UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form 10-QSB

(Mark One)

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

For the quarterly period endedAugust 31, 2006

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

For the transition period from
__________to __________Commission file number000-50931

|AURELIO RESOURCE
      CORPORATION                                                      
|----------------------------------------------------------------------------------------
|(Exact name of small
      business issuer as specified in its charter)                 
|Nevada                                                                                  
|(State or other
      jurisdiction of incorporation or organization)                    
|Suite 200,
      5554 South Prince Street, Littleton, Colorado, 80120                   
|(Address of principal
      executive offices)                                          
|303.795.3030                                                                            
|(Issuers telephone number)                                                             
|Not Applicable                                                                          
|(Former name, former address and former fiscal year, if
      changed since last report)

Check whether the issuer (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes[X]No [ ]

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

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

Check whether the issuer has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of the
Exchange Act after the distribution of securities under a plan confirmed by a
court. Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE
ISSUERS

State the number of shares outstanding of
each of the issuers classes of common equity, as of the latest practicable
date:32,436,500 common shares issued and
outstanding as of October 10, 2006

Transitional Small Business Disclosure
Format (Check one): Yes [ ] No[X]

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PART I - FINANCIAL
INFORMATION

Item 1. Financial
Statements.

It is the opinion of management that the
interim consolidated financial statements for the quarter ended August 31, 2006
include all adjustments necessary in order to ensure that the interim
consolidated financial statements are not misleading.

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|3 
          AURELIO RESOURCE CORPORATION     
      (An Exploration Stage Company)     
      CONSOLIDATED BALANCE SHEET     
      August 31, 2006
|----------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
|ASSETS                                                                                                                                              
|Current
      assets                                                                                                                                
|Cash                                                                                                                                                
|Total current assets                                                                                                                                
|Hope
      mining claims deposit                                                                                                                    
|Property and equipment, net                                                                                                                         
|                                                                                                                                                    
|Total Assets                                                                                                                                        
|LIABILITIES & STOCKHOLDERS EQUITY                                                                                                                  
|Current
      liabilities                                                                                                                           
|Accounts payable                                                                                                                                    
|Accounts payable related parties                                                                                                                    
|Stock
      subscription payable                                                                                                                    
|Advance
      on investment                                                                                                                         
|                                                                                                                                                    
|Total current
      liabilties                                                                                                                      
|Total Liabilities                                                                                                                                   
|Stockholders Equity                                                                                                                                
|Common
      stock, $.001 par value;                                                                                                                
|487,500,000 shares authorized;                                                                                                                      
|28,436,500 issued and outstanding                                                                                                                   
|Additional paid in capital                                                                                                                          
|Accumulated deficit                                                                                                                                 
|                                                                                                                                                    
|Total
      Stockholders Equity                                                                                                                    
|Total Liabilities and Stockholders Equity                                                                                                          

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

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|4         
      AURELIO RESOURCE CORPORATION(An
      Exploration Stage Company)CONSOLIDATED STATEMENTS OF
      OPERATIONS
|----------------------------------------------------------------------------------------------------------------------------
|
|
|
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Revenue                                                                                                                     
|Expenses:                                                                                                                   
|Bank
      charges                                                                                                          
|General and
      administrative                                                                                            
|Mineral
      property expenditures                                                                                         
|Office
      expenses                                                                                                       
|Professional
      and filing fees                                                                                          
|Transfer
      agent                                                                                                        
|Travel                                                                                                                      
|                                                                                                                            
|Loss from
      operations                                                                                                  
|Other income
      (expense)                                                                                                
|Interest
      expense                                                                                                      
|Income (loss)
      before provision for income tax                                                                         
|Provision
      for income tax                                                                                              
|Net income (loss)                                                                                                           
|Other comprehensive income (loss) - net of tax                                                                              
|Foreign currency
      translation gains (losses)                                                                           
|Comprehensive loss                                                                                                          
|Net income (loss) per share                                                                                                 
|(Basic and fully
      diluted)                                                                                             
|                                                                                                                            
|Weighted average number of
      common sharesoutstanding                                                                   

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

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|5AURELIO
      RESOURCE CORPORATION(An Exploration Stage
      Company)CONSOLIDATED STATEMENT OF CASH
      FLOWS
|-----------------------------------------------------------------------------------------------------------------
|
|
|
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Cash Flows
      From Operating Activities:                                                                      
|Net income
      (loss)                                                                                          
|Adjustments to reconcile net income to                                                                           
|net cash
      provided by (used for)                                                                            
|operating
      activities:                                                                                      
|Accounts payable and accrued liabilities                                                                         
|Depreciation                                                                                                     
|Other assets                                                                                                     
|Accounts payable related parties                                                                                 
|Net cash provided by
      (used for)                                                                            
|operating
      activities                                                                                       
|Cash Flows From Investing Activities:                                                                            
|Purchase of fixed assets                                                                                         
|Advance on investment                                                                                            
|Net cash provided by
      (used for)                                                                            
|investing
      activities                                                                                       

(Continued On Following
Page)

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

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6

AURELIO RESOURCE
CORPORATION(An Exploration Stage
Company)CONSOLIDATED STATEMENT OF CASH
FLOWS

(Continued From Previous
Page)

|                                                              |  | Feb. 19, 2004                 |  |                                    |  |              
|------------------------------------------------------------- |  | ----------------------------- |  | ---------------------------------- |  | -------------
|                                                              |  | (Inception)                   |  | Three Months                       |  | Three Months 
|                                                              |  | Through                       |  | Ended                              |  | Ended        
|                                                              |  | Aug. 31, 2006                 |  | Aug. 31, 2006                      |  | Aug. 31, 2005
|Cash Flows
      From Financing Activities:                   |  |                               |  |                                    |  |              
|Issuance of common stock                                      |  | (55,486)                      |  | (151,686)                          |  |              
|Stock subscription payable                                    |  | 327,500                       |  | 327,500                            |  |              
|Net cash provided by
      (used for)                         |  |                               |  |                                    |  |              
|financing
      activities                                    |  | 272,014                       |  | 175,814                            |  | -            
|Effect of exchange rate changes on cash                       |  |                               |  |                                    |  |              
|Net Increase (Decrease) In Cash                               |  | 316,776                       |  | 314,255                            |  | (26,058)     
|Cash At The
      Beginning Of The Period                     |  | -                             |  | 2,521                              |  | 51,337       
|Cash At The End Of The Period                                 |  | $           
      316,776    |  | $           
      316,776         |  | $   25,279   
|Schedule Of Non-Cash Investing And
      Financing Activities |  |                               |  |                                   
|None                                                          |  |                               |  |                                    |  |              
|Supplemental
      Disclosure                                 |  |                               |  |                                    |  |              
|Cash paid
      for interest                                  |  | $                
          - |  | $        
                
      - |  | $-           
|Cash paid for income
      taxes                              |  | $           
               - |  | $            
             -       |  | $ -          

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

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7

AURELIO RESOURCE CORP(An Exploration Stage Company)NOTES TO FINANCIAL STATEMENTSFebruary 19, 2004 (Inception) Through August 31, 2005

NOTE 1. HISTORY AND ORGANIZATION OF THE COMPANY

The Company was incorporated on February 19, 2004, under the Laws of the State of Nevada and is in the business of exploring mineral properties. The Company has not yet determined whether its properties contain mineral
resources that may be economically recoverable. Therefore, the Company has not reached the development stage and is considered to be an exploration stage company.

The recoverability of mineral property costs is dependent upon the existence of economically recoverable reserves, confirmation of the Companys interest in the underlying mineral claims, the ability of the Company to
obtain necessary financing to complete the exploration and upon future profitable production.

NOTE 2. GOING CONCERN

These financial statements 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
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. Continued operations of the Company are dependent on the Companys ability to complete additional equity financings or generate
profitable operations in the future. Managements plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on reasonable terms.

|August 31, 2006                                  |         
|------------------------------------------------ | --------
|Deficit accumulated during the exploration stage | $156,688
|Working capital deficit                          | $225,238

NOTE 3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements are stated in US dollars. Significant accounting policies adopted by the Company are as follows:

Cash and cash equivalents

The Company considers cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents.

Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

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8

Mineral properties

Costs of acquisition, exploration, carrying, and retaining unproven properties are expensed as incurred.

Investments

Investments are considered to be held to maturity and are carried at cost. Investments are continually reviewed to determine whether any events or changes in circumstances indicate that the carrying amount of the investment
may not be recoverable. The Company bases its evaluation on such impairment indicators as the nature of the investments, the future economic benefit of the investments, any historical or future profitability measurements as well as other external
market values, conditions or factors that may be present. If it is determined that the value of the investment is permanently impaired, it is written down to its estimated net realizable value.

Environmental requirements

At the report date, environmental requirements related to mineral claims acquired are unknown and therefore an estimate of any future cost cannot be made.

Income taxes

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expenses (benefit) result from the net change during the
period of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net loss per share

Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share takes into consideration shares
of common stock outstanding (computed under basic net loss per share) and potentially dilutive shares of common stock. Diluted net loss per share is not presented separately from net loss per share since there are no potentially dilutive shares of
common stock outstanding.

Recent Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151, Inventory Costs (An Amendment of ARB No. 43, Chapter 4). SFAS 151 amends and clarifies financial accounting and reporting for abnormal amounts of idle facility
expense, freight, handling costs, and wasted material (spoilage). The Company has adopted the provisions of SFAS No. 151 which are effective in general for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption did
not have a material effect on the results of operations of the Company.

In December 2004, the FASB issued SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions (An Amendment of FASB Statements No. 66 and 67). SFAS 152 amends FASB 66 and 67 to reference the accounting
and reporting guidance for real estate time-sharing transactions provided for in AICPA Statement of Position 04-2. of The Company has adopted the provisions of SFAS No. 152 which are effective for financial statements for fiscal years beginning
after June 15, 2005. The adoption did not have a material effect on the results of operations of the Company.

In December 2004, the FASB issued SFAS No. 153, Exchange of Nonmonetary Assets (An Amendment of APB No. 29). SFAS 153 amends Opinion 29 to eliminate the fair value accounting exception for nonmonetary exchanges
of similar productive assets, and replaces that exception with a general exception for nonmonetary assets that do not have commercial substance. The Company has adopted the provisions of SFAS No. 153 which are effective in general for nonmonetary
asset exchanges occurring in fiscal years beginning after June 15, 2005. The adoption did not have a material effect on the results of operations of the Company.

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9

In March 2005, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment. SFAS 123(r) requires that the cost resulting from all share-based payment transactions be recognized in the financial statements.
The Company has adopted the provisions of SFAS No. 123(r) which are effective in general for transactions entered into or modified after June 15, 2005. The adoption did not have a material effect on the results of operations of the
Company.

In May 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154, Accounting Changes and Error Corrections  A Replacement of APB Opinion No. 20 and SFAS No. 3. SFAS 154 changes the
requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the
pronouncement does not include specific transition provisions. SFAS 154 requires retrospective application to prior periods financial statements of changes in accounting principle, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change. The Company has adopted the provisions of SFAS No. 154, which are effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The
adoption did not have a material effect on the results of operations of the Company.

In February 2006, the FASB issued SFAS No. 155 Accounting for Certain Hybrid Financial Instruments  an amendment of FASB Statements No. 133 and 140, to simplify and make more consistent the accounting for
certain financial instruments. The Company has adopted the provisions of SFAS No. 155, which are effective in general for financial instruments acquired or issued in fiscal years beginning after September 15, 2006. The adoption did not have a
material effect on the results of operations of the Company.

In March 2006, the FASB issued SFAS No. 156 Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities. This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with
changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The Company has adopted the provisions of SFAS No. 156, which are effective in general for an entitys fiscal year beginning after
September 15, 2006. The adoption did not have a material effect on the results of operations of the Company.

NOTE 4. RELATED PARTY TRANSACTIONS

As of August 31, 2006 the company owed $39,963 to related parties for various working capital advances.

NOTE 5. FINANCIAL INSTRUMENTS

The Companys financial instruments consist of cash and cash equivalents, 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. The fair value of these financial instruments approximate their carrying values, unless otherwise noted.

NOTE 6.SEGMENT INFORMATION

The company operated in two reportable segments, these being the exploration of copper and gold mining properties.

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10

NOTE 7. BUSINESS ACQUISITIONS

On July 5, 2006 the company acquired 98% of the outstanding stock Minera Milenium, S.A. de C.V. in a transfer of benefit from Aurelio Resources, Inc in a transaction accounted for as a business purchase. Aurelio Resources,
Inc was not a related party at date of transfer. The net worth of Minera Milenium, S.A. de C.V. at fair value on July 5, 2006 was $(46).

On August 17, 2006 the company acquired Aurelio Resources, Inc. in a transaction accounted for as a business purchase, by issuing 10,000,000 shares for 100% of the outstanding stock of Aurelio Resources, Inc. The net worth
of Aurelio Resources, Inc. measured at fair value on August 17, 2006 was $(141,410).

On May 15, 2006 our subsidiary, Aurelio Resources Inc., entered into a purchase and sale agreement with Hope Mining and Milling Company, an Arizona corporation, concerning the acquisition by Aurelio Resources Inc. of 30
patented mining claims known as Courtland Mines and located in Turqoise Mining District, Cochise County, Arizona. The purchase price for the subject property is $1,200,000.00. The purchase agreement requires a $250,000 down payment, of which
$10,000 has been paid by way of earnest money leaving $240,000 due at closing. The remaining balance will be carried on an interest only payment 4 year term 6% straight line annual interest promissory note, with a balloon payment at the end
of year 4. On September 11, 2006, Aurelio Resources Inc., another wholly owned subsidiary, Bolsa Resources Inc., and Hope Mining and Milling Company entered into an agreement amending the terms of the purchase agreement dated May 15, 2006. Pursuant
to the amending agreement, Bolsa Resources Inc., an Arizona corporation, accepted the assignment from Aurelio Resources Inc. of all rights and obligations under the May 15, 2006 purchase and sale agreement. Pursuant to the May 15, 2006 purchase and
sale agreement as assigned to Bolsa Resources Inc., Bolsa Resources Inc. completed the acquisition of 30 patented mining claims from Hope Mining and Milling Company on September 18, 2006, paying the initial instalment of $250,000, with the
remainder of the overall purchase price of $1,200,000 to be financed over four years.

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11

Item 2. Managements Discussion and Analysis or Plan of Operation.

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts,
potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our consolidated unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be
read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report,
particularly in the section entitled Risk Factors of this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to CDN$ refer to Canadian dollars and all references to common
shares refer to the shares of our common stock.

As used in this quarterly report, the terms we, us, our and Aurelio mean Aurelio Resource Corporation, our wholly owned subsidiary, Aurelio Resources Inc., our wholly owned
subsidiary, Bolas Resources Inc. and our 98% owned subsidiary, Mineral Milenium S.A. de C.V., unless otherwise indicated.

Overview

We are an exploration stage company engaged in the exploration of mineral properties and we may also, from time to time, acquire additional mineral properties to explore. Prior to the completion of the acquisition of
Aurelio Resources Inc., we had a 100% interest in twenty-five mineral claims, subject to a 3% net proceeds interest to the State of Alaska. Upon our the completion of our acquisition of Aurelio Resources Inc., we now have, in addition to our Alaska
property, 100% rights to mineral exploration and development in 13 mining claims in Arizona, and an option to earn a 100% interest in the mineral exploration and development of 3 mining claims/concessions covering approximately 1,000 hectares, in
Durango, Mexico. We also acquired 30 patented claims in Cochise County, Arizona on September 18, 2006 from Hope Mining and Milling through our wholly owned subsidiary, Bolsa Resources Inc. We intend to explore these properties with a view to
exploiting any mineral deposits we discover or selling or otherwise assigning the rights to do so.

Corporate History

We were incorporated on February 19, 2004, under the laws of the state of Nevada under the name Furio Resources, Inc. Effective June 16, 2006 we changed our name to Aurelio Resource Corporation and effected a
six and one-half (6.5) for one (1) forward stock split of our authorized, issued and outstanding common stock. As a result, our authorized capital has increased from 75,000,000 shares of common stock with a par value of $0.001 to 487,500,000
shares of common stock with a par value of $0.001. Except as otherwise stated, all references to shares and prices per share have been adjusted to give retroactive effect to the stock split.

On August 17, 2006 we completed our acquisition of all of the issued and outstanding common stock of Aurelio Resources Inc., a privately-owned Colorado corporation engaged in mineral exploration, pursuant to an agreement we
entered into

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12

with Aurelio Resources Inc. and its shareholders dated April 27, 2006, as amended on June 9, 2006 and further amended on July 13, 2006 and on July 21, 2006.

Acquisition of Hope Property  September, 2006

Our subsidiary, Aurelio Resources Inc., entered into a purchase and sale agreement, dated for reference May 15, 2006, with Hope Mining and Milling Company, an Arizona corporation, concerning the acquisition by Aurelio
Resources Inc. of 30 patented mining claims known as Courtland Mines and located in Turqoise Mining District, Cochise County, Arizona. On September 11, 2006, Aurelio Resources Inc., another wholly owned subsidiary, Bolsa Resources Inc., and Hope
Mining and Milling Company entered into an agreement amending the terms of the purchase agreement dated May 15, 2006. Pursuant to the amending agreement, Bolsa Resources Inc., an Arizona corporation, accepted the assignment from Aurelio Resources
Inc. of all rights and obligations under the May 15, 2006 purchase and sale agreement. Pursuant to the May 15, 2006 purchase and sale agreement as assigned to Bolsa Resources Inc., Bolsa Resources Inc. completed the acquisition of 30 patented mining
claims from Hope Mining and Milling Company on September 18, 2006, paying the initial instalment of $250,000, with the remainder of the overall purchase price of $1,200,000 to be financed over four years.

Our Current Business

As a result of our acquisition of Aurelio Resources Inc., we have indirectly acquired all of its assets. In particular, we have acquired properties in Arizona and a 98% interest in Minera Milenium S.A. de C.V., a company
incorporated in Mexico which holds an option to acquire a 100% interest in a property in Mexico.

Hill Copper Property, Arizona

We are registered owner of a 100% interest in 13 mining claims on a mineral property located in southeastern Arizona, which we called the Hill Copper Property. In acquiring the Hill Copper Property, we acquired thirteen
unpatented lode-mining claims (covering approximately 260 acres), staked on federal lands administered by the United States Bureau of Land Management. The unpatented mining claims are identified as MAN 1 through MAN 6, which are contiguous, and MAN
7 through MAN 13, which were staked on two occasions and which are all contiguous with one another.

The mining claims are in good standing with all regulatory authorities, and the mining claims are properly registered at Cochise County in Bisbee and the United States Bureau of Land Management in Phoenix, Arizona. The
current annual maintenance fees are $125 per mining claim due on or before August 31st of each year.

Gavilanes Option

Since July 5, 2006, we own 98% of the issued and outstanding common shares of Minera Milenium S.A. de C.V., a company incorporated under the laws of Mexico. Minera Milenium S.A. de C.V. holds an option to earn a 100%
undivided interest in certain mining claims/concessions situated in the Tamazula District, Durango, Mexico.

The Gavilanes Property consists initially of mining claims/concessions covering approximately a 100 hectares identified as title number 185397, expediente 321.1/24569 and granted by the Direcion General de Minas and
inscribed with number 577, on page 145 of Volume number 251 of the General book of Mining Concessions of the Public Mines register in Mexico City, D.F. Subsequently, 900 hectares exploration concessions were staked around the initial Gavilanes
property.

Pursuant to the terms of the option agreement, dated for reference August 18, 2005, between Aurelio Resources Inc. and Minera Holmex S.A. de C.V., a company incorporated under the laws of the State of Sinaloa, Republic of
Mexico, and wholly-owned by Dr. Frederik Warnaars, Aurelio Resources Inc. acquired the right to earn up to a 100% interest in the mineral exploration and development in 3 mining claims/concessions, covering approximately 1,000 hectares, in Durango,
Mexico, free and clear of all charges, encumbrances and claims. Aurelio Resources Inc. assigned all of its interest in this option to its 98% owned subsidiary, Minera Milenium S.A. de C.V.

In consideration for granting the option to Aurelio Resources Inc., Aurelio Resources Inc. paid Minera Holmex an amount equal to the taxes in arrears for the years 2001 and 2002 and the aggregate sum of P$63,536 Mexican
Pesos plus late payment penalties (approximately US$6,100). Minera Milenium paid the sum of US$5,000 to the Gavilanes property owner, Mr Modesto Rivas in accordance with the options provisions which was due on February 1,
2006.

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13

To maintain the option in good standing,
we will need to make the following payments to Minera Holmex S.A. de C.V. no
later than the dates provided below:

|Payment Due Date  | Cash (US$)
|----------------- | ----------
|February 15, 2007 | $15,000   
|August 15,  2007  | $15,000   
|February 15, 2008 | $20,000   
|August 15,  2008  | $20,000   
|February 15, 2009 | $25,000   
|August 15,  2009  | $25,000   
|February 15, 2010 | $30,000   
|August 15,  2010  | $30,000   
|February 15, 2011 | $305,000  
|Total Payments    | $490,000  

The Gavilanes Property is subject to a 3%
net smelter royalty in favour of Mr. Modesto Rivas Beltran of Culiacan, Sinaloa,
Mexico. There are no provisions in the option whereby we can purchase all or a
portion of the smelter royalty from Mr. Modesto Rivas Beltran.

The smelter royalty is payable only from
the actual proceeds received by Minera Milenium from any mint, smelter, refinery
or other purchaser from the sale of our ore, metals (including bullion) or
concentrates produced from the Gavilanes Property and sold, or proceeds received
from an insurer in respect of our mineral products, after deducting certain
expenses related to certain costs to our company of the extraction, preparation
and sale of our mineral products. The smelter royalty shall be paid to Mr.
Modesto Rivas Beltran on a quarterly basis within 45 days of the end of each
fiscal quarter.

Lake Iliamna Property,
Alaska

By mineral staking in March 2004, we have
acquired 100% interest in twenty-five mineral claims, subject to a 3% net
smelter royalty to the State of Alaska on production on state lands. The staking
was originally executed by Alaska Earth Resources, Inc., an Alaska geological
company, acting as our agent. Shortly thereafter, we filed our certificate of
authority to do business in the state of Alaska and the ownership of the claims
was transferred from Alaska Earth Resources, Inc. to us. The mineral claims are
located approximately 7.5 miles northwest of Lake Iliamna which is 215 miles
south-west of Anchorage, Alaska. Each mineral claim entitles us to one quarter
section of property reserved for mineral exploration that consists of 160 acres.
The total area of the twenty-five mineral claims is approximately 4,000 acres or
6.25 square miles. The mineral claims are in good standing with the State of
Alaska through to November 30, 2006.

Phase I of our mineral exploration work
program was completed in May 2005, and consisted of an induced polarization and
ground magnetic survey. The program took approximately ten days to complete and
was estimated to cost approximately $30,000. Due to higher than expected costs
for mobilization, demobilization and labor, we revised our estimated costs of
phase one to approximately $34,000. Our consulting geophysics firm has
recommended that the we repeat certain portions of the induced polarization
survey conducted in phase one to gather better data before making a decision to
move to Phase II. However, our ability to continue exploration of the mineral
claims will be subject to us obtaining additional financing as these
expenditures will exceed our cash reserves.

In order to maintain our mineral claims in
good standing, we must make payment to the State of Alaska of an annual rental
fee of $100 per quarter section, or $2,500 in total for our twenty-five mineral
claims, to keep our claims in good standing. This payment is for claims owned as
of the 1st of every September and is payable within ninety days or the 30th of
every November. We must make a payment of $2,500 to the State of Alaska by
November 30, 2006, or we will lose our mineral claims.

In addition, we must complete annual
labour or exploration expenditures on the mineral claims and file confirmation
of work with the applicable mining recording office of the State of Alaska.
Currently, exploration work with a minimum value of $400 per quarter section (or
mineral claim) is required before the 1st of every September with the exception
of the year the mineral claims are staked. Our claims encompass twenty-five
quarter sections so our commitment for exploration

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expenditures with the State of Alaska for the current year is $10,000. During the year ended May 31, 2006, we believe we met the $10,000 work commitment as required by the State of Alaska to keep the claims in good
standing by virtue of the work performed in the previous year.

If we fail to make and file the work expenditures or make the appropriate payments to the State of Alaska, we will lose all interest in the mineral claims.

Since we are an exploration stage company, there is no assurance that a commercially viable mineral deposit exists on any of our properties, and a great deal of further exploration will be required before a final evaluation
as to the economic and legal feasibility for our future exploration is determined. We have no known reserves of any type of mineral. To date, we have not discovered an economically viable mineral deposit on the mineral property, and there is no
assurance that we will discover one.

Mineral property exploration is typically conducted in phases. Before it is carried out, each subsequent phase of exploration work is recommended by a geologist based on the results from the most recent phase of
exploration. We have only recently commenced the initial phase of exploration on our Alaska Property and have not yet begun exploration of the properties held by Aurelio Resources Inc. and Minera Milenium S.A. de C.V. Once we complete a phase of
exploration, we will make a decision as to whether or not we proceed with each successive phase based upon the analysis of the results of that program. Our directors will make these decisions based upon the recommendations of the independent
geologist who oversees the program and records the results.

Our plan of operation is to conduct exploration work on each of our properties in order to ascertain whether any possess commercially exploitable quantities of minerals. There can be no assurance that such mineral deposits
exist on any of our properties.

Even if we complete our proposed exploration programs on our properties and we are successful in identifying a mineral deposit, we will have to spend substantial funds on further drilling and engineering studies before we
will know whether we have a commercially viable mineral deposit.

We are interested in exploring for minerals such as copper, gold, silver and zinc on our properties but we are not restricting our exploration to any one type or select types of minerals. We may also seek to acquire other
properties for mineral exploration in the United States, Mexico, Latin America or elsewhere.

Our objective is to pursue deposits of any type of mineral and to develop, sell or otherwise assign the rights to develop the properties if and when any commercially viable deposits of minerals are found on our
properties.

PLAN OF OPERATIONS AND CASH REQUIREMENTS

You should read the following discussion of our financial condition and results of operations together with our unaudited financial statements and the related notes for the three month period ended August 31, 2006 which
appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

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

Plan of Operations

Our plan of operations for the next twelve months involves implementation of phased exploration programs for our Hill Copper Property, our Gavilanes Property, our Courtland Mines Property and our Alaska property.

We wish to complete the following objectives within the time periods specified, subject to our obtaining the funding necessary for the continued exploration of our mineral properties:

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15

Hill Copper Property, Arizona

We plan to acquire additional land through negotiations with private landholders and through staking additional unpatented mining claims on free land. We anticipate that the Phase I work program will cost
$110,000.

We also plan to conduct a small drill program of approximately 15 to 25 diamond drill holes on our current landholdings to confirm the previously identified resources and to test additional exploration targets with the goal
of increasing the resource estimates. We have budgeted $500,000 for Phase II of the recommended work program.

Gavilanes Property

We plan to make the option payment of US$15,000 due February 15, 2007 in order to keep the Gavilanes Option in good standing.

We plan to implement Phase I work for the Gavilanes Property. We will review and evaluate all the pertinent data available in Culiacan. We will follow-up with a field examination at the Gavilanes Property. Anticipated costs
for this Phase I review are $20,000.

We plan to conduct a drilling program to test three of the best ten targets identified at the Gavilanes Property. Our goal is to identify an economic, bulk mineable, open pittable deposit with a total of 750 meters. We
anticipate that this drill program will take one month to complete and is estimated to cost $100,000.

If warranted by the results of Phase I and the initial drilling program, we will conduct a Phase II drill program consisting of seven holes for a total of 1,750 meters. We estimate the cost of Phase II to be $270,000
and take three to four months to complete.

Lake Iliamna Property, Alaska

We plan to repeat certain portions of the induced polarization survey conducted in Phase I in order to gather data before making a decision to move to Phase II. The cost to repeat Phase I is budgeted at $35,000 and is
planned for the early summer of 2007.

If warranted by the results of Phase I, we intend to proceed with Phase II of our recommended exploration program. Phase II will consist of detailed follow-up geological mapping and prospecting of the claim area, with grid
controlled geochemical and geophysical surveys as required to cover areas of specific interest as identified in Phase I. Phase II is intended to identify the geological environment underlying the mineral claims and a detailed mineralization map to
scale should be produced. Phase II is estimated to cost $23,000. We anticipate that Phase II would be conducted during the middle of the summer of 2007 and would take approximately six weeks to complete.

We anticipate drilling a number of shallow core holes at a cost of $400,000 to confirm the drilling results of previous explorers and to test new exploration targets.

General Operating Expenses

We anticipate spending approximately $25,000 in ongoing general and administrative expenses per month for the next twelve months, for a total anticipated expenditure of $133,333 over the next twelve months. The
general and administrative expenses for the year will consist primarily of professional fees for the audit and legal work relating to our regulatory filings throughout the year, as well as transfer agent fees, annual mineral claim fees of $2,500
to the State of Alaska, maintaining an office in Littleton, Colorado and maintaining a field office in Culiacan, Mexico, and general office expenses.

At August 31, 2006, we had cash on hand of $316,776 and a working capital deficit of $225,238.

Over the next twelve months we intend to use our available funds to expand on the exploration and development of our leases, as follows:

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|Estimated Net Expenditures
      During the Next Twelve Months   |           
|---------------------------------------------------------------- | ----------
|General, Administrative and Corporate Expenses                   | $60,000   
|Phase I program on Hill Copper Property                          | 110,000   
|Drill program on Courtland Mines Property                        | 400,000   
|Phase II program on Hill Copper Property                         | 500,000   
|Option payment due February 15, 2007 on Gavilanes
      Property | 15,000    
|Phase I review of Gavilanes Property                             | 20,000    
|Drilling program on Gavilanes Property                           | 100,000   
|Phase II program on Gavilanes Property                           | 270,000   
|Phase I program on Alaska Property                               | 35,000    
|Phase II program on Alaska Property                              | 23,000    
|Working Capital                                                  | 67,000    
|Total                                                            | $1,600,000

As at August 31, 2006, we had $542,014 in
current liabilities related to staged option payments for our Mexican Property.
Our financial statements report a net loss of $43,677 for the three month period
ended August 31, 2006 compared to a net loss of $7,244 for the three month
period ended August 31, 2005. Our net cash used in operations for the three
months ended August 31, 2006 was $43,677 compared to $7,244 used in the three
months ended August 31, 2005. Our accumulated losses increased to $ 156,046 as
of August 31, 2006. General, administrative and corporate expenses increased to
$16,218 for the three month period ended August 31, 2006, as compared to nil for
the three month period ended August 31, 2005 due to a significant increase in
activities.

Our total liabilities as of August 31,
2006 were $542,014 as compared to total liabilities of $18,376 as of May 31,
2006. The increase was due to stock subscription payable, advance on investment
and accounts payable.

Liquidity and Capital
Resources

At August 31, 2006, we had cash on hand of
$316,776 and a working capital deficit of $225,238.

In order to proceed with our plans we have
raised funds by way of a private placement of equity securities in our company.
On September 21, 2006, we issued 4,000,000 common shares of our capital stock
for gross proceeds of $1,600,000.

During the next twelve-month period, we
anticipate that we will not generate any revenue. Therefore, we must obtain
additional financing in order to continue our plan of operations. We believe
that debt financing will not be an 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 phases
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 abandon our mineral claims and our
plan of operations.

We may consider entering into a joint
venture arrangement to provide the required funding to develop the mineral
claims. We have not undertaken any efforts to locate a joint venture partner for
the mineral claims. 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. 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.

Product Research and
Development

We do not intend to spend any funds on
product research and development over the twelve months ending August 31,
2007.

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Purchase of Significant Equipment

We do not intend to purchase any significant equipment over the twelve months ending August 31, 2007.

Employees

As of the date of this quarterly report, we do not have any employees other than our officers who serve the company on a consulting basis. We intend to retain independent geologists and consultants on a contract basis to
conduct the work programs on our mineral properties.

Subsidiaries

On August 17, 2006, we completed our acquisition of all of the issued and outstanding common stock of Aurelio Resources Inc., a privately-owned Colorado corporation engaged in mineral exploration. As a result, Aurelio
Resources Inc. is now a wholly-owned subsidiary of our company. Aurelio Resources Inc. owned a 100% interest in 13 unpatented mining claims on a property located in southeastern Arizona.

We also own 98% of the issued and outstanding common shares of Minera Milenium SA de CV., a Mexican incorporated company, which holds an option to earn a 100% interest in 3 mining claims/concessions in Durango, Mexico,
known as the Gavilanes Property.

We acquired Bolsa Resources Inc., an Arizona company, in September 2006, to facilitate the acquisition of the Courtland Mines Property from Hope Mining.

Going Concern

We have suffered recurring losses from operations. The continuation of our company as a going concern is dependent upon our company attaining and maintaining profitable operations and raising additional capital. The
financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations.

Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended May 31, 2006, our independent auditors
included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent
auditors.

The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

Off-Balance Sheet Arrangements

We have no significant 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.

Recent Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151, Inventory Costs (An Amendment of ARB No. 43, Chapter 4). SFAS 151 amends and clarifies financial accounting and reporting for abnormal amounts of idle facility
expense, freight, handling costs, and wasted material (spoilage). Our company has adopted the provisions of SFAS No. 151 which are effective in general for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption did
not have a material effect on the results of operations of the Company.

In December 2004, the FASB issued SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions (An Amendment of FASB Statements No. 66 and 67). SFAS 152 amends FASB 66 and 67 to reference the accounting
and

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reporting guidance for real estate time-sharing transactions provided for in AICPA Statement of Position 04-2. of our company has adopted the provisions of SFAS No. 152 which are effective for financial statements for
fiscal years beginning after June 15, 2005. The adoption did not have a material effect on the results of operations of the Company.

In December 2004, the FASB issued SFAS No. 153, Exchange of Nonmonetary Assets (An Amendment of APB No. 29). SFAS 153 amends Opinion 29 to eliminate the fair value accounting exception for nonmonetary exchanges
of similar productive assets, and replaces that exception with a general exception for nonmonetary assets that do not have commercial substance. Our company has adopted the provisions of SFAS No. 153 which are effective in general for nonmonetary
asset exchanges occurring in fiscal years beginning after June 15, 2005. The adoption did not have a material effect on the results of operations of the Company.

In March 2005, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment. SFAS 123(r) requires that the cost resulting from all share-based payment transactions be recognized in the financial statements.
Our company has adopted the provisions of SFAS No. 123(r) which are effective in general for transactions entered into or modified after June 15, 2005. The adoption did not have a material effect on the results of operations of our
company.

In May 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154, Accounting Changes and Error Corrections  A Replacement of APB Opinion No. 20 and SFAS No. 3. SFAS 154 changes the
requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the
pronouncement does not include specific transition provisions. SFAS 154 requires retrospective application to prior periods financial statements of changes in accounting principle, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change. We have adopted the provisions of SFAS No. 154, which are effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The adoption
did not have a material effect on the results of operations of our company.

In February 2006, the FASB issued SFAS No. 155 Accounting for Certain Hybrid Financial Instruments  an amendment of FASB Statements No. 133 and 140, to simplify and make more consistent the accounting for
certain financial instruments. We have adopted the provisions of SFAS No. 155, which are effective in general for financial instruments acquired or issued in fiscal years beginning after September 15, 2006. The adoption did not have a material
effect on the results of operations of our company.

In March 2006, the FASB issued SFAS No. 156 Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities. This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with
changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. Our company has adopted the provisions of SFAS No. 156, which are effective in general for an entitys fiscal year beginning after
September 15, 2006. The adoption did not have a material effect on the results of operations of our company.

Application of Critical Accounting Policies

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.

RISK FACTORS

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

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

Our common shares are considered speculative. Prospective investors should consider carefully the risk factors set out below.

Risks Related To Our Business

Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.

Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of
the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems
relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineral deposits. Problems such as unusual or
unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our
claims. If this happens, our business will likely fail.

Because of the speculative nature of exploration of mineral properties, there is no assurance that our exploration activities will result in the discovery of new commercially exploitable quantities of
minerals.

We plan to conduct mineral exploration on our mineral properties. The search for valuable minerals as a business is extremely risky. We can provide investors with no assurance that additional exploration on our properties
will establish that commercially exploitable reserves of minerals exist on our property. Additional potential problems that may prevent us from discovering any reserves of minerals on our property include, but are not limited to, unanticipated
problems relating to exploration and additional costs and expenses that may exceed current estimates. If we are unable to establish the presence of commercially exploitable reserves of minerals on our property our ability to fund future exploration
activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.

Because our mineral properties are without known mineral reserves and because we have never made a profit from our operations, our securities are highly speculative and investors may lose all of their investment in our
company.

Our securities must be considered highly speculative, generally because of the nature of our business and our early stage of exploration. Our mineral properties are in the exploration stage only and are without known
deposits of minerals.

Accordingly, we have not generated revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any
profitability in the future from our business will be dependent upon locating and exploiting mineral reserves or selling the rights to exploit those mineral reserves. The likelihood of any of our mineral properties containing valuable and
commercially exploitable minerals is extremely remote. In all probability, our mineral properties do not contain any reserves and any funds that we spend on exploration will be lost. We may never discover mineral resources in our mineral properties
or any other area, or we may do so and still not be commercially successful if we are unable to exploit those resources profitably or earn revenues from selling the rights to exploit any mineral resources we discover. We may not be able to operate
profitably and may have to cease operations, the price of our securities may decline and investors may lose all of their investment in our company.

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

The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which
we may elect not

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to insure. At the present time we have no
coverage to insure against these hazards. The payment of such liabilities may
have a material adverse effect on our financial position.

The potential profitability of mineral
ventures depends in part upon factors beyond the control of our company and even
if we discover and exploit mineral deposits, we may never become commercially
viable and we may be forced to cease operations.

The commercial feasibility of mineral
properties is dependent upon many factors beyond our control, including the
existence and size of mineral deposits in the properties we explore, the
proximity and capacity of processing equipment, market fluctuations of prices,
taxes, royalties, land tenure, allowable production and environmental
regulation. These factors cannot be accurately predicted and any one or a
combination of these factors may result in our company not receiving an adequate
return on invested capital. These factors may have material and negative effects
on our financial performance and our ability to continue operations.

Exploration and exploitation activities
are subject to comprehensive regulation which may cause substantial delays or
require capital outlays in excess of those anticipated causing an adverse effect
on our company.

Exploration and exploitation activities
are subject to federal, provincial, and local laws, regulations and policies,
including laws regulating the removal of natural resources from the ground and
the discharge of materials into the environment. Exploration and exploitation
activities are also subject to federal, provincial, and local laws and
regulations which seek to maintain health and safety standards by regulating the
design and use of drilling methods and equipment.

Various permits from government bodies are
required for drilling operations to be conducted, and no assurance can be given
that such permits will be received. Environmental and other legal standards
imposed by federal, provincial, or local authorities may be changed and any such
changes may prevent us from conducting planned activities or increase our costs
of doing so, which would have material adverse effects on our business.
Moreover, compliance with such laws may cause substantial delays or require
capital outlays in excess of those anticipated, thus causing an adverse effect
on us.

Additionally, we may be subject to
liability for pollution or other environmental damages which we may not be able
to or elect not to insure against due to prohibitive premium costs and other
reasons. Any laws, regulations or policies of any government body or regulatory
agency may be changed, applied or interpreted in a manner which will alter and
negatively affect our ability to carry on our business.

As we face intense competition in the
mineral exploration industry, we will have to compete with our competitors for
financing and for qualified managerial and technical employees.

Our mineral properties are in Alaska,
Arizona and Mexico and our competition there includes large, established mining
companies with substantial capabilities and with greater financial and technical
resources than we have. As a result of this competition, we may have to compete
for financing and be unable to acquire financing on terms we consider
acceptable. We may also have to compete with the other mining companies in the
recruitment and retention of qualified managerial and technical employees. If we
are unable to successfully compete for financing or qualified employees, our
exploration programs may be slowed down or suspended, which may cause us to
cease operations as a company.

Risks Associated With Our
Company

We have a history of losses and have a
deficit, which raises substantial doubt about our ability to continue as a going
concern.

We have not generated any revenues since
our incorporation and we will continue to incur operating expenses without
revenues until we are in commercial deployment. Our net loss from inception
February 19, 2004 to August 31, 2006 was $155,732. We had cash in the amount of
$316,776 as of August 31, 2006. We currently do not have any operations and we
have no income. We estimate our average monthly operating expenses to be
approximately $133,333 each month. We cannot provide assurances that we will be
able to successfully explore and develop our business. These circumstances raise
substantial doubt about our ability to continue as a going concern as described
in an explanatory paragraph to our independent auditors report on our audited
financial statements, dated August 21, 2006, as per our K10-SB. If we are unable
to continue as a going concern, investors will likely lose all of their
investments in our company.

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Our future is dependent upon our ability to obtain financing. If we do not obtain such financing, we may have to cease our exploration activities and investors could lose their entire investment.

There is no assurance that we will operate profitably or will generate positive cash flow in the future. We will require additional financing in order to proceed beyond the first few months of our exploration program. We
will also require additional financing for the fees we must pay to maintain our status in relation to the rights to our properties and to pay the fees and expenses necessary to become and operate as a public company. We will also need more funds if
the costs of the exploration of our mineral claims are greater than we have anticipated. We will also require additional financing to sustain our business operations if we are not successful in earning revenues. We currently do not have any
arrangements for further financing and we may not be able to obtain financing on commercially reasonable terms or terms that are acceptable to us when it is required. Our future is dependent upon our ability to obtain financing. If we do not obtain
such financing, our business could fail and investors could lose their entire investment.

Because we may never earn revenues from our operations, our business may fail and then investors may lose all of their investment in our company.

We have no history of revenues from operations. We have never had significant operations and have no significant assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate
profitably. Our company has a limited operating history and is in the exploration stage. The success of our company is significantly dependent on the uncertain events of the discovery and exploitation of mineral reserves on our properties or selling
the rights to exploit those mineral reserves. If our business plan is not successful and we are not able to operate profitably, then our stock may become worthless and investors may lose all of their investment in our company.

Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We
recognize that if we are unable to generate significant revenues from the exploration of our mineral claims in the future, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the
likelihood that we will prove successful, and we can provide no assurance that we will generate any revenues or ever achieve profitability. If we are unsuccessful in addressing these risks, our business will fail and investors may lose all of their
investment in our company.

Risks Associated With Our Common Stock

We do not intend to pay dividends on any investment in the shares of stock of our company.

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our
funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stocks price. This may never happen and investors may
lose all of their investment in our company.

Our stock is a penny stock. Trading of our stock may be restricted by the SECs penny stock regulations which may limit a stockholders ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines penny stock to be any equity security that has a market price (as defined) less than $5.00
per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than
established customers and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standard risk disclosure document in a
form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must

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be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customers confirmation. In addition, the penny stock rules require that
prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may
affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

Item 3. Controls and Procedures.

As required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the effectiveness of the design and operation of our companys disclosure controls and procedures as of the end of the period
covered by this quarterly report, being August 31, 2006. This evaluation was carried out under the supervision and with the participation of our companys management, including our companys president and chief executive officer and chief
financial officer. Based upon that evaluation, our companys president and chief executive officer and chief financial officer concluded that our companys disclosure controls and procedures are effective as at the end of the period
covered by this report. There have been no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal
controls over financial reporting.

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

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 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.

None.

Item 5. Other Information

Effective as of June 16, 2006, our board of directors passed a resolution cancelling the Bylaws in their entirety and replacing them with a new set of Bylaws. Our new Bylaws can be found under Exhibit 3.1 of the current
report on Form 8-K filed on October 10, 2006.

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23

Item 6. Exhibits.

Number
Description

|3.1   | Articles of Incorporation(1)                                                                                                                          
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|3.2   | By-Laws(13)                                                                                                                                           
|     
|3.3   | Specimen Stock Certificate(2)                                                                                                                         
|     
|10.1  | Mining Quitclaim Deed(1)                                                                                                                              
|     
|10.2  | Mineral Exploration Management
      Service Agreement between Alaska Earth Sciences, Inc. and Furio Resources
      Inc. dated March 7, 2005(3)      
|     
|10.3  | Geophysical Survey Agreement
      between SJ Geophysical Ltd. and Furio Resources Inc. dated May 5, 2005(4)                                          
|     
|10.4  | Agreement between Aurelio
      Resources Inc. and Furio Resources Inc. dated April 27, 2006(5)                                                       
|     
|10.5  | Amended Agreement between Aurelio
      Resources Inc. and Furio Resources Inc. dated June 9, 2006(6)                                                 
|     
|10.6  | Amended Agreement between Aurelio
      Resources Inc. and Aurelio Resource Corporation dated July 13, 2006(7)                                        
|     
|10.7  | Consulting Agreement among
      Aurelio Resource Corp., International American Resources Inc. and Dr.
      Frederik Warnaars dated August 9, 2006(8)
|     
|10.8  | Consulting Agreement among
      Aurelio Resource Corp., Jonson Management Company and David C. Jonson
      dated August 9, 2006(8)                  
|     
|10.9  | Consulting Agreement among
      Aurelio Resource Corp., Salzburg Holdings Inc. and Stephen Doppler dated
      August 9, 2006(8)                     
|     
|10.10 | Purchase Agreement dated May 15,
      2006, between Aurelio Resources Inc. and Hope Mining and Milling Company(10)                                   
|     
|10.11 | Amending Agreement dated
      September 11, 2006 between Aurelio Resources Inc., Bolsa Resources Inc.
      and Hope Mining and Milling Company(10)  
|     
|10.12 | Form of Subscription Agreement 
      US Accredited(12)                                                                                              
|     
|10.13 | Form of Subscription Agreement 
      Offshore(12)                                                                                                   
|     
|14.1  | Code of Ethics(11)                                                                                                                                    
|     
|21    | Subsidiaries: Aurelio Resources
      Inc., Minera Milenium S.A. de C.V. and Bolsa Resources Inc.                                                     
|     

|31.1* | Certification Statement of
      the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 302 of the Sarbanes-Oxley Act of
    2002.
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                              
|32.1* | Certification Statement of
      the Chief Executive Officer and Principal Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 
|      |                                                                                                                                                              

* Filed herewith.

|(1) | Incorporated by reference to our
      Form SB-2 filed with the Securities and Exchange Commission on July 9,
      2004.     
|--- | ------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Incorporated by reference to our
      Form 8-A filed with the Securities and Exchange Commission on September
      10, 2004.
|   
|(3) | Incorporated by reference to our
      Form 10-QSB filed with the Securities and Exchange Commission on April 5,
      2005.  
|   
|(4) | Incorporated by reference to our
      Form 10-KSB filed with the Securities and Exchange Commission on July 27,
      2005.  
|   
|(5) | Incorporated by reference to our
      Form 8-K filed with the Securities and Exchange Commission on May 2,
      2006.       
|   
|(6) | Incorporated by reference to our
      Form 8-K filed with the Securities and Exchange Commission on June 15,
      2006.     
|   
|(7) | Incorporated by reference to our
      Form 8-K filed with the Securities and Exchange Commission on July 17,
      2006.     
|   
|(8) | Incorporated by reference to our
      Form 8-K filed with the Securities and Exchange Commission on August 23,
      2006.   
|   

---

24

|(9)  | Incorporated by reference to our
      Form 8-K filed with the Securities and Exchange Commission on August 11,
      2006.      
|---- | ---------------------------------------------------------------------------------------------------------------------------------
|    
|(10) | Incorporated by reference to our
      Form 8-K filed with the Securities and Exchange Commission on September
      22, 2006.   
|    
|(11) | Incorporated by reference to our
      Form 10-KSB filed with the Securities and Exchange Commission on September
      12, 2006.
|    
|(12) | Incorporated by reference to our
      Form 8-K filed with the Securities and Exchange Commission on September
      25, 2006.   
|    
|(13) | Incorporated by reference to our
      Form 8-K filed with the Securities and Exchange Commission on October 10,
      2006.     
|    

SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

AURELIO RESOURCES
CORPORATIONBy: /s/ Frederik
Warnaars

Frederik Warnaars, President, Chief
Executive Officer (Principal Executive Officer), Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer),
Treasurer, and Director

Dated: October 23, 2006

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