the end of the quarter, the Companys focus was on marketing a number of the exploration projects acquired from C3Resources, Inc. As of the end of June 2009, one project (north Sleeper) had been farmed out, six projects were undergoing due
diligence reviews / evaluations by interested parties, and negotiations were in progress on four of the projects.



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During the third quarter of 2009, the Company hopes to sell, option, lease or joint venture as many as six of the Nevada
projects. The Company will seek to exchange its interests in various properties in exchange for up-front cash and stock payments plus significant work commitments over several years (and recurring cash payments), while ultimately retaining either a
minority participatory equity interest or an NSR production royalty. Projects that are not sold / farmed out but are deemed worthy of retaining for future exploration work, may see a reduction in land holdings in order to preserve working capital
for drilling, trenching, etc. on other projects in the Companys portfolio.

Company geologists are prioritizing the Nevada projects, and are
developing exploration programs and budgets for the each of the properties that the Company intends to retain 100% interests in. Two of the projects could be drilled in late 2009 or early 2010 based on availability of funding, with current thoughts
centered on 10,000 to 15,000 ft RVC drill programs at each project (costs estimates unavailable). RFPs are also being developed for an independent NI 43-101 quality resource estimate for the Iron Butte gold project. A decision on this work program
and anticipated cost / schedule is anticipated to be made prior to the end of the third quarter.

Gavilanes Property

In the first quarter of 2009, we made one option payment of $25,000 in order to keep the Gavilanes land purchase option in good standing. We may need to raise additional
funds in order to make subsequent payments.

Our planned exploration program (subject to funding) during the next twelve months includes 7,000 feet of
diamond drilling to test several exploration targets on the Gavilanes Property. Based on our review of all the pertinent data available on the property, we are pursuing our goal of identifying a bulk mineable, open pittable deposit at Gavilanes. The
budget for this drill program is approximately $375,000 (not including land costs), and should take three to four months to complete. If this program shows the expected results, we will then undertake a larger program of up to 10,000 feet of diamond
drilling on the property that is anticipated to cost approximately $500,000.

Results of Operations

Revenues

We have had no operating revenues since our inception on
February 19, 2004, through June 30, 2009. During the next twelve-month period, we will not generate any revenues.

General Operating Expenses

General operating expenses consist primarily of labor costs, including stock based compensation expenses, for officers, directors and administrative
consultants and independent contractors. In addition, in its normal course of business, the Company incurs professional accounting and legal fees in its normal course of business, transfer agent fees and fees to maintain our offices. All such costs
are included in general administrative expense.

We anticipate spending approximately $750,000 in ongoing general and administrative expenses over the next
twelve months. Such expenditures exclude the costs that might be incurred in raising additional funding. The general and administrative expenses for the year will consist primarily of professional fees for our management, accounting and reporting
expenses, audit and legal work relating to our regulatory filings, as well as transfer agent fees, promotion and investor relations activities, expenses related to the annual shareholder meeting, D & O insurance, and the costs of maintaining our
executive office in Lakewood, Colorado and our field office in Culiacan, Mexico.

Mineral Property Costs

Costs incurred during each of the three and six month periods ended March 31 and June 30, 2009 and 2008 pertain primarily to property maintenance payments and
exploration activities that are described above. Costs vary from period to period based upon the timing of required payments and funds available to carry out planned exploration activities including drilling, assaying, geological and metallurgical
evaluations.



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Professional Fees

Professional fees pertain to contract labor costs related to field personnel conducting exploration and exploration planning activities. Variations from period to period pertain principally to available funding.

Interest Expense

Interest expense in 2008 pertains to the issuance
of convertible debentures in February 2008 (which were subsequently redeemed / repaid in full as of October 1, 2008), including amortization of the discount attributed to recording these debentures at FMV as well as recognition of the
beneficial conversion feature.

Liquidity and Capital Resources

At June 30, 2009, we had cash on hand of approximately $353,267.

We raised $166,667 in June 2009 through a private placement equity
financing.

However, we anticipate that our cash and working capital will only be sufficient to enable us to pay for the cost of a limited exploration
program and for general and administrative expenses for approximately the next six months. Accordingly, our ability to complete our ongoing exploration activities and the next phase of our recommended work programs will be subject to us obtaining
additional financing as these expenditures will exceed our cash reserves.

While one of our 2008 financings was a convertible debt offering, we believe
that debt financing will not be a long-term alternative for funding additional phases of exploration as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from
the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund the next phase of our
exploration program. In the absence of such financing, we will not be able to continue exploration of our mineral claims and our business plan will fail. Even if we are successful in obtaining equity financing to fund the next phase of our
exploration programs, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of our mineral claims following the completion of the work program. If we do not continue to obtain additional financing, we
will be forced to either sell or abandon our mineral claims and our plan of operations.

Cash provided by (used for) operating activities was $3,641,000
and $1,861,290 for the three and six months ended June 30, 2009 ($629,926 and $1,296,817 for the three and six months ended June 30, 2008), which reflects the costs of our operations for the period and, in 2009, the reduction of
outstanding accounts payable pertaining to elimination of land acquisition payments and mineral exploration / development work in Arizona resulting form the sale of Bolsa Resources, Inc. Cash used in investing activities in 2009 and 2008 related
principally to purchase of additional lands within the Hill Copper-Zinc project, option payments and general and administrative costs in Mexico, and land / exploration costs in Nevada.

We have funded our business to date from sales of our common stock and convertible debentures, and, more recently, the sale of our Arizona subsidiary. Gross cash proceeds from the sale of our common shares during the
period from inception, on February 19, 2004, through June 30, 2009 totaled approximately $4.2 million (after adjustments when we acquired ARI), including $1 million in 2008. Gross proceeds from the sale of 10% Convertible Debentures
approximated $1.5 million in February 2008. The Convertible Debentures were repaid in full at their face value of $1,500,000 on October 1, 2008 (refer to Note 12 - Sale of Assets to and Financing Arrangement with a Shareholder).

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



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##### Table of Contents

Contractual Obligations, Contingent Liabilities and Commitments

See Note 6 on page 12 for a complete discussion.

Off-Balance Sheet
Arrangements

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

Related Party Transactions

During the year ended December 31, 2008 and throughout the first and second quarters
of 2009 Aurelio maintained consulting contracts with our president, company officers, directors and their wholly-owned companies, through which they provided services to our company. For the three and six months ended June 30, 2009, Aurelio
paid or accrued consulting fees of $63,338 and $110,210 in lieu of salaries to company officers and directors. Fees charged for consulting services were in the normal course of business and were measured at the exchange amount, which is the amount
of consideration established and agreed to by the related parties. Refer to Note 7.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and
assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. The most significant policy we have implemented is to capitalize the cost of acquiring
patented mining claims and surface rights to properties. Our significant accounting policies are disclosed in Note 3 to the audited consolidated financial statements included in the Companys Annual Report on Form 10-K.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Not
required for a Smaller Reporting Company.



|ITEM 4. | CONTROLS AND PROCEDURES.
|------- | ------------------------

Evaluation Of Disclosure Controls And
Procedures

As of the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (Exchange Act), Rules 13a-15(e) and 15d-15(e)) under the supervision and with the participation of our management,
including our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and our acting Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure
controls and procedures are effective.

Changes In Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART II  OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

None.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

None.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

There were no
matters submitted to a vote of the Security Holders during the quarter ended June 30, 2009.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------

None.



|ITEM 6. | EXHIBITS
|------- | --------

Exhibit 31.1 Certification of the Chairman and Chief
Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2 Certification of the acting CFO Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2 Certification of acting CFO pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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



|                      |  |                                                         
|--------------------- |  | --------------------------------------------------------
|Date: August 14, 2009 |  | AURELIO RESOURCE CORPORATION                            
|                      |  | A Colorado Corporation                                  
|                      | 
|                      |  | /s/    Stephen B. Doppler                               
|                      |  | Stephen B. Doppler                                      
|                      |  | Chief Executive Officer                                 
|                      | 
|Date: August 14, 2009 |  | /s/    Frederik W. Warnaars                             
|                      |  | Frederik W. Warnaars                                    
|                      |  | Interim Chief Financial Officer, Chairman, and Secretary



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