UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB**






[X]
            ANNUAL
              REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
              1934For the fiscal year ended December
                31, 2006[  
              ]
            TRANSITION REPORT UNDER SECTION 13 OR
              15(d)
              OF THE SECURITIES EXCHANGE ACTFor
              the transition period from _________ to ________Commission
                file number000-51013




Colombia
                Goldfields Ltd.(Name
                of small business issuer in its
                charter)




Delaware
            76-0730088(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification
                No.)#208-8
                King Street East, Toronto, Ontario Canada
            M5C
                1B5(Address
                of principal executive offices)
            (Zip
                Code)Issuer’s
                telephone number:(416)
                203-3856Securities
                registered under Section 12(b) of the
                Exchange Act:Title
                of each class
            Name
                of each exchange on which registeredNone
            Not
                ApplicableSecurities
                registered under Section 12(g) of the Exchange Act:Common
                Stock, par value $0.00001(Title
                of class)




Check
      whether the Issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities 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
      [  ]





Check
      if
      disclosure of delinquent filers in response to Item 405 of Regulation S-B is
      not
      contained in this form, and no disclosure will be contained, to the best of
      registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB [ ]





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





State
      issuer’s revenue for its most recent fiscal year. $0





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the average bid and asked price of
      such
      common equity, as of a specified date within the past 60 days.


$63,321,061
      as of March 21, 2007





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date. 65,056,849 Common Shares as of March 21,
      2007





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





Table
          of Contents









**TABLE
      OF CONTENTS**





PagePART
                IItem
                1.
            Description
                of Business
            3Item
                2.
            Description
                of Property
            11Item
                3.
            Legal
                Proceedings
            25Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            25PART
                IIItem
                5.
            Market
                for Common Equity and Related Stockholder Matters
            26Item
                6.
            Plan
                of Operation
            30Item
                7.
            Financial
                Statements
            48Item
                8.
            Changes
                In and Disagreements With Accountants on
                Accounting and Financial Disclosure
            49Item
                8A.
            Controls
                and Procedures
            49Item
                8B.
            Other
                Information
            49PART
                IIIItem
                9.
            Directors,
                Executive Officers, Promoters and Control Persons;
                Compliance With Section 16(a) of the Exchange Act
            50Item
                10.
            Executive
                Compensation
            56Item
                11.
            Security
                Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters
            64Item
                12.
            Certain
                Relationships and Related
                Transactions
            65Item
                13.
            Exhibits
            67Item
                14.
            Principal
                Accountant Fees and Services
            68







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          of Contents


**** **PART
      I**


**Item
      1. Description of Business**





**Our
      Business**





We
      are
      actively advancing two separate projects known as the Marmato Mountain
      Development Project and the Caramanta Exploration Project, both of which are
      located in Colombia’s Marmato Mountain Gold District. These projects are
      separated by approximately seven kilometers and our focus is on securing the
      region between Caramanta and Marmato and any other outlying targets that have
      the potential for mining.





We
      have
      been purchasing mineral licenses in the Zona Alta portion of the Marmato project
      since 2005. Our objective is to purchase all of the mineral licenses and then
      consolidate them into a single license. As part of our acquisition program
      at
      the Marmato and Caramanta projects we have also initiated a review of the
      available geological data for the projects and are in the process of compiling
      all information into a comprehensive database. We have identified a number
      of
      immediate exploration targets at both the Marmato and Caramanta locations.





With
      the
      Marmato and Caramanta projects, we have acquired a portion of a major historical
      gold producing district in Colombia. At the present time a number of small
      miners are still working the Zona Alta of the Marmato project and Mineros
      Nacionales is mining the Zona Baja at a rate of 300t/d. Very little exploration
      has been conducted in the past within the area of the Marmato and Caramanta
      projects to adequately determine the true extent of the remaining
      mineralization. Therefore, the potential economic viability of the project
      remains unknown, however we are optimistic that we will be successful in
      identifying a viable bulk tonnage, low grade gold and silver deposit with our
      Marmato and Caramanta projects. A number of other targets remain on the Marmato
      and Caramanta projects which we intend to explore further at a later
      date.





We
      have
      advanced our ownership interests in these projects as follows:





**(A)
      Caramanta Project**





(i)
      Caramanta Project - concessions 6602, 1343 and 6329





On
      September 22, 2005, we entered into an Assignment Agreement with Investcol
      Limited (“Investcol”) where Investcol assigned, transferred, and conveyed to us
      all of its rights under a contract for Purchase Option of Mining Concessions
      (“Original Option Contract”) entered into with Cia Servicios Y Logisticos Ltda.
      As the result of the Assignment Agreement, we acquired an option to purchase
      certain mining, mineral and exploration rights on property known as Concessions
      6602, 1343 and 6329 located in Caramanta Municipality, Antioquia Department,
      Medellin, Colombia for $10,000, on condition that $2,990,000 be invested in
      exploratory work on the property over a three year period. As consideration
      for
      these rights, we issued 1,000,000 restricted shares of common stock to Investcol
      at a deemed fair market value of $ 0.25 per share for total consideration of
      $
      250,000.


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Pursuant
      to the Assignment Agreement, we also committed to fund the $2,990,000
      exploratory work as follows:





(a)
            $500,000
                upon the closing of the Assignment
                Agreement;


(b)
            $750,000
                during the 12 month period commencing June 25, 2006; and on the earlier
                of
                June, 2006 or commencement of the second exploration phase, one million
                restricted shares of our common shares;


(c)
            $1,740,000
                during the 12-month period commencing June 25,
                2007.





In
      addition, we agreed to pay Investcol $7,500 per month as an office fee through
      July 31, 2006. On September 25, 2006 the Assignment Agreement was superseded
      in
      connection with our agreement to buy the Mining Concessions outright as
      described in (iii) below.





(ii)
      Caramanta Project - concessions 6993,7039,6821 and 6770 and HET 31, 32, 26,
      27
      and, HETG 01





On
      February 16, 2006 we entered into a Letter of Intent “LOI” with Investcol to
      acquire Investcol’s rights in a Contract for Purchase entered into with Cia
      Servicios y Logisticos Ltda. (“Cia Servicios”) The LOI outlined a proposed
      transaction where we intended to acquire Investcol’s rights in certain mining
      contracts to exclusively engage in mining activities on concessions 6993, 7039,
      6821 and 6770 (the “Contracts”) and options that Investcol holds to acquire the
      exclusive rights to engage in mining activities on concessions HET 31, 32,
      26,
      27 and HETG 01 (the “Options”) all located within an area in Colombia referred
      to as the Caramanta location.





The
      LOI
      was non-binding and subject to final negotiation and the execution of a
      definitive agreement. On April 10, 2006, we entered into a definitive agreement
      with Investcol finalizing this transaction (the “Assignment
      Agreement” *)* .
      In
      connection with the Assignment Agreement, we paid Investcol total consideration
      of $350,000 and issued 1,000,000 restricted shares of our common stock. Under
      the terms of the Assignment Agreement, Investcol agreed to pay the exercise
      price of $150,000 on the Options whose titles remained in the name of Cia
      Servicios until the final exploration commitments have been made. The final
      option payments were made prior to July 30, 2006.





On
      September 25, 2006 the Assignment Agreement was superseded in connection with
      our agreement to acquire the Mining Concessions outright as described
      below.





(iii)
      Acquisition of 100% of the Caramanta Exploration Properties





On
      September 25, 2006, we, through the acquisition of the outstanding shares of
      Gavilan Minerales, S.A., (“Gavilan”), acquired full legal title to the Caramanta
      project concessions described in items 3(i) and 3(ii) above. Consideration
      paid
      for the acquisition included $300,000 cash and the issuance of 1,150,000
      restricted common shares at a fair value of $1.41 per share. In addition, a
      $50,000 finders fee was paid to Investcol. The total acquisition cost of
      $1,971,500 was allocated to the net assets acquired as follows:


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Mineral
                and exploration properties and rights
            
            $1,780,841Property,
                plant and equipment
            
            190,659$1,971,500





The
      purchase of mineral and exploration properties and rights was recorded as part
      of mineral property rights acquisition and exploration expenditures in fiscal
      2006. As a result of our acquisition of Gavilan, we no longer have any minimum
      exploratory work obligations related to the Caramanta concessions.





**(B)
      Marmato Project**




On
      January 12, 2006, we entered into a Stock Purchase Agreement with Investcol
      and
      RNC (Colombia) Limited (the "Agreement"), whereby we would (i) acquire
      twenty-five percent (25%) of the issued and outstanding stock of RNC (Colombia)
      Limited, a Belize corporation ("RNC") and (ii) hold an option to acquire the
      remaining seventy five percent (75%) of RNC's issued and outstanding stock
      over
      a period of time. RNC is the beneficial holder of 94.99% of the issued and
      outstanding stock of Compania Minera De Caldas, S.A. ("Caldas"), a Colombia
      corporation that (i) owns certain mining, mineral and exploration rights, (ii)
      has options to acquire mining, mineral and exploration rights and (iii) has
      exclusive rights to evaluate certain property, all located in the Zona Alta
      portion of the Marmato project in Colombia.





Pursuant
      to the Stock Purchase Agreement, we had the option to:





a)
            Acquire
                25% of the total outstanding shares of RNC by the issuance of 1,000,000
                of
                our common shares to Investcol and the advance to RNC of a $1,200,000
                non-interest bearing loan. We completed the acquisition of 25% of
                RNC by
                the issuance of 1,000,000 shares of our restricted common stock to
                Investcol and the advancement of $1,200,000 by way of a non-interest
                bearing loan to RNC in the second quarter of fiscal 2006;




b)
            Acquire
                an additional 25% of RNC by issuance of 2,000,000 of our common shares
                to
                Investcol and the advance of an additional $4,000,000 non-interest
                bearing
                loan to RNC. We completed the acquisition of the second 25% of RNC
                by the
                issuance to Investcol of 2,000,000 shares of our restricted common
                stock
                and the advancement of $4,000,000 by way of a non-interest bearing
                demand
                loan to RNC in the second quarter of fiscal 2006;





c)
            Acquire
                an additional 25% of RNC by the issuance of 4,000,000 of our common
                shares
                to Investcol and the advance of an additional $15,000,000 non-interest
                bearing loan to RNC on or before October 30, 2006.On
                August 22, 2006 we amended the January 12, 2006 Stock Purchase Agreement
                with Investcol and RNC (Colombia) Limited and concurrently exercised
                our
                option to increase interest in RNC from 50% to 75% in the third quarter
                of
                fiscal 2006. Under the terms of the amended agreement, we issued
                4,200,000
                common shares and paid $200,000 to Investcol. In connection with
                this
                transaction we committed to provide an additional $5,000,000 by way
                of
                non-interest bearing demand loan to RNC by December 31, 2006 and
                provide
                sufficient funds to RNC, upon terms satisfactory to the Company,
                to
                complete a full bankable feasibility study of the Marmato Project;
                and




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d)
            Acquire
                the final 25% of RNC for a price equal to the 25% of the value of
                Caldas
                determined by a bankable feasibility study prepared by a certified
                mineral
                property evaluator, or other acceptable third party. We can make
                payment
                of the purchase price in either cash or our common shares.The
                terms of the agreement were amended on August 22, 2006. Under the
                terms of
                the amended agreement, we held an option to acquire the remaining
                25% of
                RNC on or before May 1, 2009 for a purchase price equal to 25% of
                the fair
                value of Caldes, as determined by a forthcoming feasibility study.
                The
                purchase price, pursuant to the amended agreement, was limited to
                a
                maximum of $15,000,000 plus 4,000,000 of our common shares. Payment
                of the
                purchase price could be satisfied in either cash or our common shares,
                or
                any combination thereof.





On
      December 14, 2006, the parties executed a Second Amendment to the Stock Purchase
      Agreement (the “Second Amendment”) in order to revise the consideration required
      to exercise our option to acquire the remaining 25% of the issued and
      outstanding stock of RNC. Subject to the revised terms set forth in the Second
      Amendment, we had the option to acquire an additional 15% interest in RNC,
      in
      exchange for the issuance of 4,000,000 common shares to Investcol. In connection
      with the execution of the Second Amendment, we exercised our option, resulting
      in us acquiring an additional 15% of RNC in exchange for us issuing 4,000,000
      common shares valued at $5,120,000 in the fourth quarter of fiscal 2006,
      bringing our total ownership to 90%. The revised terms set forth in the Second
      Amendment provide us with the option to acquire the remaining 10% of RNC until
      May 1, 2009 in exchange for a purchase price of $15,000,000. The purchase price
      can be made in either cash, shares of our common stock, or any combination
      thereof.





**(C
      ) The Kedahda Properties**





On
      August
      30, 2006 we purchased, through certain mining exploration properties in the
      Republic of Colombia and the related geochemical and other proprietary
      geological data from a wholly owned subsidiary of Anglo Gold Ashanti, Sociedad
      Kedahda, S.A., for $500,000 cash consideration.




***Competition***





The
      mineral exploration industry, in general, is intensively competitive and even
      if
      commercial quantities of reserves are discovered, a ready market may not exist
      for the sale of the reserves.




Most
      companies operating in this industry are more well-established and have greater
      resources to engage in the production of mineral claims. We were incorporated
      on
      March 25, 2003 and restructured our operations in the first quarter of 2005
      to
      pursue the exploration and development of mining properties located in Colombia.
      As a result, our operations are not well-established.





Given
      the
      scope of our planned exploration activities, our resources at the present time
      are limited. As a result of continuing losses, we may exhaust all of our
      resources and be unable to complete the exploration of any of our property
      interests. There is also significant competition to retain qualified personnel
      to assist in conducting mineral exploration activities. If a commercially


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viable
      deposit is found to exist and we are unable to retain additional qualified
      personnel, we may be unable to enter into production and achieve profitable
      operations. These factors set forth above could inhibit our ability to compete
      with other companies in the industry and entered into production of the mineral
      claims if a commercial viable deposit is found to exist.




Numerous
      factors beyond our control may affect the marketability of any substances
      discovered. These factors include market fluctuations, the proximity and
      capacity of natural resource markets and processing equipment, government
      regulations, including regulations relating to prices, taxes, royalties, land
      tenure, land use, importing and exporting of minerals and environmental
      protection. The exact effect of these factors cannot be accurately predicted,
      but the combination of these factors may result in our not receiving an adequate
      return on invested capital.




Gold
      Mining properties that produce at a cost higher than the prevailing market
      gold
      price generally cease operations whereas lower cost producers prosper. In the
      event a commercially viable deposit is found to exist, our method of competition
      will be to produce gold at a lower cost than the prevailing gold market price.
      We may be forced to cease operations if we are unable to produce at a cost
      lower
      cost than the prevailing gold market price.





***Patents,
      Licenses, Trademarks, Franchises, Concessions, Royalty Agreements, or Labor
      Contracts***





We
      do not
      own, either legally or beneficially, any patent or trademark.





***Research
      and Development***





We
      did
      not incur any research and development expenditures in the fiscal years ended
      December 31, 2006 or 2005.





***Subsidiaries***




We
      own
      certain mining rights and options to acquire mining rights in the Zona Alta
      portion of the Marmato deposit located in western Colombia as a result of our
      acquisition of a 90% equity interest in RNC (Colombia) Limited ("RNC"), a Belize
      corporation and a previously a wholly-owned subsidiary of Investcol Limited.
      We
      also own 94.99% of Gavilan Minerales S.A., a Colombia corporation.





***Existing
      and Probable Governmental Regulation***




We
      have
      and will, in the future, engage consultants to assist us with respect to our
      operations in Colombia. We are beginning to deal with the various regulatory
      and
      governmental agencies, and the rules and regulations of such agencies, in
      connection with our property interests in Colombia. No assurances can be given
      that we will be successful in our efforts. Further, in order for us to operate
      and grow our business in Colombia, we need to continually conform to the laws,
      rules and regulations of such country and local jurisdiction. It is possible
      that the legal and regulatory environment pertaining to the exploration and
      development of gold mining properties will


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change.
      Uncertainty and new regulations and rules could increase our cost of doing
      business, or prevent us from conducting our business.




The
      Marmato and Caramanta projects are subject to political, economic and other
      uncertainties, including the risk of expropriation, nationalization,
      renegotiation or nullification of existing contracts, mining licenses and
      permits or other agreements, changes in laws or taxation policies, currency
      exchange restrictions, changing political conditions and international monetary
      fluctuations. Future government actions concerning the economy, taxation, or
      the
      operation and regulation of nationally important facilities such as mines could
      have a significant effect on our business. No assurances can be given that
      the
      our plans and operations will not be adversely affected by future developments
      in Colombia




Title
      to
      land (in Western legal terms) is often unclear. Disputes over land ownership
      are
      common, especially in the context of resource developments. Identifying all
      the
      affected landowners or related stakeholders, and structuring compensation
      arrangements that are both fair and acceptable to all of them, is often
      extremely difficult. We believe that the satisfactory resolution of any local
      landowner or related stakeholder concerns is essential to the eventual
      development and operation of modern gold mines in the Marmato and Caramanta
      projects. The failure to adequately address any such landowner or related
      stakeholder issues will disrupt our plans. Although we will spend considerable
      time, effort and expense in an attempt to resolve any landowner or related
      stakeholder issues associated with our planned operations, no assurance can
      be
      given that disruptions arising out of landowner or related stakeholder
      dissatisfaction will not occur.




In
      Colombia, except for a few exceptions, the subsoils are owned by the
      State. The State may authorize private parties to explore and develop
      mineral deposits under concession contracts. Until 2001, they could also be
      developed under Exploration and Exploitation Contracts executed with specialized
      agencies of the Colombian State. However, as of 2001, Colombia’s New Mining
      Code permits only concession contracts, which are awarded by a single entity
      and
      are subject to a standard set of conditions.




The
      concession contract grants to a concessionaire, in an exclusive manner, the
      faculty to carry out within the given area, the studies, works and installations
      necessary in order to establish the existence of the minerals, object of this
      contract, and to exploit them according to the principles, rules and criteria
      belonging to the accepted techniques of geology and mining engineering. It
      covers also the faculty to install and build within the mentioned area and
      outside it, the equipment, services and works necessary for an efficient
      exercise of the rights set forth in the Colombian Mining Code. The concession
      contract will be agreed on for a term that the proponent requests, and up to
      a
      maximum of thirty (30) years. Such term will start from the date of inscription
      of the contract at the National Mining Register.




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The
      concession contract has three phases:





1.  Exploration
      Phase.




a. Starts
      once the contract is inscribed in the National Mining Registry (Registro Minero
      Nacional, RMN).


b. Valid
      for 3 years plus a 2 year extension.


c. Annual
      property
      tax.


d. Requires
      an annual
      Environmental Mining Insurance Policy for 5% of the value of the planned
      exploration expenditure for the year.


e. Present
      a mine plan (PTO) and
      an Environmental Impact Study (EIA) for the next phase.




2.  Construction
      Phase.


a.  Valid
      for
      3 years plus a 1 year extension.


b.  Annual
      property tax payments continue as in Exploration Phase.


c.  Requires
      an annual Environmental Mining Insurance Policy for 5% of the value of the
      planned investment as defined in the PTO for the year.


d.  Environmental
      License issued on approval of Environmental Impact Study.




3.  Exploitation
      Phase.


a.
      Valid
      for 30 years minus the time taken in the explortion and construction phases,
      which means that it is 21 to 24 years and is renewable for 30
      years.


b.  Annual
      Environmental Mining Insurance Policy required.


c.  No
      annual
      property tax.


d.  Pay
      royalty based on regulations at time of granting of the Contract.




We
      plan
      to apply for a master mining license which would include the exploration and
      mining rights for our Marmato Mountain Development Project.




***Compliance
      with Environmental Laws***





The
      Marmato and Caramanta Projects are subject to Colombian and local laws and
      regulations regarding environmental matters, the abstraction of water, and
      the
      discharge of mining wastes and materials. Any significant mining operations
      will
      have some environmental impact, including land and habitat impact, arising
      from
      the use of land for mining and related activities,


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and
      certain impact on water resources near the project sites, resulting from water
      use, rock disposal and drainage run-off. No assurances can be given that such
      environmental issues will not have a material adverse effect on our operations
      in the future.





The
      Colombian Mining Law 685 of 2001 requires an Environmental Mining Insurance
      Policy for each concession contract. In addition, this provision states that
      an
      Environmental Impact Study has to be presented at the end of the Exploration
      Phase if the concession is to proceed to the Construction Phase, and that this
      must be approved and an Environmental License issued before the Exploitation
      Phase can begin.





Exploration
      activities require an Environmental Management Plan and a Superficial Water
      Concession.





We
      have
      presented an Environmental Management Plan for drilling to the Departmental
      authority CORPOCALDAS (Corporación Autónoma Regional de Caldas or Caldas
      Regional Autonomous Corporation). This Plan includes a preliminary phase to
      close down the small mines and mills in the Zona Alta to stop the source of
      much
      of the contamination. We are currently in discussions with the Colombian
      government regarding the closure in the Zona Alta of the small mines and the
      related environmental liability.





A
      suitable water source has been identified for drilling water that will require
      a
      2,000 m pipe, and the application for the Superficial Water Permit is being
      prepared. Existing water permits in the zone are also being investigated as
      an
      alternative.





We
      have
      also started an environmental monitoring program to prepare an Environmental
      Baseline Study and future environmental studies.





Exploitation
      requires in addition an Environmental License, Permit for Springs, Forest Use
      Permit, Certificate of Vehicular Emissions, Emissions Permit and River Course
      Occupation Permit.





The
      Zona
      Alta has environmental issues due to past and current mining activities
      including:





·
            Surface
                disturbance and degradation including deforestation.




·
            Ground
                instability, collapse, landslides affecting mountain slopes and Marmato
                town.




·
            Absence
                of waste rock dumps and tailings ponds and dumping of waste rock
                down
                mountain slopes and into the Cascabel River and of tailings into
                rivers
                which drain into the Cauca River.




·
            Contamination
                of water by mercury, cyanide, acid drainage, heavy metals and solids.
                In
                addition contamination of water by untreated sewage from Marmato
                town
                which has no drainage or treatment system, and by agricultural chemicals
                and waste from cultivation of coffee, bananas
                etc.




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·
            Potential
                liability of prior operations which had no waste dumps or tailings
                pond
                and discharges tailings directly into the Cascabel River which drains
                into
                the Cauca River.




The
      Colombian and/or local government currently does not but could in the future
      require us to remedy such consequences. The costs of such remediation could
      be
      material. Future environmental laws and regulations could impose increased
      capital or operating costs on us and could restrict the development or operation
      of any gold mines.





***Employees***





We
        have
        74 employees, primarily consisting of administrative and technical staff
        in
        Colombia. We also retain consultants to assist in operations on an as-needed
        basis.


**Item
      2. Description of Property**





Our
      principal offices are located at #208-8 King Street East, Toronto, Ontario,
      Canada M5C 1B5.





Our
      office in Medellín
      is located at Carrera
      34 No 5G 86, Medellin, Poblado, Colombia.





**Marmato
      Mountain Development Project**




*Location
      & Access*




The
      Marmato project is located in the Departments of Caldas and Antioquia, Colombia
      and is approximately 80 km due south of the city of Medellín, which is the
      capital of Antioquia. The latitude and longitude for the Marmato project is
      approximately 5°28’24” N, 75°35’57”W.





The
      Zona
      Alta of the Marmato project is located on Cerro El Burro, which is also known
      unofficially as Alto del Burro, on the west side of urban centre of Marmato
      at
      Universal Transverse Mercator (UTM) coordinates, Zone 18N 433,493E - 605,232N.
      The datum used for the UTM coordinates was WGS84 Zone 18N.





The
      Marmato mining property is divided into two levels vertically comprising the
      Zona Alta and the Zona Baja. This division was made in 1954 and allowed
      concession contracts to be defined by horizontal levels. The Zona Alta is mined
      by numerous small miners and we are in the process of purchasing the individual
      mineral licenses which comprise the Zona Alta. We hold our interest in the
      Marmato project through our wholly-owned Colombian subsidiary Minera de Caldas.
      Minera de Caldas holds a
      number
      of mineral
      licenses in the Marmato Zona Alta (Upper Zone) which has an area of 178.9489
      ha.





The
      properties are a three-hour drive from Medellín, via the Medellín to Cali
      highway (the highways do not have route numbers) which is part of the Pan
      American Highway. The route from Medellín is via Itaguí (7 km), Caldas (12 km),
      Alto de Minas (13 km), Santa Barbara (27 km), La Pintada (26 km), La Guaracha
      del Rayo (32 km) and turn onto a secondary road to Marmato (8 km, the road
      is
      asphalted in the initial part and unsurfaced for the rest).


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The
      topography in the Marmato area is abrupt with a relief of about 1,600 m between
      the Cauca River at 600 m altitude on the east side of the project and the peaks
      of the nearby mountains of up to 2,200 m altitude. There is craggy outcrop
      in
      the upper parts of the mountain, and large landslides and talus slopes have
      formed as a result of mining activities. The Marmato veins outcrop on an
      east-facing mountain slope called Cerro El Burro with the mineralized area
      bounded by the El Pantano stream on the north side and the Cascabel stream
      on
      the south. The Cauca is a major north-flowing river in a deep valley that
      separates the Western and Central Cordilleras.





*Description
      of Our Interest in Property*




We
        acquired an interest in certain mining rights and options to acquire mining
        rights in the Zona Alta portion of the Marmato deposit located in western
        Colombia as a result of our acquisition of an equity interest in RNC (Colombia)
        Limited ("RNC"), a Belize corporation and a wholly-owned subsidiary of Investcol
        Limited. Pursuant to a Stock Purchase Agreement we entered into on January
        12,
        2006 with Investcol and RNC, we acquired 25% of RNC’s issued and outstanding
        stock. Thereafter on April 28, 2006, we acquired an additional 25% of RNC’s
        issued and outstanding common stock, resulting in our owning 50% of RNC’s issued
        and outstanding common stock. Thereafter, we acquired an additional 25% of
        RNC’s
        issued and outstanding common stock, resulting in our owning 75% of RNC’s issued
        and outstanding common stock, in consideration for the issuance of 4,200,000
        shares of our common stock to Investcol, payment of $200,000 to Investcol,
        a
        commitment to provide a $5,000,000 non-interest bearing loan to RNC by December
        31, 2006, and commitment to provide sufficient funds to RNC to complete the
        feasibility study on Marmato Mountain Project pursuant to the First Amendment
        to
        the Stock Purchase Agreement (the “First Amendment”) to the Stock Purchase
        Agreement executed on August 22, 2006.
  On
        December 14, 2006, we entered into a Second Amendment to the Stock Purchase
        Agreement (the “Second Amendment”) and concurrently acquired an additional 15%
        interest in RNC, resulting in our owning 90% of RNC, in exchange for the
        issuance of 4,000,000 shares of our common stock to Investcol. Subject to
        the
        revised terms of the Second Amendment, we have the option to acquire the
        final
        10% interest in RNC until May 1, 2009 which would result in our owning 100%
        of RNC, in consideration for exchange for the purchase price of $15,000,000.
        This payment can be made in either cash, shares of our common stock, or any
        combination thereof. Any shares issued shall be valued at 90% of the average
        closing price of our common stock as reported on a national securities exchange
        or national market or quotation system over the 30 day period immediately
        preceding the deliver of notice to Investcol of our intent to exercise this
        option. RNC is the beneficial holder of 94.99% of the issued and outstanding
        stock of Caldas, a Colombia corporation that (i) owns certain mining rights,
        (ii) has options to acquire mining rights and (iii) has exclusive rights
        to
        evaluate certain property, all located in the Zona Alta portion of the Marmato
        project in Colombia.


As
      of
      March 21, 2007, the Zona Alta portion of the Marmato project in Colombia hosts
      approximately 275 total small mines which Caldas is seeking to purchase
      individually. Eighty-five (85) of these mines have registered titles in the
      Ministry of Mines in Caldas. We refer to these mines as Category 1. Thirty-six
      (36) mines are located in an area called CHG-081 in which


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there
      is
      one mining contract and we refer to these mines as Category 2. Once all of
      these
      Category 2 mines have been purchased, Caldas will own the entire CHG-081
      contract. Approximately ninety (90) of the remaining mines have made
      applications for legalization. Approximately sixty-four (64) are illegal mines.
      We refer to these mines as Category 3. Of the applications made, management
      believes that less than thirty (30) will be legalized.




The
      procedure for purchase is normally a payment of 25% of the total negotiated
      purchase price down on signing, 25% of the total negotiated purchase price
      when
      all documentation has been submitted to the local mining department and the
      final 50% payment is when the mining claim has been registered in the company’s
      name.




Certain
      mining properties have been purchased or optioned and are awaiting final payment
      once the documentation and registration is complete. The total number of legal
      mines acquired by Caldas at March 20, 2007 is 95. Minera
      de
      Caldas is also purchasing the existing mills on the Zona Alta and has so far
      purchased ten of the out
      of a
      total of approximately 25 .
      Once
      the purchases have been completed the mills will be shut down and dismantled.
      The mines will also be closed except for maintenance to keep the tunnels open
      for future sampling and drilling.




The
      locations of those mines purchased or optioned by Caldas are disclosed in the
      map below in red. The locations of those mines which remain to be purchased
      are
      shown in black.


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Title
      on
      mineral properties and mining rights involves certain inherent risks due to
      the
      difficulties of determining the validity of certain claims as well as the
      potential for problems arising from the frequently ambiguous conveyance history
      characteristic of many mining properties. We cannot give any assurance that
      title to such properties will not be challenged or impugned and cannot be
      certain that we will have or acquire valid title to these mining
      properties.  For example, there is a risk that the Colombian government may
      in the future grant additional titles in excess of the Company's expectations
      to
      currently illegal miners.  Furthermore, although the Company believes that
      mechanisms exist to integrate the titles of mineral properties currently not
      owned by the Company, there is a risk that this process could be time
      consuming and costly.  The Company's plan to move the town of Marmato is
      subject to the risks inherent in any relocation project involving the movement
      of an established town and its residents to a new location.




Over
      the
      past 12 months, Cia Minera de Caldas has begun work by conducting a social
      evaluation of the district including a mining census to determine the social
      viability of constructing an open-pit gold mine. The mines operating at Marmato
      Mountain are currently operated underground by small scale miners using
      primitive mining methods.




On
      August
      30, 2006, Caldas entered into a Transfer of Properties and Sale Agreement with
      Sociedad KEDAHDA S.A **** (“KEDAHDA”),
      a Colombia corporation, and acquired the Mining Title, Mining Application,
      and
      Mining Data for property located in the Marmato Mountain Gold District located
      in Colombia identified Title 5956, Applications 6455, 6455-B, 6418, 6418-B,
      6418-C, 6170, D15-151, 622-17, 623-17, 615-17, 616-17 and
      628-17.


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Pursuant
      to an Agreement with Caldas, we paid the purchase price of $500,000 for these
      entire property interests and Caldas agreed to hold the title for these property
      interests in their name for our benefit. Title to these property interests
      are
      being held by Caldas in order to secure the approval for the transfer of title
      by Colombian mining authorities in accordance with the applicable laws of the
      Republic of Colombia.




*History
      of Previous Operations*




The
      Marmato deposit has been mined since pre-Colombian times. In the late 1800s
      to
      early 1900s, Western Andes Mining Company Ltd., an English company, mined at
      Marmato. Subsequently Marmato was mined by the Colombian Mining and Exploitation
      Company which made significant improvements and installed a new beneficiation
      plant at La Palma (now the site of Mineros Nacionales plant in the Zona Baja).
      The mine was expropriated in 1925 (Law 87) and the company received £3 million
      in compensation (Municipio de Marmato, 2004).





From
      1925, the mines were owned by the government and leased to contractors. For
      the
      first six years the mines remained closed, then were leased from 1931-1934
      to
      Roberto Luis Restrepo and Alfredo Londoño, and from 1935-1938 to Uribe Afanador.
      From 1938 the National Government administered the mines directly. They were
      contracted to José Miguel Lizarralde in 1938-1940, and to Gustavo White from
      1940.





Marmato
      was divided into two zones, Alta (Upper) and Baja (Lower), in 1954 (Decree
      2223). The following year the government signed a contract with a North
      American, Julio E. Hurtado, who transferred them to the Mining Enterprises
      Corporation. The contract covered mining in both the Zona Alta and the Zona
      Baja. This venture failed and the mines were returned to the government. As
      a
      result of conflicts between this company and the contractors in the Zona Alta,
      the government decided to exploit the Zona Alta and the Zona Baja separately.
      The Zona Alta would continue to be exploited by contractors.





Gulf
      Resources Exploration Co. (Gulf Resources) explored Marmato in 1978 but the
      results of this program are not known.





In
      1981,
      Marmato became part of the Aporte
      Minero scheme
      and was managed by a succession of state mining companies ECOMINAS (1981 to
      1992), MINERALCO (1992 to 1997) and MINECOL (1997 to 2004), and since then
      by the Unidad de Delegación Minera de Caldas (Caldas Mining Delegation Unit)
      (Municipio de Marmato, 2004). The
      “Exclusion Zone of the Marmato Mining District” (Zona de Exclusion del Distrito
      Minero de Marmato), was created in the Zona Alta in 1998.





A
      subsidiary of the Phelps Dodge Corporation (Phelps Dodge) called Minera Phelps
      Dodge de Colombia S.A. (Minera Phelps Dodge) explored the Zone Baja of Marmato
      in 1984 and 1985. It carried out surface and underground sampling and drilled
      7
      underground core holes, and defined a proven reserve of 102,900 t @ 7.83 g/t
      Au
      and 24 g/t Ag, and a total reserve (proven, probable and possible) of
      754,600 t at the same grade (historical reserves which predate NI-43-101;
      Conquistador, 1998).


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Electrical
      and EM surveys at Marmato were described in a paper by Calvache et al (1985)
      but
      no data are available for this program.





In
      1988,
      William Hill Mining Consultants reviewed the Marmato project for Greenstone
      Resources Limited, Canada, as part of a bid process.





In
      1993,
      Mineros Nacionales S.A. (Mineros Nacionales) started mining the Zona Baja with
      a
      300 tpd underground mine under contract No. 041-89M. This is an Aporte Minero
      contract which is still valid and is now administered by the Delegada Minera
      de
      Caldas. The contractor pays the state a royalty of 4% plus an additional sliding
      royalty based on the gold price, currently above 6%. The following year Mineros
      de Antioquia S.A. (renamed Mineros S.A. in 2004) acquired 51.75% of Mineros
      Nacionales and upgraded the mine and mill. The plant has a flotation circuit
      to
      make a sulphide concentrate, gravimetric separation by cyclones, and agitated
      cyanide leach with gold precipitation by zinc (Merrill Crowe process) and
      smelting. In the late 1990s, 24 underground core holes and 3 reverse circulation
      holes were drilledin the 1160 (Maruja) and 1210 (Zancudero) levels. Also by
      the
      late 1990s the mine and mill were operating at 300 t/d with grades ranging
      between 5 g/t and 12 g/t gold. By 2005, Mineros Nacionales was owned 94.5%
      by
      Mineros S.A.





Conquistador
      Mines Ltd. (Conquistador) a Vancouver-listed junior company which later changed
      its name to Western Platinum Holdings and is now called Orsa Ventures Corp.
      (Orsa) explored Marmato between 1996 and 2000 through its Colombian subsidiary
      Corona Goldfields S.A. (Corona Goldfields). Orsa had an option to explore the
      Zona Baja over 4 years and to acquire 50.1% of Mineros Nacionales (bought 13.15%
      which was later sold in 2001), and acquired several mines in the Zona Alta.
      Conquistador drilled 44 holes (14,678 m), and commissioned Mineral Resources
      Development Inc. (MRDI) to complete a resource estimate and scoping study in
      1998. Conquistador carried out no further work on the project due to the
      expiration of the option contract.





Conquistador
      carried out surface mapping of fracture systems, veins and alteration, and
      detailed mapping of underground cross-cuts. It took 1,147 channel samples
      totalling 2,847 m from surface trenches and underground cross-cuts. Samples
      were
      cut by hand chisel from channels 2.0 m long x 5 cm wide x 3 cm deep. It also
      drilled 30 surface diamond drill holes totalling 11,146 m and 14 underground
      diamond holes totalling 3,375 m for a total of 30 diamond drill holes totalling
      14,678 m. Diamond core was sawn in half with one half sampled in 2.0 m intervals
      for assay and the other half retained. The location and existence of the drill
      core is not certain: it was originally stored at the Barringer Lab in Medellín (according to MRDI, 1998) but this is now closed and it is presently believed
      to
      be stored at the Mina Baja of Mineros Nacionales in Marmato and access is not
      available to CGL. Table 6.1 provides a summary Conquistador’s significant
      drilling results at the Marmato project. Conquistador reported that the results
      of preliminary metallurgical tests showed ready leachability of gold but the
      appendix of the MRDI report is not available.


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At
      the
      same time, between 1995 and 1997, another junior Canadian mining company called
      Gran Colombia Resource Inc. (Gran Colombia), now called Wavve Telecommunications
      Inc. carried out exploration of the Echandia and Chaburquia properties on the
      northern portion of the Marmato system. Gran Colombia drilled 75 diamond drill
      holes for 15,000 m. A scoping study was made by Geosystems International,
      Denver, in 1997 which concluded that there was not sufficient grade continuity
      for a bulk-tonnage resource and mining operation, and no further work was
      carried out. In 1996, Gran Colombia purchased 48.25% of Mineros Nacionales
      which
      it then sold in 1997.





We
      and
      our subsidiary Minera de Caldas began exploration of Marmato and surrounding
      areas in 2005. The objective is to identify a potentially bulk mineable, low
      grade gold and silver resource. We have carried out property acquisition in
      the
      Zona Alta of Marmato, along with underground sampling, surveying and mapping,
      and preliminary metallurgical testwork. We plan to conduct further exploration
      and a drilling program to define a mineral resource and carry out a scoping
      study for the Marmato project. This work is continuing and the company plans
      to
      carry out exploration drilling on one or more gold-silver targets in future
      programs.





*Mineralization*





Mineralization
      at Marmato is hosted by a steeply-dipping sheeted vein system of sulphide
      veinlets with dominant northwest to west-northwest trend. The width of
      individual veinlets varies from <1 mm to 10s of cm and in places they can
      form a veinlet stockwork.





The
      known
      vertical extent of mineralization is greater than 600 m, from Cerro El Burro
      (1,705 m altitude) to the lowest level of Mineros Nacionales at 1,110 m. The
      vertical extent of mineralization within the Upper Zone is between 406 m and
      498
      m.





The
      wider
      veinlets are mined in numerous small mines accessed by horizontal adits. The
      mapped distribution of mine workings is over a width across strike of about
      1,300 m (of which 1,000 m are within the Marmato concession), with the main
      concentration of mine workings occurring in a zone about 800 m wide, and along
      a
      strike length of 880 m. The mine entrances are on the southeast end on the
      mountain-side and the veins trend northwest into the mountain. The
      mineralization is open along strike to the northwest and the strike length
      may
      be longer than the 880 m indicated above.





The
      veins
      and mines are distributed in two zones, a north zone and a south zone which
      are
      separated by a lower grade zone with fewer mines. The veins show a tendency
      to
      converge to the northwest under Cerro El Burro suggesting that this may be
      a
      focus for the vein system.





Gold
      mineralization at Marmato is hosted by massive sulphide veinlets which vary
      from
<1 mm to some 10s of cm in width. The veinlets are formed predominantly of
      coarse pyrite (5 mm to 10 mm) and coarse, black, iron-rich sphalerite
      (marmatite) is common along with galena and chalcopyrite. The veinlets have
      minor gangue which is comprised of quartz, calcite, sericite and, in places,
      chlorite. Vein textures include massive sulphide, coarsely banded, and open
      space filling. Cross-cutting vein textures are very rare. Disseminated pyrite
      and sphalerite occur in the


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phyllic
      altered wall rock. Fault breccias are common along with ground sulphides;
      however, no hydrothermal breccias are known.





The
      sulphides described in a petrographic study (Cuellar & Mora, 1985)
      are:





·
            Pyrite.
                The predominant sulphide. Early euhedral to massive pyrite has inclusions
                of arsenopyrite and pyrrhotite and often has a cataclastic texture
                with
                sphalerite, galena and chalcopyrite in
                fractures.





·
            Sphalerite.
                The second most abundant sulphide. Has exsolution of chalcopyrite.
                Mostly
                formed in second stage. Early sphalerite has cataclastic
                texture.





·
            Galena.
                Is formed in the second stage of
                mineralization.





·
            Chalcopyrite.
                Infills fractures in pyrite and exsolutions in pyrite and
                sphalerite.





·
            Pyrrhotite.
                Minor and only observed as exsolution lamellae in sphalerite and
                with
                pyrite.





·
            Bornite.
                Minor and is associated with chalcopyrite in granular
                aggregates.





·
            Arsenopyrite.
                Minor and occurs with early pyrite.





·
            Chalcocite.
                Minor supergene mineral coating chalcopyrite, bornite and
                galena.





·
            Covellite.
                Minor supergene mineral coating and in fractures in
                chalcopyrite.





Unconfirmed
      minerals include marcasite, pyrargyrite, gold tellurides, tetrahedrite,
      fluorite, adularia, barite, rhodonite and rhochrosite (Rossetti & Colombo,
      1999; Warden & Colley, 1990; Escuela de Minas de Marmato, 2004).





Gold
      occurs as free grains between 9 microns and 600 microns in size associated
      with
      sulphide grain aggregates, gangue minerals, iron oxides and as small grains
      encapsulated in pyrite (Escuela de Minas de Marmato, 2004). This study
      calculated that 99% of gold grains would be liberated by a 75 micron grind.
      The
      gold was described as electrum although no silver percentages were given. The
      majority of the gold associated with sulphides is non-refractory as shown by
      high recoveries from preliminary cyanide bottle roll tests.





Two
      phases of primary mineralization plus a supergene stage are described (Cuellar
      & Mora, 1985; Rubiano, 1986):





1.
            Pyrite
                (with pyrrhotite exsolution laminae), iron-rich sphalerite (marmatite,
                with exsolutions of mackinawite ((iron, nickel, cobalt) S1-x),
                chalcopyrite, pyrrhotite), chalcopyrite (with exsolutions of mackinawite,
                cubanite-II (CuFe2S3)
                and starsphalerite) with rare bornite, arsenopyrite and pyrrhotite.
                The
                inclusions in pyrite, sphalerite and chalcopyrite formed by exsolution
                of
                iron, copper and sulphur on cooling of
                minerals


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formed
      at
      high temperature. The presence of cubanite-II and iron-rich sphalerite indicates
      a high temperature of formation.





2.
            Fe-poor
                sphalerite replaced the pyrite and chalcopyrite of Stage 1; chalcopyrite
                in fractures in other minerals; galena replaces all other minerals;
                arsenopyrite; melnicovite (FeS2gel)-pyrite; melnicovite-marcasite; rare inclusions in galena of
                sulphosalts of silver (acanthite, Ag2S;
                polybasite, (Ag, Cu)16Sb2S11;
                freibergite (Ag, Cu, Fe)12Sb4S13(Rossetti & Colombo, 1999) and gold. These minerals have a lower
                temperature of formation.





3.
            Supergene
                minerals are covellite, chalcocite, iron oxides and hydroxides, and
                minor
                malachite.





The
      pyrite has oxidized to jarosite to form a jarositic cap on the Marmato deposit.
      This is accompanied by supergene argillic alteration (white clay). The depth
      of
      oxidation is shallow and most or all of the small mines work sulphides, although
      oxidation may be much deeper along highly fractured zones. MRDI (1998) reports
      partial oxidation of sulphide veinlets to an elevation of 900 m in drill hole
      MU-002. MRDI also reports that veins are greater than 50% oxidized above an
      elevation of 1,300 m (Zona Alta), however observations by us do not support
      this
      and unoxidized sulphide veins are dominant in all of the mines
      sampled.





*Exploration,
      Drilling, & Sampling*





Topography





A
      detailed topographic map with 2 m contour intervals derived from Ikonos
      satellite imagery has been commissioned. The new topographic map will provide
      a
      more detailed base map for improved accuracy when plotting the results of the
      exploration programs.





Geological
      Mapping





We
      conducted detailed surveying and mapping of the accessible underground workings
      within the Zona Alta to which we had access, between December, 2005 and May,
      2006. A number of mines remain to be surveyed once agreements are reached with
      the owners. The initial detailed surveying of the underground mines was
      conducted using a compass and tape, with the entrances surveyed by differential
      GPS. A more detailed survey of all mines will commence shortly using total
      station or theodolite which will define the true extent and volume of the
      various mine openings underground. Geological mapping on surface is underway
      and
      compilation of a detailed geological
      map for the property is in progress.





Geophysics





No
      geophysical surveys have been carried out by us. **





Drilling





We
      have
      not conducted any drilling on the Marmato project to December
      31, 2006 .


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Sampling





We
      sampled all accessible mine faces in the Zona Alta in December, 2005 and
      January, 2006. This sampling program was conducted primarily as a tool to value
      the mines prior to purchasing them. During the sampling of the accessible mine
      faces, 283 samples were taken from 50 mines with samples taken from faces (vein,
      footwall, hangingwall, stockwork) and backs, as well as samples of muck, mill
      products and concentrates. Samples were taken using hand chisels and sampling
      channels up to 2.0 m long by 5 cm wide and 1 cm deep. The samples were analyzed
      for gold and silver by the Inspectorate America Corporation (Inspectorate).
      The
      weighted average grade of all vein samples taken (total number 114, excluding
      other samples) was 8.77 g/t gold and 48.78 g/t silver over 0.32 m. The gold
      grades range from 0.17 g/t to 172.87 g/t, with silver ranging from 0.6 g/t
      to
      676.6 g/t, and vein widths ranging from 0.01 m to 2.00 m.





We
      took
      continuous channel samples of all accessible cross-cuts from February, 2006
      to
      May, 2006. The objective of this program was to check the grade of disseminated
      mineralization between the veins for evaluation of the bulk tonnage potential.
      A
      total of 303 samples were taken from cross-cuts in 14 mines with a total sampled
      length of 1.74 m. After cleaning the mine wall the samples were taken using
      hand
      chisels to sample intervals of 2.0 m (vary from 0.01 m to 1.74 m) lengths by
      5
      cm wide by 1 cm deep. Veins over 0.15 m wide were sampled separately. A number
      of mines remain to be sampled but this will be conducted once agreements are
      made with the owners.





**Caramanta
      Exploration Projects**




*Location
      & Access*




The
      Caramanta project is located in the Departments of Caldas and Antioquia,
      Colombia and is approximately 80 km due south of the city of Medellín, which is
      the capital of Antioquia. The El Salto prospect in the Caramanta project, is
      4.5
      km north of Marmato at UTM coordinates Zone 18N 433,934E - 609,670N.
      The datum used for the UTM coordinates was WGS84 Zone 18N.





We
      hold
      our interest in the Caramanta project through our wholly-owned Colombian
      subsidiary Minera de Caldas. Minera de Caldas holds a
      number
      of mineral
      licenses in the Marmato Zona Alta (Upper Zone) which has an area of 178.9489
      ha,
      and several exploration licenses in the area surrounding the Marmato Zona Alta
      totalling 32,063.6813 ha which are referred to as the Caramanta project.





Marmato
      is about a two-hour drive from Medellin on the paved Pan American Highway.
      Access to El Salto is by continuation of the road north from Marmato to the
      end
      of La Loma at about 1,350 m altitude, where we have refurbished a small house
      as
      a base camp. This road is in poor condition. From La Loma a steep path descends
      some 300 m into the Quebrada San Francisco and the mine workings on the north
      side.


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The
      El
      Salto prospect lies on a steep ridge between Rio Arquia on the north side,
      which
      marks the limit between Caldas and Antioquia Departments, and its tributary
      Quebrada San Francisco, on the south side. These flow into the Cauca River
      2 km
      to the east.




The
      topography of the area is steep with a relief of over 1,800 m from the River
      Cauca at about 600 m altitude. The climate is sub-tropical humid and the area
      is
      heavily wooded with clearings for grazing. The known mineralization lies at
      an
      altitude of about 1,050 m to above 1,100 m.





*Description
      of Our Interest in Property*




On
      September 22, 2005, we entered into an Assignment Agreement with Investcol
      Limited (“Investcol”), a corporation organized and existing under the laws of
      Belize, where Investcol assigned, transferred, and conveyed to us all of its
      rights under a Contract for Purchase Option of Mining Concessions (“Original
      Option Contract”) entered into with CIA Servicios Y Logisticos Ltda., a
      corporation organized and existing under the laws of Colombia. As a result
      of
      the Assignment Agreement with Investcol, we acquired an option to purchase
      certain mining and mineral rights on property known as Concession 6602, 1343,
      and 6329 located in Caramanta Municipality, Antioquia Department, Medellin,
      Colombia (the “Property”).




On
      April
      10, 2006, we entered into an Assignment Agreement with Investcol where Investcol
      assigned, transferred, and conveyed to us all of its rights under a Contract
      for
      Purchase (“Purchase Contract”) entered into with CIA Servicios Logisticos de
      Colombia Ltda. As a result of the Assignment Agreement with Investcol, we
      acquired Investcol’s rights to acquire certain mining contracts to exclusively
      engage in mining activities on Concessions 6993, 7039, 6821, and 6770 (the
      “Contracts”) and options that Investcol holds to acquire the exclusive rights to
      engage in mining activities on Concessions HET-31, 32, 26, 27, and HETG-01
      (the
“Options”) all located within an area in Colombia referred to as the Caramanta
      location.




On
      September 25, 2006, we entered into a Master Agreement to acquire all of the
      issued and outstanding shares of Gavilan Minerales S.A. (“Gavilan”), a Colombia
      corporation, for the purchase price of $300,000 and the issuance of 1,150,000
      shares of our common stock. Cia Servicios Logisticos de Colombia Ltda. (“Cia
      Servicios Logisticos”), a Colombian corporation, is the primary shareholder of
      Gavilan. Gavilan holds proper legal title to several properties located in
      western Colombia known as Concessions 6602, 1343, 6329, 6993, 7039, 6821, 6770,
      HET-31, 32, 26, 27, and HETG-01 (the “Properties”) which we held an option to
      acquire. As a result of our acquisition of Gavilan, we will become the title
      holder of these Properties and no longer have to satisfy any minimum exploratory
      work obligations on these Properties. We
      own,
      have optioned or have made applications for 32,063.6813 ha of exploration
      licenses in the Caramanta project area





Title
      on
      mineral properties and mining rights involves certain inherent risks due to
      the
      difficulties of determining the validity of certain claims as well as the
      potential for problems arising for the frequently ambiguous conveyance history
      characteristic of many mining properties. Currently, we are in the process
      of
      investigating the title of the Property for which we hold the option to acquire
      certain mining and mineral rights. We cannot give any assurance that title
      to
      such properties will


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not
      be
      challenged or impugned and cannot be certain that we will have or acquire valid
      title to these mining properties.





*History
      of Previous Operations*





The
      Caramanta project surrounding the Marmato project has also experienced small
      scale mining since the pre-colonial times, however, we are unaware of any modern
      systematic exploration program has been conducted on large portions of the
      project area. At the present time, both underground and surface artisanal mining
      is being conducted on a number of mineral showings in the area of the Caramanta
      project.





El
      Salto Prospect





Artisanal
      miners have been working a number of small pits at the El Salto prospect within
      the Caramanta project. At the present time there are eleven small pits which
      have been worked in the past or are still in the process of being worked. The
      eleven pits are listed under the following names; Martin D, Humberto A and
      B,
      Fortunato, El Armario, El Tierrero, Martin, La Ventana, La Cueva, Mateo, and
      Machongai.





There
      is
      no recorded historical mining, although the artisanal mining has been carried
      out at El Salto for approximately the past two decades. At present, there are
      about a dozen artisanal miners working in three groups. The artisanal mines
      comprise a series of coalescing open pits of about 5 m to 30 m diameter and
      up
      to 20 m to 30 m deep. These pits have been dug by hand with dynamite used to
      break-up the rock for easier extraction. A small compressor for drilling was
      installed about three years ago. The coarse broken rock (1/2 m to 1 m in size)
      is rolled into a water channel draining each pit. Water is accumulated in small
      reservoirs above each pit and periodically released into the pit. The water
      flow
      carries and rolls the broken rock down the channel causing some crushing and
      further breaking down the rock into smaller pieces. Downstream the water
      cascades the broken rock over a series of wooden grizzlies, made of logs with
      the undersize material passing into sluices. The sluices are then cleaned up
      using pans to recover the free gold. The mining method is primitive and the
      percentage of gold recovered by this mining method is believed to be
      low.





Most
      of
      the artisanal miners are mining the oxide zone of the mineral deposit in the
      pits, but some are now mining the sulphide zone.





The
      creeks in the El Salto area have also experienced alluvial mining along their
      extent and few areas have been untouched.





However,
      no large scale exploration appears to have been conducted in the Caramanta
      area
      and to our knowledge there is no record of any exploration diamond drilling
      having been conducted on the mineral showings in this area.


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  *Mineralization*





Mineralization
      at the El Salto prospect and on other areas within the Caramanta project is
      very
      similar in style to the Marmato project. The veins and veinlets are massive
      sulphide formed by pyrite with minor black sphalerite and galena, and a low
      percentage of quartz and calcite gangue. Visible native gold occurs with both
      the sulphides and oxides.





The
      mineralization occurs in quartz veins (up to 1.0 m wide) and veinlets with
      multiple directions. The quartz veins and veinlets are massive with crude
      banding of the sulphides at some margins. Multiple veins locally form a
      hydrothermal breccia texture and the phyllites have ribbon textured quartz
      veins.





The
      sulphide content of the veins is usually low and in the order of zero up to
      a
      few percent, but can be as much as 50% in some. The main sulphide is coarse
      grained, cubic, striated pyrite; however, small amounts of black and brown
      sphalerite, galena and sulphosalts (masses of gray, acicular, metallic mineral
      1 mm to 2 mm long) also occur. Minor copper mineralization was observed in
      one locality as sooty chalcocite coating pyrite in a quartz vein, with surficial
      oxidation to chalcanthite.





Most
      of
      the gold recovered by the miners is very fine grained and pale colored. Coarse
      gold was observed, associated with sulphides, in one location in quartz veinlets
      within phyllites. The miners report coarse gold (to 1 cm) in places which is
      likely supergene.





Some
      veins were sheared by later faulting which resulted in the development of soft
      white clays and the grinding of pyrite to a fine grain size.





*Exploration,
      Drilling, & Sampling*





Topography





A
      detailed topographic map with 2 m contour intervals derived from Ikonos
      satellite imagery has been commissioned and this map will provide a more
      detailed base map for improved accuracy when plotting the results of the
      exploration programs.





Geological
      Mapping





Geological
      mapping and surveying has been carried out at the El Salto prospect (1:600
      scale) and on License 1343 (1:6,000 scale). This work is continuing and a
      detailed geological map of the property is in progress.





Geophysics





No
      geophysical surveys have been carried out on the Caramanta project by us and
      there are no regional geophysical surveys available in the public
      domain.


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Drilling





We
      have
      not conducted any drilling on Caramanta project December 31, 2006.





Sampling





Since
      March, 2006, we have carried out surface channel sampling on the outcrops and
      open pit mine workings within the El Salto prospect, on License 1343 and in
      other areas of the Caramanta project. This sampling program is on-going and
      results from some of the earlier sampling remain outstanding. The samples were
      taken using hand chisel and sampling lengths of up to 2.0 m by 10 cm wide and
      5
      cm deep. The samples were analyzed for gold and 35 elements. The samples taken
      from License 1343 are from outcrops rather than long channels as there are
      no
      open pit mine workings.





***Proposed
      Program of Exploration and/or Development for the Marmato and Caramanta
      Projects***





Our
      2006
      exploration program consisted of two parts. The first part consisted of
      evaluating the underground mineralization on the Marmato project by channel
      sampling all of the cross-cuts underground to which we had access. The second
      part of the program consisted of channel sampling within the various pits
      located at the El Salto prospect and chip sampling outcrops located along the
      creek beds within the Caramanta project.





Our
      2006
      exploration program was successful in confirming the nature of the
      mineralization which previous operators encountered during their exploration
      programs at Marmato. We can now combine the historical exploration work
      conducted by the various operators with the results of our 2006 exploration
      program to determine further exploration targets in the immediate
      area.





As
      a
      result of the 2006 exploration program, we are planning a more comprehensive
      exploration program on the Marmato and Caramanta projects. The next phase of
      the
      exploration program will consist of further chip and channel sampling, detailed
      geological mapping, as well as conducting diamond drilling on a number of the
      mineral showings, metallurgical testing, environmental studies, a scoping study
      and resource estimation in addition to further mineral property and
      infrastructure acquisitions.





In
      order
      to reduce risk, we have decided to divide Phase 1 into two sections (stage
      A and
      stage B). At Marmato, stage A will include 10,000 samples from the chip and
      channel sampling program, detailed geologic mapping as well as conducting 8,000
      m of diamond drilling. The information gathered will be used to estimate an
      inferred resource by the end of the third quarter of 2007. At Caramanta, the
      stage A program will include an initial 2,000 m of drilling.





With
      successful indications from stage A activities, we would seek an additional
      $16.0 million in financing in order to complete Phase 1 and prepare for Phase
      2.
      At Marmato, stage B of Phase 1 would include a further 22,000 m of drilling,
      metallurgical testing, and completion of an environmental report and scoping
      study. It is also anticipated that a further 8,000 m of exploration drilling
      at
      Caramanta would occur.


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To
      successfully achieve the total Phase 1 drilling program of 30,000 m at Marmato
      and 10,000 m at Caramanta numerous drills will be required. At Marmato, we
      assume that a surface drill could average 750 m of drilling per month while
      the
      underground drill could average 600 m per month. With these productivity rates
      a
      surface drill will begin operation at Marmato in February, 2007, and during
      March 2007 we will add a second surface drill along with an underground drill.
      A
      third surface drill would be added in May, 2007 while a fourth surface drill
      would be required by September. At Caramanta one surface drill is schedule
      to
      commence in June, 2007 with a second added by September. No underground drilling
      is anticipated at Caramanta in the short term.





Other
      property acquisitions and acquisition of additional surface rights would occur
      only upon completion of the phase 1 stage A and stage B programs.





Assuming
      successful completion of Phase 1, we will immediately commence with Phase 2
      of
      the exploration program. Phase 2 includes an additional 30,000 m of drilling
      at
      Marmato and 10,000 m of drilling at Caramanta. Also, we would complete the
      geology and mapping, metallurgical testing, geotechnical testing and apply
      for
      the required permits. During Phase 2, we would complete the reserve estimate
      and
      complete a feasibility study. Acquisition of new properties and surface rights
      in other areas around the mountain would continue.





As
      with
      the end of the previous phase, during Phase 2 we would have 4 surface drills
      and
      one underground drill operating at Marmato and 2 surface drills operating at
      Caramanta.





Phase
      1
      of exploration will see expenditures of approximately US $23,700,000 over
      two stages. If the first phase is successful then we will spend a further US
      $11,400,000 during the second phase which will include further drilling,
      increased regional exploration, further metallurgical testwork, mining and
      environmental permitting, and possibly prefeasibility and feasibility studies.
      If both phases of the exploration and acquisition programs are completed we
      will
      spend an estimated US $35,100,000.





**Item
      3. Legal Proceedings**





We
      are
      not a party to any pending legal proceeding. We are not aware of any pending
      legal proceeding to which any of our officers, directors, or any beneficial
      holders of 5% or more of our voting securities are adverse to us or have a
      material interest adverse to us.





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





No
      matters have been submitted to our security holders for a vote, through the
      solicitation of proxies or otherwise, during the fourth quarter of the fiscal
      year ended December 31, 2006.


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**PART
      II**





**Item
      5. Market for Common Equity and Related Stockholder
      Matters**





**Market
      Information**





Our
      common stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is
      sponsored by the NASD. The OTCBB is a network of security dealers who buy and
      sell stock. The dealers are connected by a computer network that provides
      information on current "bids" and "asks", as well as volume information. Our
      shares are quoted on the OTCBB under the symbol “CGDF.”





The
      following table sets forth the range of high and low bid quotations for our
      common stock for each of the periods indicated as reported by the OTCBB. These
      quotations reflect inter-dealer prices, without retail mark-up, mark-down or
      commission and may not necessarily represent actual transactions.





Fiscal
                Year Ending December 31, 2006Quarter
                Ended
            
            High
                $
            
            Low
                $March
                31, 2006
            
            2.29
            
            1.33June
                30, 2006
            
            2.83
            
            1.20September
                30, 2006
            
            1.83
            
            0.9December
                31, 2006
            
            1.74
            
            1.07Fiscal
                Year Ended December 31, 2005Quarter
                Ended
            
            High
                $
            
            Low
                $March
                31, 2005
            
            10.05
            
            0.25June
                30, 2005
            
            1.05
            
            0.5September
                30, 2005
            
            0.9
            
            0.7December
                31, 2005
            
            1.55
            
            0.65





**Penny
      Stock**





The
      SEC
      has adopted rules that regulate broker-dealer practices in connection with
      transactions in penny stocks. Penny stocks are generally equity securities
      with
      a market price of less than $5.00, other than securities registered on certain
      national securities exchanges or quoted on the NASDAQ system, provided that
      current price and volume information with respect to transactions in such
      securities is provided by the exchange or system. The penny stock rules require
      a broker-dealer, prior to a transaction in a penny stock, to deliver a
      standardized risk disclosure document prepared by the SEC, that: (a) contains
      a
      description of the nature and level of risk in the market for penny stocks
      in
      both public offerings and secondary trading; (b) contains a description of
      the
      broker's or dealer's duties to the customer and of the rights and remedies
      available to the customer with respect to a violation of such duties or other
      requirements of the securities laws; (c) contains a brief, clear, narrative
      description of a dealer market, including bid and ask prices for penny stocks
      and the significance of the spread between the bid and ask price; (d) contains
      a
      toll-free telephone number for inquiries on disciplinary actions; (e)
      defines


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significant
      terms in the disclosure document or in the conduct of trading in penny stocks;
      and (f) contains such other information and is in such form, including language,
      type size and format, as the SEC shall require by rule or regulation.





The
      broker-dealer also must provide, prior to effecting any transaction in a penny
      stock, the customer with (a) bid and offer quotations for the penny stock;
      (b)
      the compensation of the broker-dealer and its salesperson in the transaction;
      (c) the number of shares to which such bid and ask prices apply, or other
      comparable information relating to the depth and liquidity of the market for
      such stock; and (d) a monthly account statement showing the market value of
      each
      penny stock held in the customer's account.





In
      addition, the penny stock rules require that prior to a transaction in a penny
      stock not otherwise exempt from those 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 acknowledgment of the receipt
      of a risk disclosure statement, a written agreement as to transactions involving
      penny stocks, and a signed and dated copy of a written suitability
      statement.





These
      disclosure requirements may have the effect of reducing the trading activity
      for
      our common stock. Therefore, stockholders may have difficulty selling our
      securities.





**Holders
      of Our Common Stock**





As
      of
      December 31, 2006, we had approximately seventy-seven (77) holders of record
      of
      our common stock and several other stockholders hold shares in street
      name.





**Dividends**





We
      have
      never declared or paid any cash dividends on our common stock. We currently
      intend to retain future earnings, if any, to finance the expansion of our
      business. As a result, we do not anticipate paying any cash dividends in the
      foreseeable future. In the event that a dividend is declared, common
      stockholders on the record date are entitled to share ratably in any dividends
      that may be declared from time to time on the common stock by our board of
      directors from funds legally available.




There
      are
      no restrictions in our articles of incorporation or bylaws that restrict us
      from
      declaring dividends. The DGCL provides that a corporation may pay dividends
      out
      of surplus, out the corporation's net profits for the preceding fiscal year,
      or
      both provided that there remains in the stated capital account an amount equal
      to the par value represented by all shares of the corporation's stock raving
      a
      distribution preference.




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**Recent
      Sales of Unregistered Securities**





The
      information set forth below relates to our issuances of securities without
      registration under the Securities Act of 1933 during the reporting period which
      were not previously included in a Quarterly Report on Form 10-QSB or Current
      Report on Form 8-K.





On
      March
      21, 2007, we completed a private equity offering of 9,020,000 shares of our
      common stock, par value $0.00001, at $1.00 per share. The gross proceeds we
      received from this offering were $ 9,020,000.  In connection with this
      private equity offering, we will be paying a commission of $541,200 and will
      be
      issuing warrants to purchase 541,200 shares of our common stock with each
      warrant exercisable for a period of thirty-six (36) months from the closing
      of
      the offering at an exercise price of $1.00 per share.





We
      completed this offering pursuant to Regulation S of the Securities Act. 
Each investor represented to us that he was a non-US person as defined in
      Regulation S.  We did not engage in a distribution of this offering in the
      United States.  Each investor represented his intention to acquire the
      securities for investment only and not with a view toward distribution.  We
      requested our stock transfer agent to affix appropriate legends to the stock
      certificate issued to each investor in accordance with Regulation S and the
      transfer agent affixed the appropriate legends.  Each investor was given
      adequate access to sufficient information about us to make an informed
      investment decision.





On
      December 14, 2006, we issued 4,000,000 shares of our common stock to Investcol
      Limited as the consideration for the exercise of our option to acquire an
      additional fifteen percent (15%) of the issued and outstanding stock of RNC,
      resulting in our owning 90% of RNC. These shares were issued pursuant to Section
      4(2) of the Securities Act. We did not engage in any general solicitation or
      advertising. The stock certificate was issued with the appropriate legends
      affixed to the restricted stock.




On
      November 27, 2006, we granted to two consultants, in connection with services
      to
      be rendered, options to purchase 450,000 shares of our common stock at the
      exercise price of $1.15 per share with the options vesting completely over
      two
      years and exercisable for a period of ten years from the date of issuance.
      These
      shares and options were issued pursuant to Section 4(2) of the Securities Act
      of
      1933, as amended. We did not engage in any general solicitation or
      advertising.





We
      received proceeds of $1,735,500 in connection with the exercise of warrants
      previously issued in a private equity offering that was completed on October
      14,
      2005. On October 25, 2006, we issued a total of 3,471,000 shares of common
      stock
      in connection with the exercise of these warrants. These shares were issued
      pursuant to Section 4(2) of the Securities Act. We did not engage in any general
      solicitation or advertising. The stock certificate was issued with the
      appropriate legends affixed to the restricted stock.




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**Securities
      Authorized for Issuance Under Equity Compensation Plans**





In
      January 2006, we adopted the Colombia Goldfield Ltd. 2006 Stock Incentive Plan,
      which provides for the grant of incentive stock options, non-qualified stock
      options, stock appreciation rights, restricted stock, performance shares and
      performance units, and stock awards our officers, directors or employees of,
      as
      well as advisers and consultants. This plan was confirmed by the stockholders
      of
      our Company on July 31, 2006 at the annual shareholders meeting.





Under
      the
      2006 Colombia Goldfield Ltd. Stock Incentive Plan, we initially reserved
      3,500,000 shares of common stock for the granting of options and rights. In
      June
      2006, our Board of Directors approved an amendment to the Colombia Goldfields
      Ltd. 2006 Stock Incentive Plan for the purpose of increasing the total number
      of
      shares of common stock that may be issued pursuant to Awards granted under
      the
      2006 Plan to five million (5,000,000) shares. Such options and rights are to
      be
      granted at or above the fair market value of our common stock on the date of
      grant. All stock options and rights are to vest over a period as determined
      by
      the board of directors and expire not more than ten years from the date of
      granted.





The
      following table provides information about our compensation plans under which
      shares of common stock may be issued upon the exercise of options as of December
      31, 2006.


**Equity
      Compensation Plans as of December 31, 2006**


A
            B
            C**Plan
                Category**
            **Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
            **Weighted-average
                exercise price of outstanding options, warrants and
                right**
            **Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (A))**Equity
                compensation plans
              approved
                by security
              holders
            2,787,500
            $1.16
            2,212,500Equity
                compensation plans
              not
                approved by security
              holders
            -
            -
            -Total
            2,787,500
            $1.16
            2,212,500





Subsequent
      to December 31, 2006, we issued 1,640,000 options as equity compensation for
      services rendered and 112,500 options expired.




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**Item
      6. Plan of Operation**





***Introduction***





This
      MD&A, which has been prepared as of March 21, 2007, is intended to
      supplement and complement our audited consolidated financial statements and
      notes thereto for the year ended December 31, 2006 prepared in accordance with
      United States generally accepted accounting principles, or US GAAP
      (collectively, our “Financial Statements”). You are encouraged to review our
      Financial Statements in conjunction with your review of this MD&A.
      Additional information relating to our Company, is available at www.sec.gov.com.
      All dollar amounts in our MD&A are in US dollars, unless otherwise
      specified.





***Forward-Looking
      Statements***




Historical
      results and trends should not be taken as indicative of future operations.
      Management’s statements contained in this report that are not historical facts
      are forward-looking statements. Forward-looking statements, which are based
      on
      certain assumptions and describe our future plans, strategies and expectations,
      are generally identifiable by use of the words “believe, expect, intend,”
“estimate,” “project,” “prospects,” or similar expressions.





Our
      ability to predict results or the actual effect of future plans or strategies
      is
      inherently uncertain. Factors which could have a material adverse affect on
      our
      operations and future prospects on a consolidated basis include, but are not
      limited to: changes in economic conditions, legislative/regulatory changes,
      availability of capital, interest rates and commodity prices, competition,
      and
      changes in generally accepted accounting principles. These risks and
      uncertainties should be considered in evaluating forward-looking statements
      and
      undue reliance should not be placed on such statements.





***Fiscal
      2006 Overview***





During
      fiscal 2006 considerable progress was made towards our objective of defining
      and
      consolidating our ownership of a bulk-mineable ore body in the Marmato region
      of
      Colombia. Our objective is to consolidate a new gold district around the Marmato
      Mountain in Colombia by:





§
            Acquiring
                the rights to an historic prospective gold project in Marmato (the
                “Marmato Mountain Development
                Project”);


§
            Acquiring
                certain surrounding properties in the Caramanta region (the “Caramanta
                Exploration Project”); and


§
            Planning
                for and executing the acquisition of additional ancillary
                properties.





Our
      focus
      in fiscal 2006 was to continue to advance the Marmato Mountain Development
      Project towards production through:





§
            The
                acquisition of Colombian mineral concessions and mineral rights;


§
            Commencing
                the resettlement of the Town of
                Marmato;


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§
            Planning
                for the commencement of test drilling;
                and


§
            The
                preparation of a feasibility study and preliminary resource
                estimates.





In
      fiscal
      2006 we advanced our business plan by:





§
            Increasing
                our ownership interest in RNC (Colombia) Ltd. to 90% and acquiring
                ancillary properties in order to consolidate the Marmato Project
                in
                exchange for share and cash consideration totaling $17.8
                million;


§
            Acquiring
                the mineral and exploration rights to 90 of 121 mineral properties
                from
                existing Colombian titleholders in exchange for cash consideration
                of
                approximately $10.6 million; and


§
            Raising
                in excess of $10.8 million to fund our acquisition and exploration
                activities.





***Our
      Business***





We
      were
      incorporated under the laws of the State of Nevada, U.S.A., on March 25, 2003
      and changed our name from Secure Automated Enterprises, Inc. to Colombia
      Goldfields Ltd. on May 13, 2005. At that time we changed our operational focus
      from providing electronic filings services for public access document
      submissions to the U.S. Securities Exchange Commission, to the acquisition
      of,
      exploration for, and development of mineral properties. On July 31, 2006, our
      jurisdiction of incorporation was changed to the state of Delaware.





We
      are
      currently in the exploration stage and our current focus is on the acquisition
      and development of mineral interests in mining properties located in the Marmato
      Mountain Gold District located in Colombia. The disclosure that follows is
      a
      discussion of each of the properties that we have an interest in and our results
      of operations for the fiscal years ended December 31, 2006 and December 31,
      2005.





***Principal
      factors affecting our results of operations***





Our
      consolidated financial statements are prepared in accordance with U.S. generally
      accepted accounting principles, and we maintain our accounts in U.S. Dollars.





We
      believe that the key determinants of our operating and financial results are
      the
      following:





(a)
            The
                state of capital markets, which affects our ability to finance exploration
                activities;





(b)
            The
                valuation of mineral properties as exploration results provide further
                information relating to the underlying reserves of such properties;
                and





(c)
            Prices
                for metals, particularly, gold.





There
      is
      no assurance that commercially exploitable reserves of gold exist on any of
      our
      property interests. In the event that commercially exploitable reserves of
      gold
      exist on any of our property interests, there is no guarantee that we will
      make
      a profit. If we cannot acquire or locate gold


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deposits,
      or if it is not economical to recover the gold deposits, our business and
      operations will be materially adversely affected.





***Revenues***





We
      have
      not yet completed our economic feasibility studies to establish the existence
      of
      proven or probable reserves for these properties and, as a result, to date
      we
      have not recognized any revenues from mining activities for the period since
      incorporation to December 31, 2006.





***Expenses***





Our
      primary expenses consist of mineral property rights exploration expenditures
      and
      general and administrative expenses.





***Critical
      accounting policies***





The
      following are the accounting policies that we consider to be Critical Accounting
      Policies *.* Critical
      Accounting Policies are those that are both important to the portrayal our
      financial condition and results and those that require the most difficult,
      subjective, or complex judgments, often as result of the need to make estimates
      about the effect of matters that are subject to a degree of
      uncertainty.





Going
      Concern





We
      incurred a net loss of $7,829,647 for the period from inception on March 23,
      2003 to December 31, 2006 and are not presently generating any revenue. Our
      future is dependent upon our ability to obtain financing and future acquisition,
      exploration and development of profitable operations form our mineral
      properties. We plan to seek additional financing in private and/or public equity
      offerings to secure funding for our operations. There can be no assurance that
      such additional financing will be available to us on acceptable terms or at
      all.
      These factors, among others, raise substantial doubt about our ability to
      continue as a going concern. Our financial statements do not include any
      adjustment to reflect the possible future effect on the recoverability and
      classification of the assets or the amounts and classification of liabilities
      that may should we cease to continue as a going concern.





Basis
      of Presentation





Entities
      that are controlled by us, either directly or indirectly, are consolidated.
      Control is established by our ability to determine strategic, operating,
      investing and financing policies without the co-operation of others. We analyze
      our level of ownership, voting rights and representation on the board of
      directors in determining if control exists by any one, or a combination of
      these
      factors.




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Our
      consolidated financial statements include the accounts of (i) Colombia
      Goldfields Ltd., a Delaware corporation (ii) Our 90% interest in RNC (Colombia)
      Limited, a Belize corporation and its 94.99% owned subsidiary - Compania Minera
      De Caldas, S.A., a Colombia corporation, iii) Our 94.99% interest in Gavilan
      Minerales, S.A. (“Gavilan”) a Colombia Corporation. All
      significant inter-company transactions and balances are eliminated upon
      consolidation.





Mineral
      Property Rights Acquisition and Exploration Expenditures





Title
      on
      mineral properties and mining and exploration rights involve certain inherent
      risks due to the difficulties of determining the validity of certain claims
      as
      well as the potential for problems arising from the frequently ambiguous
      conveyance history characteristic of many mining properties. We are in the
      process of investigating the title of mineral concessions that we hold the
      options to acquire. Therefore, we cannot give any assurance that title to such
      properties will not be challenged or impugned and we cannot be certain that
      we
      will have valid title to our mining properties. We rely on title opinions by
      legal counsel who base such opinions on the laws of countries in which we
      operate.





Our
      mineral property rights acquisition and exploration activities consist
      of





i)  The
      acquisition of mineral concessions;


ii)  The
      acquisition of mineral and exploration rights from existing titleholders;


iii)  The
      exploration of acquired mineral properties and related activities; and


iv)  The
      allocation of stock based compensation related to certain participants in our
      stock
      option plan.





Costs
      of
      acquiring mining properties are capitalized upon acquisition. Mine development
      costs incurred either to develop new ore deposits, expand the capacity of mines,
      or to develop mine areas substantially in advance of current production are
      also
      capitalized. Costs incurred to maintain current production or to maintain assets
      on a standby basis are charged to operations once proven and probable reserves
      exist and the property is a commercially mineable property. Costs of abandoned
      projects are charged to operations upon abandonment. We evaluate, whenever
      events or changes in circumstances indicate that their carrying amounts may
      not
      be recoverable, the carrying value of capitalized mining costs and related
      property, plant and equipment costs, to determine if these costs are in excess
      of their net recoverable amount whenever events or changes in circumstances
      indicate that their carrying amounts may not be recoverable. The periodic
      evaluation of carrying value of capitalized costs and any related property,
      plant and equipment costs is based upon expected future cash flows and/or
      estimated salvage value in accordance with Statement of Financial Accounting
      Standards (SFAS) No. 144, *Accounting
      for Impairment or Disposal of Long-Lived Assets.*




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Asset
      Retirement Obligations





We
      apply
      SFAS No. 143, *Accounting
      for Asset Retirement Obligations* that
      requires that the fair value of a liability for an asset retirement obligation
      be recognized in the period in which it is incurred. SFAS No. 143 requires
      us to
      record a liability for the present value of the estimated site restoration
      costs
      with a corresponding increase to the carrying amount of the related long-lived
      assets. The liability will be accreted until it has been fully incurred, and
      the
      asset will be amortized over the life of the related assets. Adjustments for
      changes resulting from the passage of time and changes to either the timing
      or
      amount of the original present value estimate underlying the obligation will
      be
      made. As at December 31, 2006 and December 31, 2005, we do not have any asset
      retirement obligations.





Stock-Based
      Compensation





On
      January 1, 2006, we applied SFAS No. 123(R), *Share-Based
      Payment* ,
      to
      account for stock options and similar equity instruments issued. Accordingly,
      compensation expense attributable to stock options or similar equity instruments
      granted are measured at the fair value at the grant date, and recognized over
      the expected vesting period. For all stock option awards granted on or after
      January 1, 2006, we recognized compensation using the fair value method of
      accounting for stock-based compensation. The fair value of stock options is
      estimated at the grant date using the Black-Scholes option pricing model and
      the
      resultant compensation expenses are classified in our consolidated statement
      of
      operations based on the classification of the underlying option plan
      participants’ related compensation expenses. In the event stock options are
      forfeited, any previously recognized compensation expense related to unvested
      and expiring awards is recognized in earnings during the period of forfeiture.
      The majority of our stock based compensation relates to either i) mineral
      exploration activities associated with our exploration personnel or ii) general
      and administrative expenses associated with our administrative employees,
      directors, and consultants.





Although
      the assumptions used to record stock compensation expense reflect management’s
      best estimates, they involve inherent uncertainties based on market conditions
      generally outside of our control. If other assumptions were used, stock-based
      compensation expense could be significantly impacted. As stock options are
      exercised, the proceeds received on exercise, in addition to the previously
      recognized amounts related to those stock options, are credited to stockholders’
equity.





***Selected
      Financial Information***





The
      following table sets forth selected financial information for the years ended
      December 31, 2006, and 2005. This summary of selected financial information
      is
      derived from, and should be read in conjunction with, and is qualified in its
      entirety by reference to, our audited financial statements and related note
      disclosures.


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**Year**
              **Ended**
              **December**
              **31,
                2006**
            **Year**
              **ended**
              **December**
              **31,
                2005**
            **Cumulative**
              **from**
              **Inception
                (March 25,**
              **2003**
              **through**
              **December
                31,**
              **2006****Statement
                of Loss and Deficit**Total
                Expenses
            7,325,668
            1,492,233
            8,886,458Net
                loss
            (6,278,684)
            (1,491,470)
            (7,829,647)Loss
                per Share- basic and diluted
            (0.15)
            (0.06)
            N/A**Balance
                Sheet Data**Total
                Assets
            45,007,379
            1,765,341
            45,007,379Total
                Long-Term Debt
            -
            -
            -Total
                Liabilities
            15,797,195
            83,004
            15,797,195Total
                Shareholders’ Equity (Deficiency)
            29,210,184
            1,682,337
            29,210,184





***Management’s
      Discussion and Analysis***





The
      following discussion and analysis should be read in conjunction with the audited
      financial statements of the Corporation for the fiscal years ended December
      31,
      2006, and December 31, 2005 and accompanying notes thereto.





***The
      Caramanta and Marmato Projects***





We
      are
      actively advancing two separate projects known as the Marmato Mountain
      Development Project and the Caramanta Exploration Project, both of which are
      located in Colombia’s Marmato Mountain Gold District. These projects are
      separated by approximately seven kilometers and our focus is on securing the
      region between Caramanta and Marmato and any other outlying targets that may
      contain similar mineralization or have the potential for mining. We have
      advanced our ownership interests in these projects as follows:




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**(A)
      Caramanta Project**





(i)
      Caramanta Project - concessions 6602, 1343 and 6329





On
      September 22, 2005, we entered into an Assignment Agreement with Investcol
      Limited (“Investcol”) where Investcol assigned, transferred, and conveyed to us
      all of its rights under a contract for Purchase Option of Mining Concessions
      (“Original Option Contract”) entered into with Cia Servicios Y Logisticos Ltda.
      As the result of the Assignment Agreement, we acquired an option to purchase
      certain mining, mineral and exploration rights on property known as Concessions
      6602, 1343 and 6329 located in Caramanta Municipality, Antioquia Department,
      Medellin, Colombia for $10,000, on condition that $2,990,000 be invested in
      exploratory work on the property over a three year period. As consideration
      for
      these rights, we issued 1,000,000 restricted shares of common stock to Investcol
      at a deemed fair market value of $ 0.25 per share for total consideration of
      $
      250,000.





Pursuant
      to the Assignment Agreement, we also committed to fund the $2,990,000
      exploratory work as follows:





(a)
            $500,000
                upon the closing of the Assignment
                Agreement;


(b)
            $750,000
                during the 12 month period commencing June 25, 2006; and on the earlier
                of
                June, 2006 or commencement of the second exploration phase, one million
                restricted shares of our common shares;


(c)
            $1,740,000
                during the 12-month period commencing June 25,
                2007.





In
      addition, we agreed to pay Investcol $7,500 per month as an office fee through
      July 31, 2006. On September 25, 2006 the Assignment Agreement was superseded
      in
      connection with our agreement to buy the Mining Concessions outright as
      described in (iii) below.





(ii)
      Caramanta Project - concessions 6993,7039,6821 and 6770 and HET 31, 32, 26,
      27
      and, HETG 01





On
      February 16, 2006 we entered into a Letter of Intent “LOI” with Investcol to
      acquire Investcol’s rights in a Contract for Purchase entered into with Cia
      Servicios y Logisticos Ltda. (“Cia Servicios”) The LOI outlined a proposed
      transaction where we intended to acquire Investcol’s rights in certain mining
      contracts to exclusively engage in mining activities on concessions 6993, 7039,
      6821 and 6770 (the “Contracts”) and options that Investcol holds to acquire the
      exclusive rights to engage in mining activities on concessions HET 31, 32,
      26,
      27 and HETG 01 (the “Options”) all located within an area in Colombia referred
      to as the Caramanta location.





The
      LOI
      was non-binding and subject to final negotiation and the execution of a
      definitive agreement. On April 10, 2006, we entered into a definitive agreement
      with Investcol finalizing this transaction (the “Assignment
      Agreement” *)* .
      In
      connection with the Assignment Agreement, we paid Investcol total consideration
      of $350,000 and issued 1,000,000 restricted shares of our common stock. Under
      the terms of the Assignment Agreement, Investcol agreed to pay the exercise
      price of $150,000 on the Options whose titles remained in the name of Cia
      Servicios


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until
      the
      final exploration commitments have been made. The final option payments were
      made prior to July 30, 2006.





On
      September 25, 2006 the Assignment Agreement was superseded in connection with
      our agreement to acquire the Mining Concessions outright as described
      below.





(iii)
      Acquisition of 100% of the Caramanta Exploration Properties





On
      September 25, 2006, we, through the acquisition of the outstanding shares of
      Gavilan Minerales, S.A., (“Gavilan”), acquired full legal title to the Caramanta
      project concessions described in items 3(i) and 3(ii) above. Consideration
      paid
      for the acquisition included $300,000 cash and the issuance of 1,150,000
      restricted common shares at a fair value of $1.41 per share. In addition, a
      $50,000 finders fee was paid to Investcol. The total acquisition cost of
      $1,971,500 was allocated to the net assets acquired as follows:





Mineral
                and exploration properties and rights
            $1,780,841Property,
                plant and equipment
            190,659$1,971,500





The
      purchase of mineral and exploration properties and rights was recorded as part
      of mineral property rights acquisition and exploration expenditures in fiscal
      2006. As a result of our acquisition of Gavilan, we no longer have any minimum
      exploratory work obligations related to the Caramanta concessions.





**(B)
      Marmato Project**




On
      January 12, 2006, we entered into a Stock Purchase Agreement with Investcol
      and
      RNC (Colombia) Limited (the "Agreement"), whereby we would (i) acquire
      twenty-five percent (25%) of the issued and outstanding stock of RNC (Colombia)
      Limited, a Belize corporation ("RNC") and (ii) hold an option to acquire the
      remaining seventy five percent (75%) of RNC's issued and outstanding stock
      over
      a period of time. RNC is the beneficial holder of 94.99% of the issued
      and


outstanding
      stock of Compania Minera De Caldas, S.A. ("Caldas"), a Colombia corporation
      that
      (i) owns certain mining, mineral and exploration rights, (ii) has options to
      acquire mining, mineral and exploration rights and (iii) has exclusive rights
      to
      evaluate certain property, all located in the Zona Alta portion of the Marmato
      project in Colombia.





Pursuant
      to the Stock Purchase Agreement, we had the option to:





(a)
            Acquire
                25% of the total outstanding shares of RNC by the issuance of 1,000,000
                of
                our common shares to Investcol and the advance to RNC of a $1,200,000
                non-interest bearing loan. We completed the acquisition of 25% of
                RNC by
                the issuance of 1,000,000 shares of our restricted common stock to
                Investcol and the advancement of $1,200,000 by way of a non-interest
                bearing loan to RNC in the second quarter of fiscal 2006;


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(b)
            Acquire
                an additional 25% of RNC by issuance of 2,000,000 of our common shares
                to
                Investcol and the advance of an additional $4,000,000 non-interest
                bearing
                loan to RNC. We completed the acquisition of the second 25% of RNC
                by the
                issuance to Investcol of 2,000,000 shares of our restricted common
                stock
                and the advancement of $4,000,000 by way of a non-interest bearing
                demand
                loan to RNC in the second quarter of fiscal 2006;





(c)
            Acquire
                an additional 25% of RNC by the issuance of 4,000,000 of our common
                shares
                to Investcol and the advance of an additional $15,000,000 non-interest
                bearing loan to RNC on or before October 30, 2006.On
                August 22, 2006 we amended the January 12, 2006 Stock Purchase Agreement
                with Investcol and RNC (Colombia) Limited and concurrently exercised
                our
                option to increase interest in RNC from 50% to 75% in the third quarter
                of
                fiscal 2006. Under the terms of the amended agreement, we issued
                4,200,000
                common shares and paid $200,000 to Investcol. In connection with
                this
                transaction we committed to provide an additional $5,000,000 by way
                of
                non-interest bearing demand loan to RNC by December 31, 2006 and
                provide
                sufficient funds to RNC, upon terms satisfactory to the Company,
                to
                complete a full bankable feasibility study of the Marmato Project;
                and





(d)
            Acquire
                the final 25% of RNC for a price equal to the 25% of the value of
                Caldas
                determined by a bankable feasibility study prepared by a certified
                mineral
                property evaluator, or other acceptable third party. We can make
                payment
                of the purchase price in either cash or our common shares.The
                terms of the agreement were amended on August 22, 2006. Under the
                terms of
                the amended agreement, we held an option to acquire the remaining
                25% of
                RNC on or before May 1, 2009 for a purchase price equal to 25% of
                the fair
                value of Caldes, as determined by a forthcoming feasibility study.
                The
                purchase price, pursuant to the amended agreement, was limited to
                a
                maximum of $15,000,000 plus 4,000,000 of our common shares. Payment
                of the
                purchase price could be satisfied in either cash or our common shares,
                or
                any combination thereof.





On
      December 14, 2006, the parties executed a Second Amendment to the Stock Purchase
      Agreement (the “Second Amendment”) in order to revise the consideration required
      to exercise our option to acquire the remaining 25% of the issued and
      outstanding stock of RNC. Subject to the revised terms set forth in the Second
      Amendment, we had the option to acquire an additional 15% interest in RNC,
      in
      exchange for the issuance of 4,000,000 common shares to Investcol. In connection
      with the execution of the Second Amendment, we exercised our option, resulting
      in us acquiring an additional 15% of RNC in exchange for us issuing 4,000,000
      common shares valued at $5,120,000 in the fourth quarter of fiscal 2006,
      bringing our total ownership to 90%. The revised terms set forth in the Second
      Amendment provide us with the option to acquire the remaining 10% of RNC until
      May 1, 2009 in exchange for a purchase price of $15,000,000. The purchase price
      can be made in either cash, shares of our common stock, or any combination
      thereof.


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  **(C
      ) The Kedahda Properties**





On
      August
      30, 2006 we purchased, through certain mining exploration properties in the
      Republic of Colombia and the related geochemical and other proprietary
      geological data from a wholly owned subsidiary of Anglo Gold Ashanti, Sociedad
      Kedahda, S.A., for $500,000 cash consideration.




***Results
      of operations - fiscal year 2006 compared with fiscal year
      2005.***





Our
      current operations are focused on the acquisition and development of the
      aforementioned interests in mining properties located in the Marmato Mountain
      Gold District located in Colombia. We do not anticipate earning any revenues
      from operations until such time that commercial production commences on the
      mining properties for which we currently hold an interest or may acquire an
      interest in the future. We are presently in the exploration stage of our
      business and we can provide no assurance that we will discover commercially
      exploitable levels of mineral resources on our property interests, or if such
      resources are discovered, that we will enter into commercial production. In
      addition, numerous regulatory, practical, legal and other obstacles could
      adversely affect our ability to achieve profitable operations.





In
      the
      first quarter of fiscal 2005, we discontinued our electronic filing services
      operations and, as a result, historical income and expenses relating to those
      discontinued oppositions have been classified as discontinued operations for
      all
      comparative periods presented.





For
      the
      year ended December 31, 2006, we incurred a net loss of $6,278,684
      (2005-$1,491,470). We generated interest income of $118,034 (2005-$NIL). The
      primary contributors to our net loss were mineral property rights acquisition
      and exploration expenses of $3,298,438 (of which $213,595 relates to non-cash
      stock-based compensation charges) and general and administrative expenses of
      $3,962,960 (of which $1,779,562 relates to non-cash stock based compensation
      charges).





Our
      exploration activities typically involve the following activities and
      expenditures:





*i)*
            *The
                acquisition of mineral concessions*:
                to December 31, 2006 this has consisted primarily of payments for
                the
                assignment contracts and subsequent full legal titles associated
                with the
                Caramanta project, the acquisition of the Marmato project via our
                purchases of RNC (Colombia), and the purchase of the Kedahda properties.
                The concessions we acquire typically exclusively grant to the
                concessionaire the faculty to carry out within the given area, the
                studies, works and installations necessary in order to establish
                the
                existence of the minerals, and to exploit them according to the
                principles, rules and criteria belonging to the accepted techniques
                of
                geology and mining engineering. In fiscal 2006, we expended a total
                of
                $22,200,841 acquiring mineral
                concessions.


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*ii)*
            *The
                acquisition of mineral and exploration rights from existing Colombian
                titleholders*.
                This typically involves staged payments to affected landholders and
                related stakeholders. The procedure for payment is normally a payment
                of
                25% of the total negotiated purchase price on signing, 25% of the
                total
                negotiated purchase price when all documentation has been submitted
                to the
                local mining department, and the final 50% payments when the mining
                claim
                has been registered in our name. Satisfactory resolution of local
                landowner or relative concerns is essential to the eventual development
                and operation of modern gold mines on the Marmato project. As at
                December
                31, 2006, we reached agreements with the titleholders to secure 90
                of 121
                titles deemed desirable in our business plan. In fiscal 2006, we
                expended
                a total of $10,639,071 acquiring mineral and exploration rights;
                and





*iii)*
            *The
                evaluation of acquired mineral properties and related
                activities*.
                This typically involves the payment of salaries, wages, and other
                exploration costs in the host country directly attributable to field
                activities furthering our mineral concessions and rights. In fiscal
                2006,
                we expended a total of $3,084,843 on the exploration of acquired
                mineral
                properties.





As
      a
      result of our fiscal 2006 efforts to explore and evaluate the Marmato Region,
      our mineral property exploration expenses increased significantly, from
      $1,179,298 for the year ended December 31, 2005 to $3,298,438 for the year
      ended
      December 31, 2006.





General
      and administrative expenses also increased during fiscal 2006, from $309,100
      in
      fiscal 2005 to $3,962,960 in fiscal 2006 (of which $1,779,562 relates to
      non-cash stock based compensation charges), reflecting our transition from
      a
      start-up enterprise to a Company with an active exploration program and
      infrastructure sufficient to support field activities. The primary component
      of
      general and administrative expenses in fiscal 2006 was allocated stock based
      compensation, which totaled $1,779,562. The remainder, $2,183,398 consisted
      primarily of consulting fees paid to directors, officers, and shareholders
      of
      $885,130, and balance relating to accounting, legal, investor relations, and
      travel expenses associated with the ramp up of our exploration activities.





The
      increase in our other operating expenses in fiscal 2006, primarily amortization
      expenses, related to the amortization of office equipment, computers, and
      vehicles. For the year ended December 31, 2006, we incurred a net loss of
      $6,278,684 (2005- $1,491,470). The primary contributors to our net loss were
      mineral property exploration expenses of $3,298,438, general and administrative
      expenses of $3,962,960 (of which $1,779,562 relates to non-cash stock based
      compensation charges) and a future income tax recovery of $928,950 related
      to
      deductable temporary differences associated with our Colombian
      subsidiaries.





During
      fiscal 2006, we used cash of $4,800,669 in operations (2005-$1,339,165). The
      majority of our operating cash requirements consisted of costs incurred to
      establish our Colombian operations, primarily consulting fees, travel expenses,
      and audit and legal fees. During fiscal 2006, we issued a total of 13,350,000
      common shares as consideration for i) the acquisition of the 90% of RNC and
      ii)
      the acquisition of Gavilan. We received no cash from these issuances,


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but
      did
      receive net proceeds of $10,821,874 in connection with the separate issuance
      of
      13,097,749 common shares. In fiscal 2006, we expended $465,058 on the purchase
      of capital assets and $6,238,874 acquiring mineral exploration rights, resulting
      in a net cash usage of $682,727 for the year ended December 31,
      2006.





As
      at
      December 31, 2006, we held cash and cash equivalents of $882,913. Our working
      capital deficiency of $4,978,411 consisted of i) Cash and cash equivalents
      of
      $882,913; ii) Prepaid expenses and deposits of $176,347, consisting primarily
      of
      advances for mineral and exploration rights and prepaid Marmato exploration
      expenditures; and iii) Accounts payable and accrued liabilities of $6,037,671,
      consisting primarily of amounts owing to Marmato titleholders under our mineral
      and exploration rights purchase agreements. These amounts relate primarily
      to
      staged payments owing under our agreements to acquire exploration rights from
      existing Colombian titleholders as described earlier in this
      MD&A.





***Results
      of operations - fiscal year 2005 compared with fiscal year 2004***





For
      the
      fiscal year ended December 31, 2005, we incurred a net loss of $1,491,470,
      compared to $23,094 in the fiscal year ended December 31, 2004.





Our
      general and administrative expenses in fiscal 2005 were $309,100 (2004-$28,258).
      The primary components of general and administrative expenses were legal and
      consulting fees in connection with our mineral exploration
      business.




Mineral
      property acquisition and exploration expenditures of $1,179,298 (2004-$NIL)
      were
      incurred during fiscal 2005. We expended $260,000 towards mineral concessions
      and $919,298 on exploration activities. Further information with respect to
      these expenditures is provided in Note 3 to our consolidated financial
      statements *.*


Changes
      in our other operating expenses, primarily amortization, were not significant.





During
      fiscal 2005, we used $1,339,165 in cash for operations (2004-generated $1,194
      from operations). The majority of the fiscal 2005 operating cash requirements
      consisted of mineral property acquisition and administrative expenditures as
      described above.





We
      raised
      $2,822,900 during fiscal 2005 through the issuance of common stock and share
      purchase warrants as described in Note 5 to our consolidated financial
      statements and expended $22,780 on the purchase of capital assets and website
      development costs (2004-$NIL), resulting in net increase in cash of $1,460,955
      (2004-$101,194).





At
      December 31, 2005, we held cash and cash equivalents of $1,565,640 and our
      working capital was $1,663,392.




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***Quarterly
      Results***





**2006**
            
            **2005****Q4**
            **Q3**
            **Q2**
            **Q1**
            
            **Q4**
            **Q3**
            **Q2**
            **Q1**Net
                Loss
            $(1,398,195)
            $(1,945,622)
            $(1,601,628)
            $(1,333,239)
            
            $(1,027,485)
            $(339,225)
            $(87,336)
            $(37,424)Net
                loss
              per
                share-
                basic and
              diluted
            $
                (0.03)
            $
                (0.04)
            $
                (0.04)
            $
                (0.04)
            
            $
                (0.04)
            $
                (0.01)
            $
                (0.00)
            $
                (0.00)





In
      the
      fourth quarter of fiscal 2006 we generated a net loss of $1,398,195 and used
      $2,963,232 cash in our operations. $1,735,500 cash was generated from the
      issuance of common shares pursuant to the exercise of 3,471,000 warrants, and
      $1,114,751 cash was used in the purchase of mineral rights and property and
      equipment. As discussed elsewhere in the MD&A, the increase in quarterly net
      loss over the last eight quarters is consistent with the discontinuance of
      our
      secure automated filing operations in fiscal 2005 and the ramp up of mineral
      exploration activities in fiscal 2006.




***Liquidity
      and Capital Resources***





Our
      cash
      and working capital positions as at the dates indicated were as
      follows:





**December
                31, 2006**
            **December
                31, 2005**Cash
                and cash equivalents
            $
                882,913
            $
                1,565,640Working
                capital
            $
                (4,978,411)
            $
                1,663,392





We
      have
      historically relied on equity capital to fund our operations and mineral
      property acquisition and exploration activities. For the cumulative period
      March
      25, 2003 to December 31, 2006, we raised in excess of $13.7 million from the
      issuance of common shares and share purchase warrants and used in excess of
      $12.8 million to fund operations and exploration activities, leaving $882,913
      in
      cash reserves at December 31, 2006.





In
      order
      to continue to advance our operations while we source additional equity
      financing, on February 27, 2007 we entered into a $3,700,000 promissory note
      with our President, a shareholder, and a company controlled by these
      individuals. The loan, secured by our investment in RNC (Colombia) Ltd. was
      due
      and payable upon closing of a planned equity financing but in no case later
      than
      April 15, 2007.


42
 Table
          of Contents


Upon
      repayment an $185,000 fee is payable to the note holders. The note bears
      interest at 10% per annum, with monthly interest payments commencing February
      28, 2007.





On
      March
      21, 2007, we completed a private equity offering of 9,020,000 common shares
      at
      $1.00 per share. The gross proceeds received from the offering were $ 9,020,000.
      In connection with this private equity offering, we are obligated to pay as
      a
      commission $541,200 and issue agents warrants to purchase 541,200 shares of
      our
      common stock with each warrant exercisable for a period of 36 months from the
      closing of the offering at an exercise price of $1.00 per share.





Based
      upon our current financial condition, we anticipate that the current cash on
      hand is insufficient to operate our business through the end of the current
      fiscal year. We intend to fund operations through additional debt and/or equity
      financing arrangements, (which may be insufficient to fund expenditures) or
      other cash requirements. We plan to seek additional financing in a public equity
      offering to secure funding for operations. There can be no assurance that we
      will be successful in raising additional funding. If we are not able to secure
      additional funding, the implementation of our business plan will be impaired
      and
      we may lose our option to purchase certain mining and mineral rights. There
      can
      be no assurance that such additional financing will be available to us on
      acceptable terms or at all.





In
      order
      to finance continuing operations and make payments related to the acquisition
      of
      identified properties and the exercise of our rights to the remaining options
      we
      hold, additional funding will be required from external sources. Management
      estimates that a minimum of $25 million will be required over the next twelve
      months to adequately fund our business plan.





***Off-balance
      sheet arrangements***





We
      do not
      enter into off-balance sheet arrangements and have no off-balance sheet
      obligations at December 31, 2006.





***Contractual
      obligations***





We
      have a
      two year consulting contract with Mr. Martin, our President and Chief Executive
      Officer. Under the contract, Mr. Martin is entitled to receive a monthly
      compensation of $10,000, and is eligible to participate in our share
      compensation arrangements. In addition, Mr. Martin is entitled to reimbursement
      of all reasonable out-of-pocket expenses incurred in the performance of his
      duties. If, Mr. Martin’s contract is terminated without cause, he is entitled
      receive a lump sum equal to 12 months monthly compensation. Under the contract,
      Mr. Martin has disclaimed any rights to all intellectual property created by
      him
      or jointly with others while with us. In addition, following termination of
      the
      contract, Mr. Martin will be subject to a one year non-competition
      covenant.





We
      have a
      two year consulting contract with Dr. Redwood our VP of Exploration. Under
      the
      contract, Mr. Redwood is entitled to receive compensation at the rate of $750
      per day and is eligible to participate in our share compensation arrangements.
      In addition, he is entitled to reimbursement of all reasonable out-of-pocket
      expenses incurred in the performance of his duties. We have committed to
      granting Dr. Redwood 500,000 restricted shares in fiscal 2007.


43
 Table
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Should
      Dr. Redwood’s contract with us be terminated with cause or by his resignation
      before the period of two years has elapsed, he is required to return pro rata
      portion of the shares based on the time remaining on the contract.





We
      have a
      two year consulting contract with Mr. Ian Park, the President of Caldas. Under
      the contract Mr. Park is entitled to receive monthly compensation of USD $12,500
      and may be entitled to a bonus (subject to board approval) and is eligible
      to
      participate in our share compensation arrangements. In addition, Mr. Park is
      entitled to reimbursement of all reasonable out-of-pocket expenses incurred
      in
      the performance of his duties. Mr. Park can terminate his contract with us
      at
      any time upon 30 days written notice and upon receipt of such notice; we have
      the right to accelerate the termination date. Under the contract, Mr. Park
      has
      disclaimed any rights to all intellectual property created by him or jointly
      with others while with us. In addition, following the termination of the
      contract, Mr. Park will be subject to a one year non-competition
      covenant.





We
      have
      entered into a two year renewable contract with Mr. Thomas Lough. Mr.
      Lough
      is the President and a director of Investcol Limited. We purchased our 90%
      interest and have an option to acquire to remaining 10% interest in
      RNC (Colombia) Limited from
      Investcol Limited. In
      exchange for management services provided by Mr. Lough in connection with our
      Colombian operations, the contract provides for compensation of $800 per day.
      Mr. Lough is also eligible to participate in our share compensation
      arrangements. In addition he is entitled to reimbursement of all reasonable
      out-of-pocket expenses incurred in the performance of his duties.





***Related
      Party Transactions***





Certain
      transactions described under *The
      Caramanta and Marmato Projects* elsewhere
      in this MD&A are considered related party transactions. During certain
      periods we also paid management and consulting fees to directors, senior
      officers and shareholders and for certain of these periods, we paid office
      rental fees to a company related to a former director. Further information
      on
      these transactions is provided in our accompanying consolidated financial
      statements under Note 6 - “Related Party Transactions”.





***Risks
      and Uncertainties***





Going
      Concern




The
      Company has incurred a net loss for the
      period from inception on March 25, 2003 to December 31, 2006 and has no source
      of operating revenue. The Company’s future is dependent upon its ability to
      obtain financing and the future exploration and development of profitable
      operations from its mineral properties. These conditions raise substantial
      doubt
      about the Company’s ability to continue as a going concern. Although there are
      no assurances that management’s plans will be realized, management believes that
      the Company will be able to continue operations in the future. Management
      intends to continue relying upon the issuance of securities to finance the
      development of the business. As disclosed in Note 11 to our December 31, 2006
      financial statements, subsequent to December 31, 2006 the Company raised
      $--9,020,000 by way of the issuance of additional share capital. There can
      be no
      assurance that the Company




44
 Table
          of Contents




will
      continue to be successful in raising the funds necessary to maintain operations,
      or that a self-supporting level of operations will ever be achieved. If the
      Company is unable to secure additional funding, the implementation of its
      business plan will be impaired and the Company may lose its option to purchase
      certain mining and mineral rights. The financial statements do not include
      any
      adjustment to reflect the possible future effect on the recoverability and
      classification of the assets or the amounts and classification of liabilities
      that may result should the Company cease to continue as a going
      concern.




*Ownership
      of Mineral
      Rights*




Title
        on
        mineral properties and mining rights involves certain inherent risks due
        to the
        difficulties of determining the validity of certain claims as well as the
        potential for problems arising from the frequently ambiguous conveyance history
        characteristic of many mining properties. We cannot give any assurance that
        title to such properties will not be challenged or impugned and cannot be
        certain that we will have or acquire valid title to these mining
        properties.  For example, there is a risk that the Colombian government may
        in the future grant additional titles in excess of the Company's expectations
        to
        currently illegal miners.  Furthermore, although the Company believes that
        mechanisms exist to integrate the titles of mineral properties currently
        not
        owned by the Company, there is a risk that this process could be time
        consuming and costly.  The Company's plan to move the town of Marmato is
        subject to the risks inherent in any relocation project involving the movement
        of an established town and its residents to a new location.




***Foreign
      Exchange Risk***





A
      substantial portion of our operating expenses is denominated in U.S. dollars,
      with the remainder largely in either Colombian pesos or Canadian dollars.
      Fluctuations in currency exchange rates have a significant impact on our results
      from operation and corresponding financial stability. Historically, we have
      not
      entered into derivative contracts either to hedge existing risks or for
      speculative purposes and do not currently foresee doing so in the future. As
      a
      result, fluctuations in exchange rates could materially impact reported results
      in the future.





***Environmental
      Risk***





Environmental
      legislation and regulations affect our operations and development projects.
      Such
      legislation and regulations apply to us along with other companies in the mining
      and metals industry. These types of legislation and regulations require us
      to
      obtain operating licenses, permits and other approvals and impose standards
      and
      controls on activities relating to our mining exploration activities.
      Environmental assessments are required before undertaking significant changes
      to
      existing operations. In addition to current requirements, we expect that
      additional environmental regulations will likely be implemented to protect
      the
      environment and quality of life, given issues of sustainable development and
      other similar requirements. Although at December 31, 2006 we have no asset
      retirement or remediation obligations there can be no certainty this situation
      will continue.





Changes
      in environmental legislation could have a material adverse effect on our
      operations and business plan. The complexity and breadth of these issues make
      it
      extremely difficult to predict their future impact on us. Compliance with
      environmental legislation can require significant expenditures and failure
      to
      comply with environmental legislation may result in the imposition of fines
      and
      penalties, liability to clean up costs, damages, and the loss of important
      permits.





There
      can
      be no assurance that we will at all times be in compliance with all
      environmental regulations or that steps to bring us into compliance would not
      materially adversely affect our business, results of operations, financial
      condition or liquidity. We may also be subject to claims from persons alleging
      that they have suffered significant damages as a result of the environmental
      impact of our operations.




45
 Table
          of Contents


***Governmental
      Regulations***





The
      mining and metals industry is subject to regulation and intervention by
      governments in such matters as control over the development and abandonment
      of
      mine sites (including restrictions on production) and possible expropriation
      or
      cancellation of contract and mineral rights. Before proceeding with major
      projects, including significant changes to existing operations, we must obtain
      certain regulatory approvals. The regulatory approval process can involve
      stakeholder consultation, environmental impact assessments and public hearings,
      among other things. In addition, regulatory approvals may be subject to
      conditions, including the obligation to post security deposits and other
      financial commitments. Failure to obtain regulatory approvals, or failure to
      obtain them on a timely basis could result in delays and abandonment or
      restructuring of projects and increased costs, all of which could negatively
      affect our profitability and cash flows. In addition, such regulations may
      be
      changed from time to time in response to economic or political conditions,
      and
      the implementation of new regulations or the modification of existing
      regulations affecting the mining and metals industry could increase our costs
      and have a material adverse impact on business, results of operations, financial
      condition and liquidity.





There
      can
      be no assurance that we will be in compliance with all applicable laws or
      regulations at all times or that steps to bring us into compliance would not
      materially adversely impact our business, results of operations, liquidity
      or
      financial condition.





***Recently
      Issued Accounting Standards, Not Yet Adopted***





The
      FASB
      has issued FIN 48, which prescribes rules on the accounting for uncertainty
      in
      income tax positions. FIN 48 requires all material tax positions to undergo
      a
      new two-step recognition and measurement process. All material tax positions
      in
      all jurisdictions in all tax years in which the statute of limitations remains
      open upon the initial date of adoption are required to be assessed. In order
      to
      recognize a tax asset it must be more likely than not a tax position will be
      sustained upon examination based solely on its technical merits. If the
      recognition standard is not satisfied, then no tax benefit otherwise arising
      from the tax position can be recorded for financial statement purposes. If
      the
      recognition standard is satisfied, the amount of tax benefit recorded for
      financial statement purposes will be the largest amount of tax benefit with
      a
      greater than 50% likelihood of being realized upon ultimate settlement with
      a
      taxing authority. FIN 48 is effective for our fiscal 2007 year. We do not
      anticipate the adoption of FIN 48 will have a material impact on our financial
      position, results of the operations, or cash flows.





**Share
      Data**





At
      March
      21, 2007, we have 65,056,849 common shares outstanding. In addition, we have
      outstanding:





i)
            4,427,500
                stock options, each of which is exercisable into one common share;
                and





ii)
            6,890,706
                common share purchase warrants, each of which is exercisable into
                one
                common share. In addition, in connection with our March 21, 2007
                equity
                offering, we are obligated to issue an additional 541,200 warrants
                to
                purchase common shares.


46
 Table
          of Contents


As
      at
      March 21, 2007, we are also obligated to issue to certain consultants of the
      Company 650,000 shares for services rendered.





***Fiscal
      2006 Recap and Outlook***





We
      have
      been purchasing mineral licenses in the Zona Alta portion of the Marmato project
      since 2005. Our objective is to purchase all of the mineral licenses and then
      consolidate them into a single license. As part of our acquisition program
      at
      the Marmato and Caramanta projects we have also initiated a review of the
      available geological data for the projects and are in the process of compiling
      all information into a comprehensive database. We have identified a number
      of
      immediate exploration targets at both the Marmato and Caramanta locations.





Our
      2006
      exploration program consisted of two parts. The first part consisted of
      evaluating the underground mineralization on the Marmato project by channel
      sampling all of the cross-cuts underground to which CGL had access. The second
      part of the program consisted of channel sampling within the various pits
      located at the El Salto prospect and chip sampling outcrops located along the
      creek beds within the Caramanta project. Our 2006 exploration program was
      successful in confirming the nature of the mineralization which previous
      operators encountered during their exploration programs at Marmato. We can
      now
      combine the historical exploration work conducted by the various operators
      with
      the results of our 2006 exploration program to determine further exploration
      targets in the immediate area.





As
      a
      result of the 2006 exploration program we are planning a more comprehensive
      exploration program on the Marmato and Caramanta projects in fiscal 2007. The
      next phase of the exploration program will consist of further chip and channel
      sampling, detailed geological mapping, as well as conducting diamond drilling
      on
      a number of the mineral showings, metallurgical testing, environmental studies,
      a scoping study and resource estimation in addition to further mineral property
      and infrastructure acquisitions.





With
      the
      Marmato and Caramanta projects, we have acquired a portion of a major historical
      gold producing district in Colombia. At the present time a number of small
      miners are still working the Zona Alta of the Marmato project and Mineros
      Nacionales is mining the Zona Baja at a rate of 300t/d. Very little exploration
      has been conducted in the past within the area of the Marmato and Caramanta
      projects to adequately determine the true extent of the remaining
      mineralization. Therefore, the potential economic viability of the project
      remains unknown, however we are optimistic that we will be successful in
      identifying a viable bulk tonnage, low grade gold and silver deposit with our
      Marmato and Caramanta projects. A number of other targets remain on the Marmato
      and Caramanta projects which intend to explore further at a later
      date.


47
 Table
          of Contents


**Item
      7. Financial Statements**





Index
      to
      Financial Statements:




**Audited
                Financial Statements:**F-1
            Report
                of Independent Registered Public Accounting
                FirmF-3
            Balance
                Sheet as of December 31, 2006 and
                2005F-4
            Statements
                of Operations - Years Ended
                December 31, 2006 and 2005F-5
            Statement
                of Stockholders’ Equity (Deficiency)
                for the Years Ended December 31, 2006 and 2005F-7
            Statements
                of Cash Flows for the Years Ended December
                31, 2006 and 2005F-8
            Notes
                to Financial
                Statements




48
 Table
          of Contents


*PRICEWATERHOUSECOOPERS*
                  Pricewaterhouse
                    Coopers LLP
                    Chartered
                      Accountants
                    PO
                      Box 82
                    Royal
                      Trust Tower, Suite 3000
                    Toronto
                        Dominion Centre
                      Toronto,
                        Ontario
                      CanadaM5K
                        1G8
                      Telephone
                        +1 416 863 1133 Facsimile +1 416 365
                        8215
   **Report
            of Independent Auditors**
 To
          the
          stockholders of Colombia Goldfields Limited:
  We
          have
          audited the accompanying consolidated balance sheet of Colombia Goldfields
          Limited (the "Company") as of December 31, 2006, and the related consolidated
          statement of operations, of stockholders'
          equity (deficiency) and cash flows for the year then ended. These consolidated
          financial statements are the responsibility of the Company's management. Our
          responsibility is to express an opinion on these consolidated financial
          statements based on our audit. The consolidated financial statements of
          the
          Company as of December 31, 2005 and for the year, and cumulative period
          since
          inception then ended, were audited by other auditors whose report dated
          April
          10, 2006 expressed an unqualified opinion on those statements.
  We
          conducted our audit in accordance with the standards of the Public Company
          Accounting Oversight Board (United States of America). Those standards
          require
          that we plan and perform the audit to obtain reasonable assurance about
          whether
          the consolidated financial statements are free of material
          misstatement. An audit includes examining, on a test basis, evidence supporting
          the amounts and
          disclosures in the consolidated financial statements. An audit also includes
          assessing the accounting principles used and significant estimates made
          by
          management, as well as evaluating the overall
          consolidated financial statement presentation. We believe that our audit
          provides a reasonable basis
          for our opinion.
  In
          our
          opinion, the 2006 consolidated financial statements referred to above present
          fairly, in all material
          respects, the financial position of the Company as at December 31, 2006,
          and the
          results of its operations and its cash flows for the year then ended in conformity with
          accounting principles generally accepted in the United States of
          America.
  The
          accompanying consolidated financial statements have been prepared assuming
          that
          the Company  will
          continue as a going concern. As discussed  in Note
          1 to
          the consolidated financial statements, the Company
          has suffered recurring losses from operations, has no source of operating
          revenue, and is dependent on its ability to obtain financing and upon the
          future
          exploration and development of profitable
          operations from its mineral properties. These factors together raise substantial
          doubt about its
          ability to continue as a going concern. Management's plans in regard to
          these
          matters are also described
          in Note 1. The consolidated financial statements do not include any adjustments
          that might result
          from the outcome of this uncertainty.
  Pricewaterhouse
          Coopers LLP
  Chartered
          Accountants
 Toronto,
          Canada
 March
          21,
          2007
  PricewaterhouseCoopers
          refers to the Canadian firm of PricewaterhouseCoopers LLP and the other
          member
          firms of PricewaterhouseCoopers International Limited, each of which is
          a
          separate and independent legal entity
 F-1
 Table
            of Contents
 ***Vellmer
            & Chang***
 ***Chartered
            Accountants ****
 *505
            -
            815 Hornby Street*
 *Vancouver,
            B.C, V6Z 2E6*
 *Tel:
            604-687-3776*
 *Fax:
            604-687-3778*
 *E-mail:
            info@vellmerchang.com*
 **
            denotes a firm of incorporated professionals*
 
 
 
 **REPORT
            OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 **To
            the Board of Directors and Stockholders of**
 
 **Colombia
            Goldfields Ltd.**
 (formerly
            Secure Automated Filing Enterprises Inc.)
 (A n
            Exploration stage company)
 
 We
            have
            audited the balance sheet of Colombia Goldfields Ltd. (formerly Secure
            Automated
            Filing Enterprises Inc.) (“the Company”) as at December 31, 2005 and the
            related statements of operations, stockholders’ equity and cash flows for the
            year then ended and for the period cumulative from inception on March
            25, 2003
            to December 31, 2005. These financial statements are the responsibility
            of the
            Company's management. Our responsibility is to express an opinion on
            these
            financial statements based on our audit.
 
 We
            conducted our audits in accordance with the standards of the Public Company
            Accounting Oversight Board (United States). Those standards require that
            we plan
            and perform an audit to obtain reasonable assurance whether the financial
            statements are free of material misstatement. An audit includes consideration
            of
            internal control over financial reporting as a basis for designing audit
            procedures that are appropriate in the circumstances, but not for the
            purpose of
            expressing an opinion on the effectiveness of the Company’s internal control
            over financial reporting. Accordingly, we express no such opinion. An
            audit also
            includes examining, on a test basis, evidence supporting the amounts
            and
            disclosures in the financial statements, assessing the accounting principles
            used and significant estimates made by management, and evaluating the
            overall
            financial statement presentation. We believe that our audits provide
            a
            reasonable basis for our opinion.
 
 In
            our
            opinion, these financial statements present fairly, in all material respects,
            the financial position of the Company as at December 31, 2005 and the
            results of
            its operations and it’s cash flows for the year then ended and for the period
            cumulative from inception on March 25, 2003 to December 31, 2005 in conformity
            with generally accepted accounting principles in the United States of
            America.
 
 The
            accompanying financial statements have been prepared assuming the Company
            will
            continue as a going concern. As discussed in Note 1 to the financial
            statements,
            the Company’s business is in the exploration stage and has no source of revenue.
            As at December 31, 2005, the Company has recurring loss and requires
            financing,
            either through issuing shares or debt, to fund its mineral exploration
            commitments. These factors together raise substantial doubt about its
            ability to
            continue as a going concern. Management’s plans in regard to these matters are
            also described in Note 1. The financial statements do not include any
            adjustments that might result from the outcome of this uncertainty.
 
 Vancouver, Canada
                  *“VELLMER & CHANG”*April 10, 2006
                  Chartered
                    Accountants
 F-2
 **COLOMBIA
        GOLDFIELDS LTD.**
 **(An
        Exploration Stage Company)**
 **CONSOLIDATED
        BALANCE SHEETS**
  *US
                  Dollars*
              **December
                  31,**
                **2006**
              
              **December
                    31,**
                  **2005****ASSETS****Current**Cash
                  and cash equivalents
              $
              882,913
              
              $
              1,565,640Prepaid
                  expenses and deposits
              
              176,347
              
              
              22,554Exploration
                  expenditure advances (Note 6)
              
              -
              
              
              158,2021,059,260
              
              
              1,746,396Mineral
                  and exploration properties and rights (Note 3)
              
              43,528,386
              
              
              -Property
                  and equipment, net of accumulated amortization (Note 4)
              
              419,733
              
              
              1,445Website
                  Development Cost, net of accumulated amortization (Note 4)
              
              -
              
              
              17,500$
              45,007,379
              
              $
              1,765,341**LIABILITIES****Current**Accounts
                  payable and accrued liabilities
              $
              6,037,671
              
              $
              83,004**Non
                  Current**Deferred
                  income tax liability (Notes 3 and 7)
              
              9,759,524
              
              
              -15,797,195
              
              
              83,004**STOCKHOLDERS’
                  EQUITY (DEFICIENCY)****Common
                  stock (Notes 5 & 11)**
              
              565
              
              
              296Authorized:200,000,000
                  common shares, $0.00001 par valueIssued
                  and Outstanding:56,036,849
                  common shares (December 31, 2005, 29,589,100 common
                  shares)**Additional
                  paid-in capital (Note 5)**
              
              37,039,266
              
              
              1,465,354**Share
                  subscriptions (Note 5)**
              
              -
              
              
              1,767,65037,039,831
              
              
              3,233,300**Deficit
                  accumulated during the exploration stage**
              
              (7,829,647)
              
              
              (1,550,963)29,210,184
              
              
              1,682,337$
              45,007,379
              
              $
              1,765,341
 
 **See
        accompanying Notes to Consolidated Financial Statements**
 F-3
 Table
            of Contents
 COLOMBIA
        GOLDFIELDS LTD.
 **(An
        Exploration Stage Company)**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 
 *US
                  Dollars*
              **Year
                    Ended**
                  **December
                    31,**
                  **2006**
              
              ****Year**Ended**
                **December
                  31,**
                **2005**
              
              ********Cumulative********
                **from
                        inception**
                      **(March
                        25, 2003)**
                      **through**
                      **December
                        31,**
                      **2006****REVENUES**
              $
              -
              
              $
              -
              
              $
              -**OPERATING
                  EXPENSES**Mineral
                  property exploration expenses (Notes 3 and 5)
              
              3,298,438
              
              
              1,179,298
              
              
              4,477,736General
                  and administrative (Note 5)
              
              3,962,960
              
              
              309,100
              
              
              4,340,617Amortization
              
              64,270
              
              
              3,835
              
              
              68,105Total
                  operating expenses
              
              7,325,668
              
              
              1,492,233
              
              
              8,886,458Other
                  income
              
              (118,034)
              
              
              -
              
              
              (118,034)Loss
                  from continuing operations
              
              (7,207,634)
              
              
              (1,492,233)
              
              
              (8,768,424)Income
                  from discontinued operations (Note 1)
              
              -
              
              
              763
              
              
              9,827Loss
                  before future income taxes
              
              (7,207,634)
              
              
              (1,491,470)
              
              
              (8,758,597)Deferred
                  income tax recovery (Note 7)
              
              (928,950)
              
              
              -
              
              
              (928,950)**NET
                  LOSS**
              $
              (6,278,684)
              
              $
              (1,491,470)
              
              $
              (7,829,647)**LOSS
                  PER SHARE - BASIC DILUTED**Earnings
                  (loss) from continuing operations
              $
              (0.15)
              
              $
              (0.06)Earnings
                  (loss) from discontinued operations
              
              -
              
              
              0.00Net
                  loss per share - basic & diluted
              $
              (0.15)
              
              $
              (0.06)**WEIGHTED
                  AVERAGE****NUMBER
                  OF COMMON****SHARES
                  OUTSTANDING**Basic
                  and diluted
              
              42,677,419
              
              
              25,260,136
  **See
        accompanying Notes to Consolidated Financial Statements**
 F-4
 Table
            of Contents
 **COLOMBIA
        GOLDFIELDS LTD.**
 **(An
        Exploration Stage Company)**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS’ EQUITY
        (DEFICIENCY)**
  *US
                  Dollars*
              Common
                Shares
              
              Stock
                Amount
              
              Additional
                Paid-in
                Capital
              
              Share
                Subscriptions
                  Received
              
              Deficit
                Accumulated
                DuringThe
                Exploration
                Stage
              
              Total
                Stockholders’
                Equity
                (Deficiency)**Period
                  Ended December 31, 2003 (see Note 1):**Issue
                  of common stock for cashat
                  $0.000125per
                  share onMarch
                  25, 2003
              
              8
              
              $
              -
              
              $
              1
              
              $
              -
              
              $
              -
              
              $
              1Issue
                  of common stock for cashat
                  $0.000125per
                  share onMay
                  5, 2003
              
              16,000,000
              
              
              160
              
              
              1,840
              
              
              -
              
              
              -
              
              
              2,000Repurchase
                  of common stock for cash at $0.000125per
                  share on October 31, 2003
              
              (8,000,008)
              
              
              (80)
              
              
              (920)
              
              
              -
              
              
              -
              
              
              (1,000)Donated
                  Capital
              
              -
              
              
              -
              
              
              35,200
              
              
              -
              
              
              -
              
              
              35,200Net
                  loss for the twelve months ended December 31, 2003
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (36,399)
              
              
              (36,399)Balance,
                  December 31, 2003
              
              8,000,000
              
              
              80
              
              
              36,121
              
              
              -
              
              
              (36,399)
              
              
              (198)**Year
                  Ended December 31, 2004:**Issue
                  of common stock forcash
                  at $0.00625per
                  shareon
                  December 20, 2004
              
              16,000,000
              
              
              160
              
              
              99,840
              
              
              -
              
              
              -
              
              
              100,000Donated
                  Capital
              
              -
              
              
              -
              
              
              19,200
              
              
              -
              
              
              -
              
              
              19,200Net
                  loss for the twelve months ended December 31, 2004
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (23,094)
              
              
              (23,094)Balance
                  December 31, 2004
              
              24,000,000
              
              
              240
              
              
              155,161
              
              
              -
              
              
              (59,493)
              
              
              95,908**Year
                  Ended December 31, 2005:**Issue
                  of common stock for mineral concessionat
                  $0.25per
                  share on September 22, 2005
              
              1,000,000
              
              
              10
              
              
              249,990
              
              
              -
              
              
              -
              
              
              250,000Issue
                  of 4,221,000 common stock for cash at $0.25per
                  share and 368,100
                common
                  stock for finder fee on October 14, 2005
              
              4,589,100
              
              
              46
              
              
              1,055,204
              
              
              -
              
              
              -
              
              
              1,055,250Forgiveness
                  of advances from a related party
              
              
              
              
              
              
              
              4,999
              
              
              -
              
              
              -
              
              
              4,999Share
                  Subscriptions Received
              
              -
              
              
              -
              
              
              -
              
              
              1,767,650
              
              
              -
              
              
              1,767,650Net
                  loss for the twelve months ended December 31, 2005
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,491,470)
              
              
              (1,491,470)Balance,
                  December 31, 2005
              
              29,589,100
              
              $
              296
              
              $
              1,465,354
              
              $
              1,767,650
              
              $
              (1,550,963)
              
              $
              1,682,337
 
 **See
        accompanying Notes to Consolidated Financial Statements**
 F-5
 Table
            of Contents
 **COLOMBIA
            GOLDFIELDS LTD.**
 **(An
            Exploration Stage Company)**
 **CONSOLIDATED
            STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)**
  *US
                    Dollars*
                Common
                  Shares
                
                Stock
                  Amount
                
                Additional
                  Paid-in
                  Capital
                
                Share
                    Subscriptions
                  Received
                
                Deficit
                  Accumulated
                  DuringThe
                  Exploration
                  Stage
                
                Total
                  Stockholders’
                    Equity
                  (Deficiency)Balance,
                  December 31, 2005
                
                29,589,100
                
                $
                296
                
                $
                1,465,354
                
                $
                1,767,650
                
                $
                (1,550,963)
                
                $
                1,682,337**Year
                  Ended December 31, 2006:**
                
                3,126,083
                
                
                31
                
                
                1,688,054
                
                
                (1,767,650)
                
                
                -
                
                
                (79,565)Issue
                    of common stock for cash at $0.60 per share on January 24, 2006,
                  net
                    of $187,565 finders feeIssue
                  of common stock forMineral
                  concessions at $1.90 per share on February 14, 2006
                
                1,000,000
                
                
                10
                
                
                1,899,990
                
                
                -
                
                
                -
                
                
                1,900,000Issue
                  of common stockFor
                  Mineral concession at$2.25
                  per share on April 10, 2006
                
                1,000,000
                
                
                10
                
                
                2,249,990
                
                
                -
                
                
                -
                
                
                2,250,000Issue
                    of common stockfor
                    cash at $1.50 per unit
                  (common
                    shares & warrants less finders fee of $585,060 on April 26,
                    2006
                
                6,500,666
                
                
                65
                
                
                6,416,112
                
                
                -
                
                
                -
                
                
                6,416,177Issue
                  of share purchase warrants with April 26, 2006 common stock
                  issuance
                
                -
                
                
                -
                
                
                2,749,762
                
                
                -
                
                
                -
                
                
                2,749,762Issue
                  of common stock forMineral
                  concessions of $2.74per
                  share on April 28, 2006
                
                2,000,000
                
                
                20
                
                
                5,479,980
                
                
                -
                
                
                -
                
                
                5,480,000Issue
                  of common stock for Mineral concessions at $1.10 per share on August
                  22,
                  2006
                
                4,200,000
                
                
                42
                
                
                4,619,958
                
                
                -
                
                
                -
                
                
                4,620,000Issue
                  of common stock for Mineral concessions at $1.41 per share on September
                  25, 2006
                
                1,150,000
                
                
                16
                
                
                1,621,484
                
                
                -
                
                
                -
                
                
                1,621,500Issue
                  of common shares per exercise of 3,471,000 warrants on October
                  14,
                  2006.
                
                3,471,000
                
                
                35
                
                
                1,735,465
                
                
                -
                
                
                -
                
                
                1,735,500Issue
                  of common stock for Mineral concessions at $1.28 per share on December
                  14,
                  2006.
                
                4,000,000
                
                
                40
                
                
                5,119,960
                
                
                **-**
                
                
                **-**
                
                
                5,120,000Stock
                  based compensation
                
                -
                
                
                -
                
                
                1,993,157
                
                
                -
                
                
                -
                
                
                1,993,157Net
                  loss for the twelve months ended December 31, 2006
                
                
                
                
                
                
                
                -
                
                
                -
                
                
                (6,278,684)
                
                
                (6,278,684)Balance
                  December 31, 2006
                
                56,036,849
                
                $
                565
                
                $
                37,039,266
                
                $
                -
                
                $
                (7,829,647)
                
                $
                29,210,184
  **See
        accompanying Notes to Consolidated Financial Statements**
 F-6
 Table
            of Contents
 COLOMBIA
          GOLDFIELDS LTD.
 **(An
          Exploration Stage Company)**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
  **Year
                  Ended**
                **December
                  31, 2006**
              
              **Year
                  Ended**
                **December
                  31, 2006**
              
              **Cumulative**
                **Inception**
                **(March****25, 2003)**
                **through**
                **December
                  31, 2006****OPERATING
                ACTIVITIES:**Net
                  loss
              $
              (6,278,684)
              
              $
              (1,491,470)
              
              $
              (7,829,647)Items
                  not requiring cash outlay:-
                  Consulting fees
              
              -
              
              
              -
              
              
              52,400-
                  Website design and software development
              
              -
              
              
              -
              
              
              2,000-
                  Amortization
              
              64,270
              
              
              3,835
              
              
              68,105-
                  Mineral property exploration
              
              -
              
              
              250,000
              
              
              250,000-
                  Stock based compensation
              
              1,993,157
              
              
              -
              
              
              1,993,157-
                  Deferred income taxes
              
              (928,950)
              
              
              -
              
              
              (928,950)Changes
                  in non-cash working capital items-
                  Accounts receivable
              
              -
              
              
              910
              
              
              --
                  Prepaid expenses and deposits
              
              (153,793)
              
              
              (22,554)
              
              
              (176,347)-
                  Exploration expenditure advances
              
              158,202
              
              
              (158,202)
              
              
              --
                  Accounts payable and accrued liabilities
              
              345,129
              
              
              79,317
              
              
              428,133-
                  Due to/from related parties
              
              -
              
              
              (1,001)
              
              
              4,999Net
                  cash provided by (used in) operating activities
              
              (4,800,669)
              
              
              (1,339,165)
              
              
              (6,136,150)**FINANCING
                  ACTIVITIES:**Issuance
                  of securities, net of finder fees
              
              10,821,874
              
              
              1,055,250
              
              
              11,978,125Proceeds
                  of share subscription
              
              -
              
              
              1,767,650
              
              
              1,767,650Net
                  cash provided by financing activities
              
              10,821,874
              
              
              2,822,900
              
              
              13,745,775**INVESTING
                  ACTIVITIES:**Purchase
                  of mineral exploration rights
              
              (6,238,874)
              
              
              -
              
              
              (6,238,874)Purchase
                  of equipment
              
              (465,058)
              
              
              (1,780)
              
              
              (466,838)Website
                  development costs
              
              -
              
              
              (21,000)
              
              
              (21,000)Net
                  cash used in investing activities
              
              (6,703,932)
              
              
              (22,780)
              
              
              (6,726,712)**INCREASE
                  (DECREASE) IN CASH**
              $
              (682,727)
              
              $
              1,460,955
              
              $
              882,913**CASH
                  AND CASH EQUIVALENTS AT BEGINNING OF PERIOD**
              
              1,565,640
              
              
              104,685
              
              
              -**CASH
                  AND CASH EQUIVALENTS AT END OF PERIOD**
              $
              882,913
              
              $
              1,565,640
              
              $
              882,913**SUPPLEMENTAL
                  CASH FLOW INFORMATION**Interest
                  expense
              $
              -
              
              $
              -
              
              $
              -Taxes
              $
              -
              
              $
              -
              
              $
              -
 
 **See
        accompanying Notes to Consolidated Financial Statements**
 F-7
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
          Exploration Stage Company)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
        1 - GOING CONCERN AND NATURE OF OPERATIONS**
  The
        Company was incorporated under the laws of the State of Nevada, U.S.A., on
        March
        25, 2003. The Company changed its name from Secure Automated Enterprises,
        Inc.
        to Colombia Goldfields Ltd. on May 13, 2005. The Company changed its operational
        focus from providing electronic filings services for public access document
        submissions to the U.S. Securities Exchange Commission, to acquisition of,
        exploration for, and development of mineral properties. The Company is currently
        in the exploration stage. On July 31, 2006 the Company’s jurisdiction of
        incorporation was changed to the state of Delaware.
  In
        the
        first quarter of 2005, the Company discontinued its electronic filings services
        operations and historical income and expenses relating to these discontinued
        operations have been classified as discontinued operations in the Statements
        of
        Operations for all comparative periods presented.
  As
        at
        December 31, 2006, the Company has incurred a cumulative net loss since
        inception on March 25, 2003 of $7,829,647 and has no source of operating
        revenue. The Company’s ability to meet its obligations and continue as a going
        concern is dependent on the ability to identify and complete future funding.
        While the Company has been successful in raising financing to date, there
        can be
        no assurance that it will be able to do so in the future.
 
 These
        consolidated financial statements have been prepared using U.S generally
        accepted accounting principles applicable to a going concern which contemplates
        the realization of assets and settlement of liabilities in the normal course
        of
        business as they come due. In addition to the Company’s working capital
        requirements and its cumulative losses during the year ended December 31,
        2006
        and since inception, the Company must also secure sufficient funding to meet
        its
        spending and purchase option obligations with respect to its mineral properties
        in order to maintain its option to purchase certain mining and mineral rights.
        These circumstances lend substantial doubt as to the ability of the Company
        to
        meet its obligations as they come due and, accordingly, as to the
        appropriateness of the use of accounting principles applicable to a going
        concern. As disclosed in Note 11, subsequent to December 31, 2006 and in
        recognition of these circumstances, the Company raised funding of $---9,020,000
        through a private placement of additional share capital in March 2007 and
        intends to continue relying upon the issuance of securities to finance
        exploration, meet contractual obligations and continue as a going concern.
        As of
        the date of the approval of the consolidated financial statements, there
        is no
        assurance that these initiatives will be sufficient or successful.
 
 The
        Company’s ability to continue as a going concern is dependent upon its ability
        to fund its working capital and exploration requirements and, eventually,
        upon
        the future exploration and development of profitable operations from its
        mineral
        properties. These consolidated financial statements do not reflect the
        adjustments to the carrying values of assets and liabilities and the reported
        expenses and balance sheet classifications that would be necessary if the
        going
        concern assumption were not appropriate, and these adjustments could be
        material.
  F-8
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
        Exploration Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Basis
        of Presentation**
 
 The
        consolidated financial statements have been prepared in accordance with U.S.
        generally accepted accounting principles.
 
 **Use
        of Estimates**
 
 The
        preparation of financial statements in conformity with U.S. generally accepted
        accounting principles requires 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 amount of revenues and expenses during the period. Actual results
        may differ from those estimates.
 
 **Consolidation**
 
 Entities
        which are controlled by the Company, either directly or indirectly, are
        consolidated. Control is established by the Company’s ability to determine
        strategic, operating, investing and financing policies without the co-operation
        of others. The Company analyzes its level of ownership, voting rights and
        representation on the board of directors in determining if control exists
        by any
        one, or a combination of these factors.
 
 These
        consolidated financial statements include the accounts of (i) Colombia
        Goldfields Ltd., formerly a Nevada corporation, (ii) the Company’s 90% interest
        in RNC (Colombia) Limited (“RNC”), a Belize corporation and its 94.99% owned
        subsidiary - Compania Minera De Caldas, S.A. (“Caldas”), a Colombia corporation,
        (iii) the Company’s 94.99% interest in Gavilan Minerales, S.A. (“Gavilan”) a
        Colombia corporation. All
        significant inter-company transactions and balances have been eliminated
        upon
        consolidation.
 
 In
        accordance with Interpretation No. 46R, *Consolidation
        of Variable Interest Entities* (“FIN 46R”),
        variable interest entities (VIEs) are generally entities that lack sufficient
        equity to finance their activities without additional financial support from
        other parties or whose equity holders lack adequate decision making ability.
        All
        VIEs with which the Company is involved must be evaluated to determine the
        primary beneficiary of the risks and rewards of the VIE. The primary beneficiary
        is required to consolidate the VIE for financial reporting purposes.
 
 At
        January 12, 2006 and in
        connection with the adoption of FIN 46R, the Company concluded that RNC and
        its 94.99% owned subsidiary, Caldas,
        S.A., were
        VIEs since the Company provided the principal financial support to these
        entities and the Company was their primary beneficiary. Under FIN 46R
        transition rules, the financial statements of RNC and Caldas,
        S.A. were
        considered VIEs and the Company’s 25% interest has been included within the
        Company’s consolidated financial statements for the period January 12, 2006 to
        April 28, 2006.
 
 In
        connection with the Company’s April 28, 2006 acquisition of an additional 25% of
        RNC, the Company also received rights to nominate three of the four members
        of
        RNC’s board of directors. As such, the Company determined that control over RNC
        existed as of April 28, 2006, and these financial statements reflect the
        consolidation of the Company’s 50% interest in RNC, for the period April 29,
        2006 to August 22, 2006.
 
 On
        August
        22, 2006 the Company acquired an additional 25% of RNC, bringing the Company’s
        total ownership to 75% at August 22, 2006. These financial statements reflect
        the consolidation of the Company’s 75% interest in RNC for the period August 23,
        2006 to December 14, 2006.
 
 On
        September 25, 2006 the Company acquired 94.99% of the outstanding shares
        of
        Gavilan. These financial statements reflect the consolidation of Gavilan
        for the
        period of September 25, 2006 to December 31, 2006.
 
 F-9
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
          Exploration Stage Company)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 On
        December 14, 2006 the Company acquired a further 15% of RNC, bringing the
        Company’s total to December 31, 2006 ownership to 90%. These financial
        statements reflect the consolidation of the Company’s 90% interest in RNC for
        the period December 15, 2006 to December 31, 2006.
 
 Since
        the
        non-controlling shareholder of RNC and Gavilan has no obligation to contribute
        any additional capital and the Company was the primary entity obligated to
        fund
        future exploratory work, no non-controlling interest related to RNC or Gavilan
        has been recognized in the consolidated statement of operations for the period
        January 1, 2006 to December 31, 2006 and in the consolidated balance sheet
        at
        December 31, 2006.
 
 **Mineral
        Property Rights Acquisition and Exploration Expenditures**
 
 Costs
        of
        acquiring mining properties are capitalized upon acquisition. Mine development
        costs incurred either to develop new ore deposits, expand the capacity of
        mines,
        or to develop mine areas substantially in advance of current production are
        also
        capitalized once proven and probable reserves exist and the property is a
        commercially mineable property. Costs incurred to maintain current production
        or
        to maintain assets on a standby basis are charged to operations. Costs of
        abandoned projects are charged to operations upon abandonment. The Company
        evaluates the carrying value of capitalized mining costs and related property,
        plant and equipment costs, to determine if these costs are in excess of their
        net recoverable amount whenever events or changes in circumstances indicate
        that
        their carrying amounts may not be recoverable. The periodic evaluation of
        carrying value of capitalized costs and any related property, plant and
        equipment costs are based upon expected future cash flows and/or estimated
 salvage
        value in accordance with Statement of Financial Accounting Standards (SFAS)
        No.
        144, *Accounting
        for Impairment or Disposal of Long-Lived Assets.*
 
 **Asset
        Retirement Obligations**
 
 The
        Company applies SFAS No. 143, *Accounting
        for Assets Retirement Obligations* which
        requires that the fair value of a liability for an asset retirement obligation
        be recognized in the period in which it is incurred. SFAS No. 143 requires
        the
        Company to record a liability for the present value of the estimated site
        restoration costs with a corresponding increase to the carrying amount of
        the
        related long-lived assets. The liability will be accreted until it has been
        fully incurred and the asset will be amortized over the life of the related
        assets. Adjustments for changes resulting from the passage of time and changes
        to either the timing or amount of the original present value estimate underlying
        the obligation will be made. As at December 31, 2006 and December 31, 2005
        the
        Company does not have any asset retirement obligations.
 
 **Cash
        and Cash Equivalents**
 
 The
        Company considers all highly liquid instruments with a maturity of three
        months
        or less at the time of issuance to be cash equivalents. As at December 31,
        2006
        the Company has cash and cash equivalents in the amount of $782,913
        (2005-$1,476,361) in excess of federally insured limits.
 
 **Property
        and Equipment**
 
 Property
        and equipment are carried at cost. For the significant components of property
        and equipment, depreciation is provided for using the following method and
        time
        periods:
 
 **Asset**
              **Basis**
              **Period**Vehicles
              Straight
                  line
              5
                  yearsBuildings
              Straight
                  line
              20
                  yearsOffice
                  equipment & furniture
              Straight
                  line
              3
                  to 10 years
  F-10
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
            Exploration Stage Company)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 The
        Company regularly reviews the carrying values of property and equipment based
        on
        expected future cash flows whenever events or changes in circumstances indicate
        that the carrying amounts may not be recoverable. If this carrying value
        exceeds
        the recoverable amount, a write-down is charged to the statement of
        operations.
 
 **Environmental
        Costs**
 
 Environmental
        expenditures that related to current operations are charged to operations
        or
        capitalized as appropriate. Expenditures that relate to an existing condition
        caused by past operations, and which do not contribute to current or future
        revenue generation, are charged to operations. Liabilities are recorded when
        environmental assessments and/or remedial efforts are probable, and the cost
        can
        be reasonably estimated. Generally, the timing of these accruals coincides
        with
        the earlier of completion of a feasibility study or the company’s commitment to
        plan of action based on the then known facts.
 
 **Comprehensive
        Income**
 
 In
        accordance with SFAS 130, *Reporting
        Comprehensive Income* (“SFAS
        130”), comprehensive income consists of net income and other gains and losses
        affecting stockholders’ equity that are excluded from net income, such as
        unrealized gains and losses on investments available for sale, foreign currency
        translation gains and losses when the Company has a functional currency other
        than US dollars, and minimum pension liabilities. For all periods presented
        the
        Company’s financial statements include do not include any of the additional
        elements that affect comprehensive income. Accordingly, net income and
        comprehensive income are identical.
 
 **Stock-Based
        Compensation**
 
 On
        January 1, 2006, the Company applied SFAS No. 123(R), *Share-Based
        Payment* ,
        to
        account for stock options and similar equity instruments issued. Accordingly,
        compensation expense attributable to stock options or similar equity instruments
        granted are measured at the fair value at the grant date and recognized over
        the
        expected vesting period. For all stock option awards granted on or after
        January
        1, 2006, the Company recognizes compensation using the fair value method
        of
        accounting for stock-based compensation. The fair value of stock options
        is
        estimated at the grant date using the Black-Scholes option pricing model.
        In the
        event stock options are forfeited, any previously recognized compensation
        expense related to unvested and expiring awards is recognized in earnings
        during
        the period of forfeiture.
 
 Although
        the assumptions used to record stock compensation expense reflect management’s
        best estimates, they involve inherent uncertainties based on market conditions
        generally outside of the control of the Company. If other assumptions were
        used,
        stock-based compensation expense could be significantly impacted. As stock
        options are exercised, the proceeds received on exercise, in addition to
        the
        previously recognized amounts related to those stock options, are credited
        to
        stockholders’ equity. The adoption of SFAS No. 123(R) did not have an impact on
        the Company’s historical financial statements as the Company had no stock
        options outstanding prior to adoption.
 
 The
        Company provides direct stock awards to certain directors, officers, and
        consultants. Direct stock awards are typically subject to a two year vesting
        period. Direct stock awards are recorded at fair value on the grant date,
        with
        compensation expense recognized on a straight-line basis over the vesting
        period.
 
 F-11
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
          Exploration Stage Company)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Foreign
        Currency Translation**
 
 The
        Company’s functional currency is US dollars. Accordingly, foreign currency
        balances are translated into US dollars as follows:
  i)
              Monetary
                  assets and liabilities are translated at the period-end exchange
                  rate;
  ii)
              Non-monetary
                  assets are translated at the rate of exchange in effect at their
                  acquisition date; and
 
 iii)
              Revenue
                  and expense items are translated at the average exchange rate for
                  the
                  respective period.
 
 Foreign
        exchange gains and losses are recognized as period expenses.
 
 **Earnings
        (Loss) per Share**
 
 Basic
        earnings (loss) per share is computed by dividing net earnings (loss) available
        to common stockholders by the weighted average number of common shares
        outstanding during the period. Diluted net earnings (loss) per share on the
        potential exercise of the equity-based financial instruments is not presented
        where anti-dilutive. For the years ended December 31, 2006 and 2005, outstanding
        share purchase warrants and options to purchase common shares were excluded
        from
        the computation of diluted earnings per share as the impact of these instruments
        was antidilutive as a result of losses incurred in these years.
 
 **Income
        taxes**
 
 The
        Company accounts for income taxes using the asset and liability method which
        requires the recognition of deferred tax assets and liabilities for the expected
        future tax consequences of events that have been recognized in the Company’s
        financial statements or tax returns.
  **Long-Lived
        assets**
 
 Long-lived
        assets of the Company are reviewed for impairment whenever events or
        circumstances indicate that the carrying amount of assets may not be
        recoverable, pursuant to SFAS No. 144, *Accounting
        for the Impairment or Disposal of Long-Lived Assets* and EITF
        04-3, *Mining
        Assets: Impairment and Business Combinations.*
 
 Management
        considers assets to be impaired if the carrying value exceeds the future
        projected cash flows from related operations (undiscounted and without interest
        charges). If impairment is deemed to exist, the assets will be written down
        to
        fair value. Fair value is generally determined using a discounted cash flow
        analysis.
 
 **Financial
        Instruments**
 
 The
        Company’s financial instruments consist of cash and cash equivalents, accounts
        payable and accrued liabilities and amounts due to and from related parties.
        The
        carrying value of these financial instruments approximates their fair value
        based on their liquidity or their short-term nature. The Company is not exposed
        to significant interest, credit or currency risk arising from these financial
        instruments.
 
 F-12
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
            Exploration Stage Company)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
        3 - MINERAL PROPERTIES AND EXPLORATION RIGHTS**
 
 Title
        to
        mineral properties and mining and exploration rights involves certain inherent
        risks due to the difficulties of determining the validity of certain claims
        as
        well as the potential for problems arising from the frequently ambiguous
        conveyance history characteristic of many mining properties. Currently, the
        Company is in the process of investigating the title of mineral concessions
        for
        which it holds the options to acquire. Therefore, the Company cannot give
        any
        assurance that title to such properties will not be challenged or impugned
        and
        cannot be certain that the Company will have valid title to its mining
        properties. The Company relies on title opinions by legal counsel who base
        such
        opinions on the laws of countries in which the Company operates.
 
 **A)
        Caramanta Project**
 
 (i)
        Caramanta Project - Concessions 6602, 1343 and 6329
 
 On
        September 22, 2005, the Company entered into an Assignment Agreement with
        Investcol Limited (“Investcol”), a related party, where Investcol assigned,
        transferred, and conveyed to the Company all of its rights under a contract
        for
        Purchase Option of Mining Concessions (“Original Option Contract”) entered into
        with Cia Servicios Y Logisticos Ltda. As the result of the Assignment Agreement,
        the Company acquired an option to purchase certain mining, mineral and
        exploration rights on property known as Concessions 6602, 1343 and 6329 located
        in Caramanta Municipality, Antioquia Department, Medellin, Colombia for $10,000,
        on condition that $2,990,000 is invested in exploratory work on the property
        over a three year period. The Company issued 1,000,000 common stock to Investcol
        at a deemed fair market value $0.25 per share for total consideration of
        $250,000. At the date of acquisition of these mineral rights the Company
        had not
        yet incorporated a Company in Colombia and had not gained the support of
        the
        Colombian federal or local governments. Due to these uncertainties, the initial
        $260,000 was considered mineral property exploration and was recorded as
        part of
        mineral property exploration expenses in the consolidated statement of
        operations in fiscal 2005.
 
 Pursuant
        to the Assignment Agreement, the Company was committed to fund $2,990,000
        exploratory work as follows:
 
 a)
              $500,000
                  upon the closing of the Assignment
                  Agreement;
 b)
              $750,000
                  during the 12 month period commencing June 25, 2006; and on the
                  earlier of
                  June, 2006 or commencement of the second exploration phase, one
                  million
                  restricted shares of the Company’s common shares;
                  and
 c)
              $1,740,000
                  during the 12-month period commencing June 25,
                  2007.
 
 In
        addition, the Company agreed to pay Investcol $7,500 per month as an office
        fee
        through July 31, 2006.
 
 On
        September 25, 2006 the Assignment Agreement was superseded in connection
        with
        the Company’s agreement to acquire the Mining Concessions. (See note 3(A)(iii)
        below for further details)
 
 (ii)
        Caramanta Project - Concessions 6993, 7039, 6821 and 6770 and HET 31, 32,
        26, 27
        and HETG 01
 
 On
        February 16, 2006 the Company entered into a Letter of Intent (“LOI”) with
        Investcol to acquire Investcol’s rights in a Contract for Purchase (“Purchase
        Contract”) entered into with Cia Servicios y Logisticos Ltda. The LOI outlined a
        proposed transaction where the Company intended to acquire Investcol’s rights to
        acquire mining contracts to exclusively engage in mining activities on
        concessions 6993, 7039, 6821 and 6770 (the “Contracts”) and options that
        Investcol holds to acquire the exclusive rights to engage in mining activities
        on concessions HET 31, 32, 26, 27 and HETG 01 (the “Options”) all located within
        an area in Colombia referred to as the Caramanta location.
 
 F-13
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
            Exploration Stage Company)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS** 
  The
              LOI
              was non-binding and subject to final negotiation and the execution
              of a
              definitive agreement. On April 10, 2006, the Company entered into a
              definitive
              agreement with Investcol finalizing this transaction (“Assignment Agreement”).
              In consideration for this Assignment Agreement, the Company paid Investcol
              total
              consideration in the amount of $350,000 and issued 1,000,000 restricted
              shares
              of common stock. Under the terms of the Assignment Agreement, Investcol
              agreed
              to pay the exercise price of $150,000 on the Options whose titles will
              remain in
              the name of Cia Servicios until the final exploration commitments have
              been
              made. The final option payments were made prior to July 30,
              2006.
 
 On
        September 25, 2006 the Assignment Agreement was superseded in connection
        with
        the company’s agreement to acquire the Mining Concessions. (See note 3(A)(iii)
        below for further details)
 
 (iii)
        Caramanta Project - Acquisition of the Caramanta Exploration
        Properties
 
 On
        September 25, 2006 the Company, through the acquisition of the outstanding
        shares of Gavilan, acquired full legal title to the Caramanta project
        concessions described in Notes 3A(i) and 3A(ii) above. Consideration paid
        for
        the acquisition included $300,000 cash and the issuance of 1,150,000 restricted
        common shares at a fair value of $1.41 per share. In addition, a $50,000
        finder’s fee was paid to Investcol. The total acquisition cost of $1,971,500 was
        allocated to the net assets acquired as follows:
 
 Mineral
                  and exploration and properties rights
              $
              1,780,841Property,
                  plant and equipment
              
              190,659$
              1,971,500
 
 The
        purchase was recorded as part of i) acquired mineral and exploration properties
        and rights and ii) property, plant and equipment in fiscal 2006. As a result
        of
        the acquisition of Gavilan, the Company no longer has any minimum exploratory
        work obligations related to the Caramanta concessions.
 
 **B)
        Marmato Project**
  On
        January 12, 2006, the Company entered into a Stock Purchase Agreement with
        Investcol and RNC (the "Agreement"), whereby the Company (i) acquired
        twenty-five percent (25%) of the issued and outstanding stock of RNC, a Belize
        corporation ("RNC") and (ii) held an option to acquire the remaining seventy
        five percent (75%) of RNC's issued and outstanding stock over a period of
        time.
        RNC is the beneficial holder of 94.99% of the issued and outstanding stock
        of
        Caldas, a Colombia corporation that (i) owns certain mining, mineral and
        exploration rights, (ii) has options to acquire mining, mineral and exploration
        rights and (iii) has exclusive rights to evaluate certain property, all located
        in the Zona Alta portion of the Marmato project in Colombia.
 
 Pursuant
        to the Stock Purchase Agreement, the Company:
 
 a)
              Acquired
                  25% of the outstanding shares of RNC (total 25% of RNC) by the
                  issuance of
                  1,000,000 common shares of the Company to Investcol and the advance
                  to RNC
                  of a $1,200,000 non-interest bearing loan. Total consideration
                  of
                  $1,900,000 related to this transaction was recorded as part of
                  acquired
                  mineral and exploration properties and rights in fiscal
                  2006.
  b)
              Acquired
                  an additional 25% of RNC (total 50% of RNC) by the issuance of
                  2,000,000
                  shares of the Company to Investcol and the advance of an additional
                  $4,000,000 non-interest bearing loan to RNC in two instalments
                  of
                  $1,000,000 and $3,000,000 on or before March 15, 2006 and April
                  30, 2006,
                  respectively. On March 10, 2006, the Company entered an extension
                  agreement with Investcol to extend the terms to April 30, 2006,
                  and
                  completed the transaction on April 28, 2006. Total consideration
                  of
                  $5,480,000 related to this transaction was recorded as part of
                  acquired
                  mineral and exploration properties and rights in fiscal
                  2006.
 
 F-14
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
            Exploration Stage Company)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
  c)
              Held
                  the option to acquire an additional 25% of RNC (total 75% of RNC)
                  by the
                  issuance of 4,000,000 common shares of the Company to Investcol
                  and the
                  advance of an additional $15,000,000 non-interest bearing loan
                  to RNC on
                  or before October 30, 2006. On
                  August 22, 2006, the Company amended its January 12, 2006 Stock
                  Purchase
                  Agreement with Investcol and RNC and concurrently exercised its
                  option to
                  increase the Company’s interest in RNC from 50% to 75%. Under the terms of
                  the amended agreement, the Company issued 4,200,000 common shares
                  and paid
                  $200,000 to Investcol. In connection with this transaction, the
                  Company
                  committed to providing an additional $5,000,000 by way of non-interest
                  bearing demand loan to RNC by December 31, 2006 and providing sufficient
                  funds to RNC, upon terms satisfactory to the Company, to complete
                  a full
                  bankable feasibility study of the Marmato Project. Total consideration
                  of
                  $ 4,820,000 related to this transaction was recorded as part of
                  acquired
                  mineral and exploration properties and rights in fiscal
                  2006.
  d)
              Has
                  the option to acquire an additional 25% of RNC (total 100% of RNC)
                  until
                  May 1, 2009 for a price equal to the 25% of the value of Caldas
                  determined
                  by a bankable feasibility study prepared by a certified mineral
                  property
                  evaluator, or other acceptable third party. Payment of the purchase
                  price
                  can be made by the Company in either cash or the Company’s common
                  shares.Under the terms of the August 22, 2006 amended agreement, the Company
                  continues to hold an option to acquire the remaining 25% of RNC
                  on or
                  before May 1, 2009 for a purchase price equal to 25% of the fair
                  value of
                  Caldas determined by a feasibility study. The purchase price, pursuant
                  to
                  the amended agreement, is limited to a maximum of $15,000,000 plus
                  4,000,000 shares of the Company. Payment of the purchase price
                  can be
                  satisfied in either cash or common shares of the Company, or any
                  combination thereof. On December 14, 2006 the parties executed
                  a Second
                  Amendment to the Stock Purchase Agreement (the “Second Amendment”) in
                  order to revise the consideration required to exercise the Company’s
                  option to acquire the remaining 25% of the issued and outstanding
                  stock of
                  RNC. Subject to the revised terms set forth in the Second Amendment,
                  the
                  Company
                
                has
                  the option to acquire an additional 15% interest in RNC, in exchange
                  for
                  the issuance of 4,000,000 common shares of the Company to Investcol.
                  In
                  connection with the execution of the Second Amendment, the Company
                  exercised its option, resulting in the Company acquiring an additional
                  15%
                  of RNC, bringing the Company’s total ownership to 90%. The revised terms
                  set forth in the Second Amendment provide that the Company has
                  the option
                  to acquire the remaining 10% of RNC until May 1, 2009 in exchange
                  for a
                  purchase price of $15,000,000. The purchase price can be made in
                  either
                  cash, shares of our common stock, or any combination thereof. Total
                  consideration of $5,120,000 related to this transaction was recorded
                  as
                  part of acquired mineral and exploration properties and rights
                  in fiscal
                  2006.
  **C)
        Kedahda Properties**
  On
        August
        30, 2006 the Company, purchased certain mining exploration properties in
        the
        Republic of Colombia and the related geochemical and other proprietary
        geological data from a wholly-owned subsidiary of Anglo Gold Ashanti, Sociedad
        Kedahda, S.A., for $500,000 cash consideration. The purchase was recorded
        as
        part of acquired mineral and exploration properties and right in fiscal
        2006.
  **Mineral
        Property Rights Acquisition and Exploration Expenditures**
 
 The
        Company’s mineral property acquisition and exploration expenditures consist
        of
 
 I)
              The
                  acquisition of mineral concessions;
 II)
              The
                  acquisition of mineral and exploration rights from existing titleholders;
 III)
              The
                  exploration of acquired mineral properties and related activities;
                  and
 IV)
              Stock-based
                  compensation allocated pursuant to FAS
                  123(R)
 
 The
        following table summarizes the Company’s mineral concession acquisitions,
        mineral rights acquisitions, and mineral exploration expenses as recorded
        in the
        Company’s Consolidated financial statements for the period March 25, 2003 to
        December 31, 2006:
 
 F-15
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
            Exploration Stage Company)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Year
                  Ended**
                **December
                  31, 2006**
              
              **Year
                  Ended**
                **December
                  31, 2005**
              
              **Cumulative**
                **From
                  Inception**
                **(March
                  25, 2003)**
                **Through**
                **December
                  31, 2006**I)
              Acquisition
                  ofmineralconcessions
              $
              22,200,841
              
              $
              -
              
              $
              22,200,841II)
              Acquisition
                  ofmineral
                  and explorationrights
              
              10,639,071
              
              
              -
              
              
              10,639,071Total
                  acquiredmineral
                  and explorationproperties
                  and rights
              
              32,839,912
              
              
              -
              
              
              32,839,912III)
              Exploration
                  ofacquiredmineralproperties
              
              3,084,843
              
              
              1,179,298
              
              
              4,264,141IV)
              Stock
                  basedCompensation
              
              213,595
              
              
              -
              
              
              213,595Total
                  mineral propertyexploration
                  expenses
              
              3,298,438
              
              
              1,179,298
              
              
              4,477,736Total
                    mineralproperty
                    rightsacquisition
                  and
                    explorationexpenditures
              $
              36,138,350
              
              $
              1,179,298
              
              $
              37,317,648
 
 **Capitalized
        Mineral and Exploration Properties and Rights**
 
 Acquired
        mineral and exploration properties and exploration rights at December 31,
        2006
        of $32,839,912 have been recorded at amounts necessary to reflect temporary
        differences associated with the differences between their accounting and
        tax
        bases. As a result, these properties are recorded in the consolidated balance
        sheet at December 31, 2006 at $43,528,386.
 
 **NOTE
        4 - PROPERTY AND EQUIPMENT**
 
 **As
                  at December 31, 2006**
              **Cost**
              
              **Accumulated**
                **Amortization**
              
              **Net
                  Book**
                **Value**Furniture
                  and office equipment
              $
              171,656
              
              $
              (11,292)
              
              $
              160,364Building
              
              87,033
              
              
              (1,451)
              
              
              85,582Vehicles
              
              193,149
              
              
              (19,362)
              
              
              173,787Total
              $
              451,838
              
              $
              (32,105)
              
              $
              419,733Website
                  Development Cost
              $
              36,000
              
              $
              (36,000)
              
              
              -
  F-16
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
            Exploration Stage Company)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **As
                  at December 31, 2005**
              **Cost**
              
              **Accumulated**
                **Amortization**
              
              **Net
                  book**
                **Value**Furniture
                  and Office equipment
              $
              1,780
              
              $
              (335)
              
              $
              1,445Website
                  Development Cost
              $
              21,000
              
              $
              (3,500)
              
              $
              17,500
 
 **NOTE
        5 - STOCKHOLDERS’ EQUITY**
 
 **Common
        Stock**
 
 **December
                  31, 2006**
              
              **December
                  31, 2005****Authorized:**200,000,000
                  common shares,$0.00001
                  par value**Issued
                  and Outstanding:**56,036,849
                    commonshares
                  (December
                    31, 2005:
                  29,589,100
                    shares)
              $
              565
              
              $
              296
 
 i)
              During
                  the year ended December 31, 2006, the Company completed the following
                  transactions:
  a)
              On
                  January 10, 2006, the Company issued 3,126,083 common shares at
                  $0.60 per
                  share for gross proceeds of $1,875,650. The Company paid finders
                  fees in
                  the amount of $187,565, for net proceeds of
                  $1,688,085.
 
 b)
              On
                  February 14, 2006, the Company issued 1,000,000 common shares at
                  fair
                  value of $1.90 per share to Investcol in connection with the acquisition
                  of 25% ownership of RNC (See Note 3).
 
 c)
              On
                  April 10, 2006, the Company issued 1,000,000 common shares at fair
                  value
                  of $2.25 per share to Investcol to acquire rights in certain properties
                  in
                  the Caramanta area of Colombia. See Note
                  3)
 
 d)
              On
                  April 26, 2006 the Company completed a private equity offering
                  of
                  6,500,666 Units at $1.50 per Unit to a total of 26 investors. Each
                  Unit
                  consists of one (1) share of common stock, par value $0.00001,
                  and one (1)
                  Warrant (the “Warrant”) to purchase one (1) share of common stock,
                  exercisable for twenty-four (24) months from the closing of the
                  offering.
                  The exercise price for the Warrant is priced at $2.50. The gross
                  proceeds
                  received from this offering were $9,751,000. Assuming that the
                  investors
                  exercise all of the Warrants, the gross proceeds received from
                  the
                  exercise of the Warrants will equal $16,251,665.
                
                In
                  connection with this private equity offering, the Company paid
                  as a
                  commission $585,060 and issued warrants to purchase 390,040 shares
                  of the
                  Company’s common stock with each warrant exercisable for a period of
                  thirty-six (36) months from the closing of the offering at the
                  exercise
                  price of $2.00 per share. Assuming that all of these warrants are
                  exercised, the Company will receive gross proceeds of
                  $780,080.
 
 F-17
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
              Exploration Stage Company)**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
  The
          Company has allocated the total net proceeds from the offering of $9,165,939
          to
          the various underlying equity instruments comprising the equity offering,
          based
          on the estimated relative fair value of each instrument at the offering
          date, as
          follows:
 
 Common
                  shares
              $
              65Additional
                  paid in capital - common shares
              
              6,416,112Additional
                  paid in capital - share purchase warrants
              
              2,749,762Total
                  gross proceeds from private equity offering
              $
              9,165,939
  e)
              On April 28, 2006, in connection
                with the
                acquisition of the second 25% of RNC, the Company issued 2,000,000
                common
                shares at a fair values of $2.74 to Investcol. (See Note
                3).
  f)
              On August 22, 2006 in connection
                with the
                acquisition of the third 25% of RNC, the Company issued 4,200,000
                common
                shares at a value of $1.10 per share to Investcol. (See Note
                3).
  g)
              On
                  September 25, 2006 in connection with the Company’s acquisition of 100% of
                  the Caramanta Exploration Properties, the Company issued 1,150,000
                  restricted common shares at a value of $1.41 (see Note
                  3).
 
 h)
              On
                  October 14, 2006 3,471,000 share purchase warrants were exercised
                  for net
                  proceeds to the Company of $1,735,500 and 3,471,000 common shares
                  were
                  issued upon exercise.
 
 i)
              On
                  December 14, 2006 in connection with the acquisition of the forth
                  15% of
                  RNC, the Company issued 4,000,000 common shares at a value of $1.28
                  per
                  share to Investcol.
 
 ii)
              During
                  the fiscal year ended December 31, 2005, the
                  Company:
  a)
              Issued
                  1,000,000 restricted common shares valued at an estimated market
                  price of
                  $0.25 per share, pursuant to an option to acquire a 100% interest
                  in
                  certain mining and mineral and exploration rights on three gold
                  properties
                  known as the Caramanta concessions in the Marmato Mountain mining
                  district, Colombia.
  b)
              Completed
                  a private placement and issued 4,221,000 units at a price of $0.25
                  per
                  share for net proceeds of $1,055,250. Each unit consisted of one
                  common
                  share and one non-transferable warrant, entitling the holder to
                  acquire
                  one additional common share at a price of $0.50, exercisable on
                  or before
                  October 14, 2006. The Company also issued 368,100 shares as a finders’ fee
                  relating to this private offering. The Company has allocated the
                  total
                  gross proceeds from the offering of $1,055,250 to the various underlying
                  equity instruments comprising the equity offering, based on the
                  estimated
                  relative fair value of each instrument at the offering date, as
                  follows:
  Common
                  shares
              $
              46Additional
                  paid in capital - common shares
              
              712,204Additional
                  paid in capital - share purchase warrants
              
              343,000Total
                  gross proceeds from private equity offering
              $
              1,055,250
  F-18
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
              Exploration Stage Company)**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS** 
  iii)
                      During
                          the fiscal year ended December 31, 2004, the
                          Company:
  a)
                      Completed
                          an initial public offering and issued 16,000,000 common
                          shares at a price
                          of $0.00625 per share for total proceeds of $100,000.
 **Warrants**
 
 As
        at
        December 31, 2006, the following warrants were issued and
        outstanding:
 
 **#
                  Warrants**
              **Exercise
                  Price**
              **Expiry
                  Date**6,500,666
              $2.50
                  per share
              April
                  25, 2008390,040
              $2.00
                  per share
              April
                  25, 20096,890,706
              $2.47
                  per share
  Assuming
        all warrants are exercised, the Company would potentially receive
        $17,031,745.
 
 **Stock
        Options and Other Stock-Based Compensation**
 
 In
        fiscal
        2006, the Company adopted the 2006 Stock Incentive Plan, (the “Plan”) which
        provides for the grant of incentive stock options, non-qualified stock options,
        stock appreciation rights, restricted stock, performance shares and performance
        units, and stock awards to officers, directors or employees of, as well as
        advisers and consultants to, the Company.
 
 All
        stock
        options and rights are to vest over a period determined by the Board of
        Directors and expire not more than ten years from the date granted. On
        July
        31, 2006 the Company received shareholder approval for an amended Stock
        Incentive Plan. Pursuant to the amended Plan, the number of shares that may
        be
        issued for awards granted under the 2006 plan was increased from 3,500,000
        to
        5,000,000.
 
 Pursuant
        to the Plan, during fiscal 2006 the Company granted 3,500,000 stock options
        to
        employees, directors, officers and consultants of the Company. These stock
        options vest at a rate of 25% every six months over a period of two years,
        and
        expire over a life of 10 years. For the year ended December 31, 2006, the
        Company recorded a total of $1,878,782 in stock based compensation expense
        related to these grants in the consolidation statement of
        operations.
 
 On
        October 1, 2006 the Company agreed to grant 500,000 common shares to a
        consultant providing services to the Company. Pursuant to the terms of the
        Consulting Agreement, should the Consultant’s employment terminate by the
        Consultant’s resignation before the period of two years has elapsed, the
        Consultant is required to return a pro rata portion of the shares based on
        the
        time remaining in the contract. In the case of a change in control of the
        Company by merger or sale of a majority stake or otherwise, the shares held
        by
        the Consultant will immediately vest. The fair value of the common stock
        award,
        based on the market price of the Company’s common shares at the agreement date,
        was $915,000. The Company accounts for this award by recognizing compensation
        expense ratably over twenty-four months, commencing on the agreement date.
        For
        the year ended December 31, 2006, the Company recorded a total of $114,375
        in
        stock based compensation expense related to this award in the fiscal 2006
        consolidated statement of operations.
  F-19
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
        Exploration Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 The
        following table summarizes stock-based compensation recorded in the consolidated
        statements of operations:
 
 **Year****Ended**
                **December****31,****2006**
              
              **Year****Ended**
                **December****31,****2005**
              
              **Cumulative**
                **from
                  Inception**
                **(March
                  25, 2003)**
                **through**
                **December
                  31,****2006**Mineral
                  property rights acquisitionand
                  exploration expenditures
              $
              213,595
              
              $
              -
              
              $
              213,595General
                  and administrative
              
              1,779,562
              
              
              -
              
              
              1,779,562Total
                  stock-based compensation
              $
              1,993,157
              
              $
              -
              
              $
              1,993,157
 
 As
        at
        December 31, 2006 there was $1,361,810 of unrecognized compensation cost
        related
        to unvested stock options. The cost is expected to be recognized as follows:
        Fiscal 2007 - $1,176,296; Fiscal 2008 - $185,514; Fiscal 2009 - $NIL. At
        December 31, 2006 there was $800,625 unrecognized compensation cost related
        unvested direct stock awards. The cost is expected to be recognized as follows:
        Fiscal 2007-$457,500; Fiscal 2008 - $343,125.
 
 A
        summary
        of stock options granted and exercised is as follows:
 
 **Shares**
              
              **Weighted
                  Average**
                **Exercise****Price**Options
                  outstanding at December 31, 2005
              
              -
              
              $
              -Granted
                  in fiscal 2006
              
              3,500,000
              
              
              1.08Exercised
                  in fiscal 2006
              
              -
              
              
              -Forfeited
                  and expired in fiscal 2006
              
              (712,500)
              
              
              0.75Options
                  outstanding at December 31, 2006
              
              2,787,500
              
              $
              1.16
 
 
 **Year
                  Ended**
                **December
                  31, 2006**
              
              **Year
                  Ended**
                **December
                  31, 2005**Weighted
                      averagegrant date fair value of options granted
                      during the period
              $
              1.08
              
              $
              -Weighted
                    average fair value
                    of options vested during
                    the period
              $
              0.99
              
              $
              -
 
 A
        summary
        of stock options outstanding and exercisable at December 31, 2006 is as
        follows:
 
 **Range
                  of**
                **Exercise**
                **Prices**
              **Number**
                **Outstanding**
              **Weighted**
                **Average**
                **Exercise**
                **Pri****ce**
              **Weighted**
                **Average**
                **Remaining**
                **Contractual**
                **Life
                  (yrs)**
              **Number**
                **Exercisable**
              **Weighted**
                **Average**
                **Exercise**
                **Price**$0.75
                  - $1.00
              1,037,500
              $
                  0.75
              9.02
              437,500
              $
                  0.75$1.01
                  - $2.00
              1,750,000
              1.41
              9.54
              150,000
              1.69$0.75
                  - $2.00
              2,787,500
              $
                  1.16
              9.35
              587,500
              $
                  0.99
  F-20
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
        Exploration Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 The
        fair
        value of each option granted has been estimated as of the date of the grant
        using the Black-Scholes option pricing model with the following assumptions:
        risk-free interest rate of 4.45%, dividend yield 0%, a historic volatility
        of
        92%, and expected term of 10 years, equal to the full life of the options
        as the
        Company does not expect any options to be exercised early.
 
 **NOTE
        6 - RELATED PARTY TRANSACTIONS**
 
 The
        Company, during the normal course of operations, engages in transactions
        with
        certain directors, senior officers, and shareholders of the
        Company.
 
 Significant
        related party transactions reflected within the Company’s consolidated financial
        statements include:
 
 i)
              The
                  acquisition of the Company’s interest in the Caramanta and Marmato
                  projects as described in notes 3(A) and 3(B) from Investcol, a
                  company
                  controlled by certain shareholders of the
                  Company;
 
 ii)
              Management
                  and consulting fees paid to certain directors, senior officers,
                  and
                  shareholders of the Company; and
 
 iii)
              Office
                  rent paid to a Company related to a former director of the
                  Company.
 
 
 i)  During
        the year ended December 31, 2006 the Company:
  a)
              Paid $186,306 for management and consulting fees
                to
                directors of the Company.
  b)
              Paid $356,168 for management and consulting fees
                to
                senior officers of the Company.
  c)
              Paid
                  $332,400 for management and consulting fees to shareholders of
                  the
                  Company.
 
 d)
              Paid
                  $10,256 for office rent to a company related to a former director
                  of the
                  Company.
 
 Included
        in prepaid expenses at December 31, 2006 is $30,000 related to a company
        controlled by shareholders of the Company. Included in accounts payable and
        accrued liabilities at December 31, 2006 is $49,213 owing to a company
        controlled by shareholders of the Company.
 
 ii)  During
        the year ended December 31, 2005 the Company:
 
 a)
              Paid
                  $29,875 for management fees to directors and former senior officers
                  of the
                  Company.
  b)
              Paid $37,500 for administration of exploration
                activities
                to a shareholder of the Company.
  c)
              Paid $2,122 for consulting to a director of the
                Company.
  d)
              Paid
                  $11,250 for office rent to a company related to a director of the
                  Company.
 
 Included
        in prepaid expenses at December 31, 2005 is $9,585 pertaining to office rent
        paid to a company related to a former director of the Company. Included in
        accounts payable and accrued liabilities at December 31, 2005 is $19,883
        payable
        to directors of the Company and to a company related to a director.
 
 F-21
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
          Exploration Stage Company)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **NOTE
            7 - INCOME TAXES**
 
 The
        potential benefit of net operating loss carry forwards has not been recognized
        in the financial statements. Since the Company has no source of operating
        revenue, it cannot be assured that it is more likely than not that such benefit
        will be realized in future years. The components of the net deferred tax
        asset,
        net deferred tax liability, differences between the statutory rate and the
        effective rate, and the valuation allowance are as follows:
 
 a)
              Components
                  of income tax provision:
 
 The
        components of the Company’s provision for (recovery of) income taxes consists of
        the following:
 
 **Year
                  ended**
                ****December
                  31, 2006****
              
              **Year
                  ended**
                ****December
                  31, 2005****Domestic
              $
              -
              
              $
              -Foreign
              
              (928,950)
              
              
              -$
              (928,950)
              
              $
              -
 
 For
        the
        year ended December 31, 2006 the Company’s loss before provision for income
        taxes was generated in the following jurisdictions: Domestic $3,732,634;
        Foreign
        $3,475,000.
 
 b)
              Income
                  tax rate reconciliation:
 
 The
        effective income tax rate differs from the statutory rate that would be obtained
        by applying the U.S. Federal income tax rate to net income (loss) before
        income
        taxes. These differences result from the following items:
 
 **Year
                    ended**
                  **December
                    31,
                    2006**
              
              **Year
                    ended**
                  **December
                    31,
                    2005**US
                  federal income tax rate
              
              34%
              
              
              15%Increase
                  (decrease) in
                  Income
                    tax rate resulting
                    From:Losses
                  not recognized fortax
                  purposes
              
              (8.2%)
              
              
              (15%)Tax
                  rate differences inforeign
                  subsidiaries
              
              (3.5%)
              
              
              -Other
                  permanentDifferences
              
              (9.4%)
              
              
              -Effective
                  income tax rate
              
              12.9
                  %
              
              
              -
                  %
  F-22
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
          Exploration Stage Company)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 c)
              Component
                  of future income tax provision:
 
 The
        components of the temporary differences, which created the future income
        tax
        provision, are as follows:
 
 **Year
                    ended**
                  **December
                    31,
                    2006**
              
              **Year
                    ended**
                  **December
                    31,
                    2005**Losses
                  carriedForward
              $
              (528,223)
              
              $
              (224,100)Tax
                  depreciationless
                  than (greater than)accounting
                  depreciation
              
              (402,039)
              
              
              -Foreign
                  exploration costs
              
              (928,950)
              
              
              -$
              (1,859,212)
              
              $
              (224,100)Change
                  in valuationAllowance
              
              930,262
              
              
              224,100Deferred
                  income tax provision
              $
              (928,950)
              
              $
              -
 
 
 d)
              Components
                  of deferred tax asset and
                  liability:
 
 The
        components of the temporary differences which have created the deferred tax
        assets are:
 
 **December
                  31, 2006**
              
              **December
                  31, 2005**Tax
                  depreciation less than(greater
                  than) depreciation
              $
              402,039
              
              $
              -Losses
                  carriedForward
              
              752,323
              
              
              224,1001,154,362
              
              
              224,100Valuation
                  allowance
              
              (1,154,362)
              
              
              (224,100)Deferred
                  tax asset
              $
              -
              
              $
              -
 
 The
        components of the temporary differences, which have created the deferred
        tax
        liability, are:
 
 **December
                  31, 2006**
              
              **December
                  31, 2005**Tax
                  depreciation less than(greater
                  than) accounting depreciation
              $
              -
              
              $
              -Tax
                  basis less than accountingbasis
                  for mineral concessions
              
              (10,688,474)
              
              
              -Foreign
                  exploration costs
              
              928,950
              
              
              -Deferred
                  tax liability
              $
              (9,759,524)
              
              $
              -
 
 e)
              The
                  Company has income tax losses available for carry forward of $2,210,000
                  which expire as follows:
 
 **Expiry
                  Year**
              **Domestic**
              
              **Foreign**
              
              **Total**2023
              $
              36,500
              
              **$**
              **-**
              
              $
              36,5002024
              
              23,000
              
              
              -
              
              
              23,0002025
              
              310,500
              
              
              -
              
              
              310,5002026
              
              1,840,000
              
              
              -
              
              
              1,840,000Indefinite
              
              -
              
              
              -
              
              
              -$
              2,210,000
              
              $
              -
              
              $
              2,210,000
 
 **NOTE
        8 - NON-CASH ACTIVITIES**
 
 The
        Company has issued common shares as consideration for the acquisition of
        certain
        mineral rights as disclosed in Notes 3 and 5. During the fiscal year ended
        December 31, 2005, a related party forgave $4,999 and the amount was credited
        to
        additional paid-in capital.
 
 F-23
 Table
            of Contents
 COLOMBIA GOLDFIELDS LTD.
 **(An
            Exploration Stage Company)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 - SEGMENTED INFORMATION**
 
 The
        Company has determined that it operates in a single reportable segment, being
        the acquisition of, exploration for, and development of mineral
        properties.
 
 **NOTE
        10 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS**
 
 The
        FASB
        has issued FIN 48, which prescribes rules for the financial statements
        accounting for uncertainty in income tax positions.
 
 FIN
        48
        requires all material tax positions to undergo a new two-step recognition
        and
        measurement process. All material tax positions in all jurisdictions in all
        tax
        years in which the statute of limitations remains open upon the initial date
        of
        adoption are required to be assessed. For a tax benefit to be recognized
        it must
        be more likely than not that a tax position will be sustained upon examination
        based solely on its technical merits. If the recognition standard is not
        satisfied, then no tax benefit otherwise arising from the tax position can
        be
        recorded for financial statement purposes. If the recognition standard is
        satisfied, the amount of tax benefit recorded for financial statement purposes
        will be the largest amount of tax benefit with a greater than 50% likelihood
        of
        being realized upon ultimate settlement with a taxing authority. FIN 48 is
        effective for the Company’s fiscal 2007 year. The Company does not anticipate
        the adoption of FIN 48 will have a material impact on the Company’s financial
        position, results of the operations, or cash flows.
 
 **NOTE
        11 - SUBSEQUENT EVENTS**
 
 (a)
              On
                  February 27, 2007 the Company entered into a $3,700,000 promissory
                  note
                  between the Company and the Company’s President, a shareholder, and a
                  Company controlled by these individuals. The loan, collateralized
                  by the
                  Company’s investment in RNC, was due and payable upon closing a planned
                  equity financing, but in no case later than April 15, 2007. Upon
                  repayment, an $185,000 fee was payable to the note holders. The
                  note bears
                  interest at 10% per annum, with monthly interest payments commencing
                  February 28, 2007.
 
 (b)
              On
                  March 21, 2007 the Company completed a private equity offering
                  of
                  9,020,000 common shares at $1.00 per common share. The gross proceeds
                  received from the offering were $9,020,000.
 
 In
        connection with this private equity offering, the Company is obligated to
        pay a
        commission of $541,200 and is obligated to issue agents’ warrants to purchase
        541,200 shares of the Company’s common stock with each warrant exercisable for a
        period of 36 months from the closing of the offering at an exercise price
        of
        $1.00 per share.
 
 (c)
              Subsequent
                  to year-end, in March, 2007 the Company issued to certain directors
                  and
                  consultants 1,640,000 options to purchase common shares of the
                  Company.
  F-24
 Table
            of Contents




**Item
      8. Changes In and Disagreements with Accountants on Accounting and Financial****Disclosure**





No
      events
      occurred requiring disclosure under Item 304(b) of Regulation S-B.





On
      August
      10, 2006, Vellmer & Chang (the “Former Accountant”) was dismissed as our
      accountant. We have engaged PricewaterhouseCoopers LLP as our principal
      accountants effective August 10, 2006. The decision to change accountants was
      approved by our Board of Directors. We did not consult with
      PricewaterhouseCoopers LLP on any matters prior to retaining the firm as
      our principal accountants.




The
      Former Accountant's audit reports on the financial statements for the fiscal
      years ended December 31, 2005 and December 31, 2004 contained no adverse opinion
      or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
      audit scope, or accounting principles except that the audit reports on the
      financial statements of us for the fiscal years ended December 31, 2005 and
      December 31, 2004 contained an uncertainty about our ability to continue as
      a
      going concern.




During
      the years ended December 31, 2005 and December 31, 2004, and through the interim
      period ended August 10, 2006, there were no disagreements with the Former
      Accountant on any matter of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedures, which disagreements
      if
      not resolved to the satisfaction of the Former Accountant would have caused
      them
      to make reference thereto in their reports on the financial statements for
      such
      periods.




During
      the years ended December 31, 2005 and December 31, 2004, and through the interim
      period ended August 10, 2006, the Former Accountant did not advise us with
      respect to any of the matters described in paragraphs (a)(1)(iv)(A) and (B)
      of
      Item 304 of Regulation S−B.





**Item
      8A. Controls and Procedures**





We
      carried out an evaluation of the effectiveness of the design and operation
      of
      our disclosure controls and procedures (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(e)) as of December 31, 2006. This evaluation was carried
      out under the supervision and with the participation of our Chief Executive
      Officer, Mr. J. Randall Martin, and our Chief Financial Officer, Mr. James
      Kopperson. Based upon that evaluation, our Chief Executive Officer and Chief
      Financial Officer concluded that, as of December 31, 2006, our disclosure
      controls and procedures are effective. Since the end of the quarterly period
      ended September 30, 2006, we have made the following significant changes in
      our
      internal controls over financial reporting which have materially affected or
      are
      reasonably likely to materially affect our disclosure controls and
      procedures:





·
            Mr.
                James Kopperson, a CA and CPA with extensive public company financial
                reporting experience, was appointed as CFO on December 1,
                2006;


·
            We
                have implemented a formal process where our CEO and CFO, through
                inquiry
                and discussion with those responsible for financial reporting, satisfy
                themselves that our disclosure controls are operating
                effectively.


·
            We
                have reviewed our quarterly reporting procedures with our independent
                auditors to ensure that all material accounting and disclosure issues
                are
                identified on a timely basis.





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act are recorded, processed, summarized and
      reported, within the time periods specified in the SEC'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
      reports filed under the Exchange Act is accumulated and communicated to
      management, including our Chief Executive Officer and Chief Financial Officer,
      to allow timely decisions regarding required disclosure.





Limitations
      on the Effectiveness of Internal Controls





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





**Item
      8B. Other information**





None.




49
 Table
          of Contents


**PART
      III**





**Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      with****Section
      16(a) of the Exchange Act**





The
      following information sets forth the names of our current directors and
      executive officers, their ages and their present positions.





Name
            Age
            Position(s)
                and Office(s) HeldJ.
                Randall Martin
            50
            President,
                Chief Executive Officer and DirectorJames
                Kopperson
            40
            Chief
                Financial OfficerDr.
                Stewart Redwood
            46
            Vice
                President of ExplorationThomas
                Ernest McGrail
            56
            DirectorDavid
                Bikerman
            47
            DirectorTerry
                Lyons
            57
            DirectorJames
                Verraster
            51
            DirectorEdward
                Flood
            61
            DirectorJonathan
                Berg
            63
            Director





Set
      forth
      below is a brief description of the background and business experience of each
      of our current executive officers and directors.





**J.
      Randall Martin** .
      On
      March 1, 2006, our Board of Directors appointed J. Randall Martin to act as
      our
      Chief Executive Officer, President, and as a member of our Board. Most recently,
      Mr. Martin served as Chairman and CEO of RNC Gold from May 13, 2005 to February
      28, 2006 and served as CEO from December 2003 to May 13, 2005. Following its
      inception as a private company in 2000, he proceeded to list RNC Gold on the
      Toronto TSX in December of 2003. At the end of February 2006, RNC Gold completed
      a successful amalgamation with Yamana Resources, a Toronto-based intermediate
      gold producer. RNC Gold operated three gold mines located in Nicaragua and
      Honduras with combined annual gold production capacity of over 150,000 ounces.
      RNC Gold also completed a feasibility study on a gold project in Panama and
      conducted extensive exploration programs in Mexico, Honduras, and Nicaragua.
      Mr.
      Martin previously worked with AMAX Inc. (a worldwide base metals mining
      company), DRX, Inc. (a junior exploration company), Martin Marrietta, Behre
      Dolbear (an international mining consulting company) and Greenstone Resources
      Limited (a Central American gold producer). He has a B.Sc. in mining engineering
      from the Krumb School of Mines at Columbia University where he completed
      graduate work in mining and mineral economics.  Mr. Martin is Chairman and
      a principal of RNC (Management) Limited, a privately-held mine management and
      investment company.




**James
      Kopperson** .
      On
      December 1, 2006, the Board of Directors appointed Mr. Jim Kopperson to act
      as
      our Chief Financial Officer. Mr. Kopperson is a Chartered Accountant and holds
      a
      Masters Degree in Accounting from the University of Waterloo. From 1994 to
      1997,
      Mr. Kopperson served in the Office of the Chief Accountant at the Ontario
      Securities Commission. From 1997 to 1999, he was Senior Manager at KPMG, LLP,
      an
      international accounting and consulting firm. From 1999 to 2002 he was an Audit
      and Securities Reviewing Partner with KPMG, LLP. From 2002 to 2005, he was
      Chief
      Financial Officer of RDM Corporation, a


50
 Table
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publicly
      traded transaction processing and manufacturing company. In 2006, Mr. Kopperson
      served as interim Chief Financial Officer for Photowatt Technologies, an
      alternative energy company.




**Dr.
      Stewart D. Redwood** .
      On
      December 1, 2006, our Board of Directors appointed Dr. Redwood to act as Vice
      President of Exploration. Dr. Redwood has accumulated 25 years of mineral
      exploration experience. He has a degree in geology from Glasgow University
      and
      obtained his Ph.D from Aberdeen University for his work on the gold and silver
      deposits of Bolivia. From 1987 to 1989 he was a Higher Scientific Officer with
      the British Geological Survey in Scotland. From 1989 to 1994 he was Director
      of
      Exploration for Mintec S.A., a Bolivian consulting firm. From 1994 to 1999,
      Dr.
      Redwood joined Inmet Mining Corporation as Senior Geologist in South and Central
      America. In 2000, he worked as Chief Geologist for AngloGold South America
      Ltd.
      on the company’s gold exploration in South America. From 2000 to 2004, Dr.
      Redwood co-founded and served as the COO and director of Exploration &
Discovery Latin America (Panama) Inc. to carry out gold exploration in the
      Dominican Republic, Central America and Peru. From 2002 to 2005, he was the
      Chief Geologist of Minmet plc, a company conducting exploration and mining
      in
      Brazil, Sweden and Spain. From 2004 to 2005, he was President, CEO and director
      of GoldQuest Mining Corp., a company involved in gold exploration in the
      Dominican Republic. From 2005 until joining our company, Dr. Redwood provided
      geological consulting to various firms.




**Thomas
      Ernest McGrail** .
      On June
      14, 2005, our Board of Directors appointed Mr. McGrail to serve as a member
      of
      the Board. Mr. McGrail has an extensive background in mining development and
      operation. From January 2002 to the present, Mr. McGrail has served as
      construction manager for Minero Cerro Quema. Mr. McGrail’s responsibilities
      include obtaining all appropriate government approvals prior to commencing
      mining operations and participating in the feasibility study. Also from January
      2002 to the present, Mr. McGrail has acted as a consultant to Minerales de
      Copan
      for a project located in Honduras. From April 2001 to July 2002, Mr. McGrail
      served as general manager for Desarrollo Minera de Nicaragua, S.A. and also
      acted as the interim general manager for this company on a mining project from
      August 2004 to October 2004. Mr. McGrail served as president and general manager
      of HEMCO de Nicaragua, S.A. from June 1999 to April 2001.





**David
      Bikerman.** On
      July 31, 2006, Mr. Bikerman was elected to serve as a member of our Board.
      Mr.
      Bikerman has been in the mining field for over twenty years and is experienced
      in all aspects of mining enterprises from exploration through operations. He
      is
      the founder of Bikerman Engineering & Technology Associates, Inc. where he
      offers expert services to the mining industry in financial modeling, exploration
      and geologic model preparation, geo-statistical and reserve analyses,
      environmental plans, project feasibility, and project design and management.





Mr.
      Bikerman is President, China Operations and advisor to the Board for East Delta
      Beta Resources Corp. and is President and CEO of Sino Silver Corp. Most
      recently, Mr. Bikerman served as the Manager of Mining for RNC Resources Ltd.
      until it was sold in 2006. He was Vice President and Chief Engineer for
      Greenstone Resources Ltd. from 1993 to 1996 and was responsible for technical
      analysis, project design, and engineering for a Central American
      gold


51
 Table
          of Contents


project.
      He was Vice President and Manager of Mining of Minas Santa Rosa, S.A. (Panama)
      and was a member of the Board of Minera Nicaraguense, S. A. (Nicaragua). He
      worked for five years as an Associate at Behre Dolbear & Co., an
      international minerals industry consultant based in New York, N.Y.





Mr.
      Bikerman holds three degrees in mining engineering. In 1981, he earned his
      Bachelor of Science in Mining Engineering from the University of Pittsburgh.
      In
      1985, he earned his Master of Science in mining engineering from the Henry
      Krumb
      School of Mines at Columbia University in New York. In 1995, he earned his
      Engineer of Mines, also from the Henry Krumb School of Mines at Columbia
      University.





**Terry
      Lyons.** On
      March
      14, 2007, our Board of Directors appointed Mr. Lyons to serve as a member of
      the
      Board. Mr.
      Lyons is
      the
      non-executive Chairman of Northgate Minerals Corporation and a director and
      officer of several public corporations including Canaccord Capital Inc.
      (Chairman, Audit Committee), Diamonds North Resources as well as several private
      corporations. He is a past director of Battle Mountain Gold Company, former
      Chairman of Westmin Resources Limited and is the past Chairman of the Mining
      Association of British Columbia. After completing a Bachelor of Science in
      Civil
      Engineering, Mr. Lyons attended the University of Western Ontario, graduating
      with an MBA in 1974.





**James
      Verraster.** On
      March
      14, 2007, our Board of Directors appointed Mr. Verraster to serve as a member
      of
      the Board. Mr. Verraster **** is
      one of
      the founders and the CEO of Auramet Trading LLC, a global physical precious
      metals trading, merchant banking and advisory firm. Mr. Verraster has been
      successful in the Metals Trading and Finance Industry for 30 years. He was
      a
      significant contributor to the growth and development of the Rhode Island
      Hospital Trust National Bank precious metals lease portfolio to industrial
      end
      users which, in the mid-1980's, became the largest of any financial institution
      in the US. In 1996, Standard Bank hired Mr. Verraster to create and head up
      a
      comprehensive precious metals financing and physical precious metals trading
      business. He successfully attracted talented and experienced individuals who
      assisted in making Standard one of the leading banks dealing in precious metals.
      Mr. Verraster holds a B.Sc and is an MBA candidate in Accounting and Finance
      at
      Bryant College, Providence Rhode Island.





**Edward
      Flood.** On
      March
      14, 2007, our Board of Directors appointed Mr. Flood to serve as a member of
      the
      Board. Mr. Flood has recently accepted the position of Managing Director,
      Investment Banking, Haywood Securities, UK, Limited. He was the founding
      President and has been a member of the board of directors of Ivanhoe Mines
      Ltd.
      since the company was formed in 1994. His 35-plus years of experience in the
      international mining field has helped guide Ivanhoe's growth and the
      establishment of the company as a significant presence in Asia's mineral
      exploration and mining sectors. Before joining Ivanhoe, Mr. Flood was a
      principal at Robertson Stephens & Co., an investment bank in San Francisco,
      USA. He was a member of Robertson Stephens' investment team for the Contrarian
      Fund, a public mutual fund concentrated on natural resources development
      projects around the world. He holds a bachelor's degree and a master's degree
      in
      Geology.




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**Jonathan
      Berg.** On
      March
      14, 2007, our Board of Directors appointed Mr. Berg to serve as a member of
      the
      Board. Mr.
      Berg
      is Vice President of Finance and Chief Administrative Officer of Pericor
      Therapeutics, Inc., a development stage bio-pharmaceutical company. Prior to
      his
      present position, he was President of Berg Capital Corporation, a registered
      investment advisor, focusing on institutional and high net worth individual
      clients. Mr. Berg has previously acted as a consultant on corporate structure,
      and raised funds for a number of small companies in the energy, technology,
      healthcare and consumer electronics fields. He holds a B.Sc. from the University
      of California, Berkley and an MBA from the University of
      Pennsylvania.





**Term
      of Office**





Our
      directors are appointed for a one-year term to hold office until the next annual
      meeting of our shareholders or until removed from office in accordance with
      our
      bylaws.





Our
      executive officers are appointed by our board of directors and hold office
      until
      removed by the board.





**Significant
      Employees**





We
      have
      no significant employees other than our officers and directors who act as
      consultants to the company.





**Family
      Relationships**





There
      are
      no family relationships between or among the directors, executive officers
      or
      persons nominated or chosen by us to become directors or executive
      officers.





**Involvement
      in Certain Legal Proceedings**





To
      the
      best of our knowledge, during the past five years, none of the following
      occurred with respect to a present director, person nominated to become
      director, executive officer, or control person: (1) any bankruptcy petition
      filed by or against any business of which such person was a general partner
      or
      executive officer either at the time of the bankruptcy or within two years
      prior
      to that time; (2) any conviction in a criminal proceeding or being subject
      to a
      pending criminal proceeding (excluding traffic violations and other minor
      offenses); (3) being subject to any order, judgment or decree, not subsequently
      reversed, suspended or vacated, of any court of competent jurisdiction,
      permanently or temporarily enjoining, barring, suspending or otherwise limiting
      his or her involvement in any type of business, securities or banking
      activities; and (4) being found by a court of competent jurisdiction (in a
      civil
      action), the SEC or the Commodities Futures Trading Commission to have violated
      a federal or state securities or commodities law, and the judgment has not
      been
      reversed, suspended or vacated.




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**Audit
      Committee**





The
      Audit
      Committee of the Board of Directors consists solely of independent directors.
      The members of the Audit
      Committee are DirectorsJames
      Verraster, Jonathan Berg, and Terry Lyons.
      The Audit
      Committee was established in March 2007 and, therefore, held no meetings during
      the fiscal year ended December 31, 2006, as the full Board of the Company
      fulfilled this role for the period prior to the establishment of separate
      committees in March 2007.  The Audit
      Committee assists the Board with the oversight of the integrity of our financial
      statements and internal controls, compliance with legal and regulatory
      requirements, the review and approval of transactions with related persons,
      the
      independent auditor’s qualifications and independence and the performance of our
      internal audit function.




The
      role
      of the Audit
      Committee is to assist the Board of Directors in fulfilling its responsibility
      to oversee our financial reporting process. Management has primary
      responsibility for our consolidated financial statements and reporting process,
      including our systems of internal controls. Our independent registered public
      accounting firm is responsible for expressing an opinion on the conformity
      of
      our consolidated financial statements with accounting principles generally
      accepted in the United States and on management’s assessment of the
      effectiveness of our internal control over financial reporting.




In
      connection with this Annual Report, our board of directors:




·
            Met
                with our independent registered public accounting firm, with and
                without
                management present, to discuss the overall scope and plans for their
                respective audits, the results of their examinations and their evaluations
                of our internal controls;




·
            Reviewed
                and discussed with management the audited financial statements included
                in
                our Annual Report;




·
            Discussed
                with our independent registered public accounting firm the matters
                required to be discussed by Statement on Auditing Standards No. 61
                (Communications with Audit Committees), as modified and supplemented;
                and




·
            Received
                the written disclosures and the letter from our independent registered
                public accounting firm required by Independence Standards Board Standard
                No. 1 (Independence Discussions withAudit
                Committee), as modified and supplemented, and discussed with them
                matters
                relating to their independence.




The
      Board
      of Directors resolved that the audited financial statements be included in
      our
      Annual Report on Form 10-KSB for the fiscal year ended December 31,
      2006, for filing with the SEC.




**Section
      16(a) Beneficial Ownership Reporting Compliance**





Section
      16(a) of the Exchange Act requires our
      directors and executive officers and persons who beneficially own more than
      ten
      percent of a registered class of the Company’s equity securities to file with
      the SEC initial reports of ownership and reports of changes in ownership of
      common stock and other equity securities of the Company. Officers, directors
      and
      greater than ten percent beneficial shareholders are required by SEC regulations
      to furnish us with copies of all Section 16(a) forms they file. To the best
      of
      our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments
      thereof) received by us during or with respect to the year ended December 31,
      2006, the following persons have failed to file, on a timely basis, the
      identified reports required


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by
      Section 16(a) of the Exchange Act during fiscal year ended December 31, 2006:





Name
            Principal
                position
            Number
                of
              late
                reports
            Transactions
                not
              timely
                reported
            Known
                failures to
              file
                a required formJ.
                Randall Martin
            President,
                Chief Executive Officer, & Director
            1
            1
            0Jim
                Kopperson
            Chief
                Financial Officer
            0
            0
            0Dr.
                Stewart Redwood
            Vice
                President of Exploration
            1
            0
            0Thomas
                Ernest McGrail
            Director
            1
            2
            0Robert
                E. Van Tassell
            Director
            0
            0
            1David
                Bikerman
            Director
            1
            0
            0Daniel
                Hunter
            Former
                Chief Executive Officer,
                Chief Operating Officer & Director
            4
            11
            0Kenneth
                Phillippe
            Former
                Chief Financial Officer
            0
            0
            1Luis
                Gabriel Correa Ocampo
            Former
                Vice President of Exploration
            0
            0
            1Hernando
                Molina Velez
            Former
                Director
            0
            0
            1





**Code
      of Ethics Disclosure**





We
      adopted a Code of Ethics for Financial Executives, which include our principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or persons performing similar functions. The code of ethics was
      filed as an exhibit to the annual report on Form 10-KSB for the fiscal year
      ended December 31, 2004 and filed with the SEC on April 16, 2005.


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**Item
      10. Executive Compensation**





**Summary
      Compensation Table**




The
      table
      below summarizes all compensation awarded to, earned by, or paid to our former
      or current executive officers for the fiscal years ended 2006 and
      2005.


SUMMARY
                COMPENSATION TABLEName
              and
              principal
              position
            Year
            Salary($)
            Bonus
              ($)
            Stock
              Awards
              ($)
            Option
              Awards
              ($)
            Non-Equity
              Incentive
                Plan
              Compensation
              ($)
            Nonqualified
              Deferred
              Compensation
              Earnings
                ($)
            All
                Other
              Compensation
              ($)
            Total
              ($)Daniel
                Hunter(1)
              Former
                CEO & COO
            2006
              2005
            -
              -
            -
              -
            -
              -
            492,606
              -
            -
              -
            -
              -
            90,870
              22,500
            583,476
              22,500J.
                Randall Martin
              CEO
            2006
              2005
            -
              -
            -
              -
            -
              -
            619,905
              -
            -
              -
            -
              -
            90,000
              -
            709,905
              -Kenneth
                Phillippe(2)
              Former
                CFO
            2006
              2005
            -
              -
            -
              -
            -
              -
            164,202
              -
            -
              -
            -
              -
            36,200
              -
            200,402
              -Luis
                Gabriel Correa Ocampo(3)
              Former
                VP of Exploration
            2006
              2005
            -
              -
            -
              -
            -
              -
            54,734
              -
            -
              -
            -
              -
            28,009
              11,617
            82,743
              11,617Stewart
                Redwood(4)
              VP
                of Exploration
            2006
              2005
            -
              -
            -
              -
            -
              -
            145,438
            -
              -
            -
              -
            61,875
              -
            207,313
              -James
                Kopperson(5)
              CFO
            2006
              2005
            -
              -
            -
              -
            -
              -
            421,837
              -
            -
              -
            -
              -
            49,214
              -
            471,051
              -







(1)
            Mr.
                Hunter resigned as our Chief Operating Officer and as a member of
                our
                board of directors on December 31,
                2006.




(2)
            Mr.
                Phillippe resigned as our Chief Financial Officer on December 1,
                2006, but
                has agreed to continue to serve as a consultant. The information
                provided
                in the summary compensation table includes all compensation paid
                to Mr.
                Phillippe for the full fiscal year of the reported
                periods.




(3)
            Luis
                Gabriel CorreaOcampo
                resigned as our Vice President of Exploration on December 1, 2006,
                but
                continues to serve as an employee of our subsidiary, Caldas. The
                information provided in the summary compensation table includes all
                compensation paid to Mr. Ocampo for the full fiscal year of the reported
                periods.




(4)
            Stewart
                Redwood was appointed Vice President of Exploration on December 1,
                2006.
                Prior to his appointment as Vice President of Exploration, Dr. Redwood
                was
                retained as a consultant to prepare geological reports. The information
                provided in the summary compensation table includes all compensation
                paid
                to Dr. Redwood for the full fiscal year of the reported periods.
                On March
                6, 2007, the Board of Directors of the Company approved the issuance
                of
                500,000 restricted shares of the Company to Dr. Redwood. The aggregate
                value of this issuance was $915,000.




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**(5)**
            James
                Kopperson was appointed Chief Financial Officer on December 1, 2006.
                Prior
                to his appointment as Chief Financial Officer, Mr. Kopperson rendered
                services to us as a consultant. The information provided in the summary
                compensation table includes all compensation paid to Mr. Kopperson
                for the
                full fiscal year of the reported
                periods.




**Narrative
      Disclosure to the Summary Compensation Table**




We
      do not
      compensate our executive officers by the payment of salaries or bonus
      compensation.





Consulting
      Agreements





The
      amounts disclosed as “All Other Compensation” relate to consulting fees earned
      by our executive officers for the periods indicated.





On
      August
      1, 2006, we entered into Consulting Services Agreements (the “Agreements”) with
      our President and Chief Executive Officer, J. Randall Martin, our Chief
      Operating Officer, Daniel Hunter, and our Chief Financial Officer, Kenneth
      Phillippe. The Agreements are effective for a period of two (2) years commencing
      May 1, 2006 and may be terminated by mutual consent, for cause (as defined
      in
      the Agreements), or without cause. In the event of termination without cause,
      the Agreements provide that the officer will receive a lump sum payment equal
      to
      twelve (12) months of consulting fees and that any stock options granted to
      the
      officer shall vest immediately. Following termination the Agreements, each
      of
      the individuals is subject to a one-year covenant not to compete within the
      Republic of Colombia and a one-year covenant not to solicit any of our
      consultants or employees. Under the Agreements, which are effective as of May
      1,
      2006, these individuals have agreed to devote their best efforts, skill, and
      sufficient time to carrying out their responsibilities under the Agreements.
      The
      Agreements also require that each of these individuals act in substantial
      accordance with all reasonable instructions of our board of directors and that
      they provide all management and operation services as may be requested by the
      board.





Under
      the
      terms of the Consulting Services Agreement, J. Randall Martin receives monthly
      compensation of $10,000 commencing May 1, 2006 and has received $90,000 in
      consulting fees for the fiscal year ended December 31, 2006 which is recorded
      in
      the summary compensation table above in “All Other Compensation.”





Under
      the
      terms of the Consulting Services Agreement, Daniel Hunter received monthly
      compensation of $9,000 plus applicable Canadian Good and Services Tax commencing
      May 1, 2006 totaling $90,870 in consulting fees for the fiscal year ended
      December 31, 2006 which is recorded in the summary compensation table above
      in
“All Other Compensation.” The Consulting Services Agreement with Mr. Hunter was
      terminated on December 31, 2006, the date of his resignation. From March 2005
      to
      December 2005, we paid Mr. Hunter a monthly consulting fee of $2,500 and a
      total
      of $22,500 which is recorded in the summary compensation table above in “All
      Other Compensation.”




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Under
      the
      terms of the Consulting Services Agreement, Kenneth Phillippe receives monthly
      compensation of $3,000 plus applicable Canadian Good and Services Tax commencing
      May 1, 2006 and received $36,200 in consulting fees for the fiscal year ended
      December 31, 2006 which is recorded in the summary compensation table above
      in
“All Other Compensation.”





On
      October 1, 2006, we entered into a Consulting Agreement with Stewart Redwood.
      Under the terms of the Consulting Agreement, Dr. Redwood is paid a daily fee
      of
      $750 for each day of service inclusive of travel days and days required to
      write
      and complete reports and has received $61,875 in consulting fees for the fiscal
      year ended December 31, 2006 which is recorded in the summary compensation
      table
      above in “All Other Compensation.” This Consulting Agreement is automatically
      renewable for successive one-year periods in the absence of notice terminating
      this Agreement and this Agreement can be terminated immediately for cause or
      upon one month notice at any time in all other circumstances. Pursuant to the
      Consulting Agreement, on March 6, 2007, the Board of Directors approved the
      issuance of 500,000 shares of our common stock to Dr. Redwood as a stock award.
      In the event that Dr. Redwood is terminated for cause or he should submit his
      resignation prior to October 1, 2008, Dr. Redwood will be obligated to return
      a
      pro-rata portion of the 500,000 shares issued based upon a period of two
      years.





On
      August
      15, 2006, we entered into a consulting agreement with James Kopperson where
      Mr.
      Kopperson provided services to us at the rate of Cdn $200.00/hr. Mr. Kopperson
      was later appointed to act as our Chief Financial Officer on December 1,
      2006.





Stock
      Option Grants





We
      grant
      stock options to our executive officers based on their level of experience
      and
      contributions to the company.





All
      options granted to our executive officers have the following attributes: i)
      two
      year vesting period, 25% every six months from the date of grant ii) ten year
      life. The aggregate fair value of these options was computed in accordance
      with
      FAS 123R and is reported in the summary compensation table above in the column
      titled “Option Awards.” Further information regarding our Equity Compensation
      Plans and Awards, including valuation assumptions used in the preparation of
      these tables, is included in note 5 to our September 30, 2006 interim financial
      statements included in this prospectus.





We
      did
      not grant any stock options to our executive officers during the fiscal year
      ended December 31, 2005. During the fiscal year ended 2006, we granted our
      executive officers stock options as follows:





·
            On
                March 17, 2006, we granted J. Randall Martin options to purchase
                500,000
                shares of our common stock at the exercise price of $1.65 per share
                with
                an expiration date of March 17,
                2016.





·
            On
                January 6, 2006, we granted Daniel Hunter options to purchase 450,000
                shares of our common stock at the exercise price of $0.75 per share
                with
                an expiration date of January 6, 2016. At the time of Mr. Hunter’s
                resignation on December 31, 2006, 112,500 options


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had
      vested and are exercisable until March 31, 2007. The remaining 337,500 stock
      options with an associated compensation expense of $369,454 were forfeited.





·
            On
                January 6, 2006, we granted Kenneth Phillippe options to purchase
                150,000
                shares of our common stock at the exercise price of $0.75 per share
                with
                an expiration date of January 6, 2016.





·
            On
                September 22, 2006, we granted James Kopperson options to purchase
                100,000
                shares of our common stock at the exercise price of $1.20 per share
                with
                an expiration date of September 22, 2016. On November 24, 2006, we
                granted
                James Kopperson options to purchase 300,000 shares of our common
                stock at
                the exercise price of $1.15 per share with an expiration date of
                November
                24, 2016.





·
            On
                March 24, 2006, we granted Stewart Redwood options to purchase 100,000
                shares of our common stock at the exercise price of $1.90 per share
                with
                an expiration date of March 24, 2016.





At
      no
      time during the last fiscal year was any outstanding option repriced or
      otherwise modified. There was no tandem feature, reload feature, or
      tax-reimbursement feature associated with any of the stock options we granted
      to
      our executive officers or otherwise.





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**Outstanding
      Equity Awards at Fiscal Year-End**





The
      table
      below summarizes all unexercised options, stock that has not vested, and equity
      incentive plan awards for each named executive officer as of December 31,
      2006.





**OUTSTANDING
                EQUITY AWARDS AT FISCAL YEAR-END**OPTION
                AWARDS
            STOCK
                AWARDSName
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            Equity
              Incentive
              Plan
              Awards:
              Number
                of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            Option
              Exercise
              Price
              ($)
            Option
              Expiration
              Date
            Number
              of
              Shares
              or
                Units
              of
              Stock
                That
              Have
              Not
              Vested
              (#)
            Market
              Value
              of
              Shares
              or
              Units
              of
              Stock
              That
              Have
              Not
              Vested
              ($)
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Unearned
              Shares,
              Units
                or
              Other
              Rights
              That
                Have
              Not
              Vested
              (#)
            Equity
              Incentive
              Plan
              Awards:
              Market
                or
              Payout
              Value
                of
              Unearned
              Shares,
              Units
                or
              Other
              Rights
              That
              Have
                Not
              Vested
              (#)Daniel
                Hunter
            112,500
            0(1)
            -
            0.75
            01/06/2016
            -
            -
            -
            -J.
                Randall Martin
            125,000
            375,000(2)
            -
            1.65
            03/17/2016
            -
            -
            -
            -Kenneth
                Phillippe
            37,500
            112,500(3)
            -
            0.75
            01/06/2016
            -
            -
            -
            -Luis
                Gabriel Correa Ocampo
            12,500
            37,500(4)
            -
            0.75
            01/16/2016
            -
            -
            -
            -James
                Kopperson
            -
              -
            100,000(5)
              300,000(6)
            -
            1.20
              1.15
            09/22/2016
              11/24/2016
            -
              -
            -
              -
            -
              -
            -
              -Stewart
                Redwood
            25,000
            75,000(7)
            -
            1.90
            03/24/2016
            -
            -
            -
            -





(1)
            At
                the time of Mr. Hunter’s resignation on December 31, 2006, 112,500 options
                had vested and are exercisable until March 31, 2007. The remaining
                337,500
                stock options with an associated compensation expense of $369,454
                were
                forfeited.


(2)
            125,000
                become vested and exercisable on March 17, 2007, 125,000 become vested
                and
                exercisable on September 17, 2007, and the remaining 125,000 become
                vested
                and exercisable on March 17, 2008.


(3)
            37,500
                became vested and exercisable on January 6, 2007, 37,500 become vested
                and
                exercisable on July 6, 2007, and the remaining 37,500 become vested
                and
                exercisable on January 6, 2008.


(4)
            12,500
                became vested and exercisable on January 6, 2007, 12,500 become vested
                and
                exercisable on July 6, 2007, and the remaining 12,500 become vested
                and
                exercisable on January 6, 2008.


(5)
            25,000
                become vested and exercisable on March 22, 2007, 25,000 become vested
                and
                exercisable on September 22, 2007, 25,000 become vested and exercisable
                on
                March 22, 2008, and the remaining 25,000 become vested and exercisable
                on
                September 22, 2008.


(6)
            75,000
                become vested and exercisable on May 24, 2007, 75,000 become vested
                and
                exercisable on November 24, 2007, 75,000 become vested and exercisable
                on
                May 24, 2008, and the remaining 75,000 become vested and exercisable
                on
                November 24, 2008.


(7)
            25,000
                become vested and exercisable on March 24, 2007, 25,000 become vested
                and
                exercisable on September 24, 2007, and the remaining 25,000 become
                vested
                and exercisable on March 24, 2008.





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**Compensation
      of Directors**





The
      table
      below summarizes all compensation of our directors as of December 31,
      2006.





**DIRECTOR
                COMPENSATION**Name
            FeesEarned
              orPaid
                in
              Cash
              ($)
            Stock
                Awards
              ($)
            Option
                Awards
              ($)
            Non-Equity
              Incentive
              Plan
              Compensation
              ($)
            Non-Qualified
              Deferred
              Compensation
              Earnings
              ($)
            All
              Other
              Compensation
              ($)
            Total
              ($)Daniel
                Hunter
            -
            -
            492,606
            -
            -
            90,870
            583,476J.
                Randall Martin
            -
            -
            619,905
            -
            -
            90,000
            709,905Harry
                Hopmeyer(1)
            -
            -
            547,340
            -
            -
            57,500
            604,840Thomas
                Ernst McGrail
            -
            -
            218,936
            -
            -
            81,200
            300,136Hernando
                Molina Velez(2)
            -
            -
            218,936
            -
            -
            47,606
            266,542Robert
                E. Van Tassell
            -
            -
            218,936
            -
            -
            -
            218,936David
                Bikernan
            -
            -
            255,380
            -
            -
            -
            255,380





(1)
            On
                November 14, 2006, Mr. Hopmeyer passed
                away.


(2)
            On
                August 31, 2006, Hernando Molina Velez resigned as a member of our
                board
                of directors. Mr. Velez continues to provide legal services to the
                company.





**Narrative
      Disclosure to the Director Compensation Table**





We
      do not
      pay any cash compensation to our directors.





Consulting
      Fees





The
      amounts disclosed as “All Other Compensation” in the Director Compensation table
      above relate to consulting fees earned by directors for consulting services
      performed during the fiscal year ended December 31, 2006.





The
      consulting fees received by J. Randall Martin and Daniel Hunter were earned
      in
      connection with the Consulting Services Agreement each entered into on August
      1,
      2006 which is described in the narrative disclosure to the summary compensation
      table above. These consulting fees have been included in the column titled
“All
      Other Compensation” in both the summary compensation able for our executive
      officers and the director compensation table above.





On
      August
      1, 2006, we entered into Consulting Services Agreement (the “Agreement”) with
      Harry Hopmeyer, the Chairman of our board of directors. The Agreement is
      effective for a period of two (2) years commencing May 1, 2006 and may be
      terminated by mutual consent, for cause (as defined in the Agreement), or
      without cause. In the event of termination without cause,


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the
      Agreement provides that Mr. Hopmeyer will receive a lump sum payment equal
      to
      twelve (12) months of consulting fees and that any stock options granted to
      the
      officer shall vest immediately. Following termination the Agreement, Mr.
      Hopmeyer is subject to a one-year covenant not to compete within the Republic
      of
      Colombia and a one-year covenant not to solicit any of our consultants or
      employees. Under the Agreement, which was effective as of May 1, 2006, Mr.
      Hopmeyer agreed to devote his best efforts, skill, and sufficient time to
      carrying out his responsibilities under the Agreement. The Agreement also
      required that each Mr. Hopmeyer act in substantial accordance with all
      reasonable instructions of our board of directors and that he provide all
      management and operation services as may be requested by the board.





Under
      the
      terms of the Agreement, Mr. Hopmeyer received monthly compensation of $5,000
      plus applicable Canadian Good and Services Tax commencing May 1, 2006 totaling
      $57,500 in consulting fees for the fiscal year ended December 31, 2006 which
      is
      recorded in the director compensation table above in “All Other Compensation.”
The Consulting Services Agreement with Mr. Hopmeyer was terminated on November
      14, 2006 following his passing.





During
      the fiscal year ended December 31, 2006, we retained Thomas Ernst McGrail to
      provide consulting services to us on an as-needed basis at the rate of $600
      per
      day. During the fiscal year ended December 31, 2006, we paid Mr. McGrail a
      total
      of $81,200 in consulting fees which is included in the column titled “All Other
      Compensation” in the director compensation table above.





During
      the fiscal year ended December 31, 2006, we retained Hernando Molina Velez
      to
      provide legal services to us relating the local legal issues in Colombia. We
      paid Mr. Velez an average monthly fee of approximately $4,000 for the fiscal
      year ended December 31, 2006. During the fiscal year ended December 31, 2006,
      we
      paid Mr. Velez a total of $47,606 in legal fees which is included in the column
      titled “All Other Compensation” in the director compensation table above.





Stock
      Option Grants





Directors
      receive stock option awards annually as follows: Chairman of the Board receives
      options to purchase 400,000 to 500,000 shares of our common stock and all other
      members of the board who do not also serve as executive officers receive options
      to purchase 200,000 to 300,000 shares of our common stock.





All
      options granted to our directors have the following attributes: i) two year
      vesting period, 25% every six months from the date of grant ii) ten year life.
      The aggregate fair value of these options was computed in accordance with FAS
      123R and is reported in the director compensation table above in the column
      titled “Option Awards.” Further information regarding our Equity Compensation
      Plans and Awards, including valuation assumptions used in the preparation of
      these tables, is included in note 5 to our December 31, 2006 audited
      consolidated financial statements.




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During
      the fiscal year ended 2006, we granted our directors stock options as
      follows:





·
            On
                March 17, 2006, we granted J. Randall Martin options to purchase
                500,000
                shares of our common stock at the exercise price of $1.65 per share
                with
                an expiration date of March 17, 2016. 125,000 of these stock options
                have
                vested and are exercisable, 125,000 become vested and exercisable
                on March
                17, 2007, 125,000 become vested and exercisable on September 17,
                2007, and
                the remaining 125,000 become vested and exercisable on March 17,
                2008.





·
            On
                January 6, 2006, we granted Daniel Hunter options to purchase 450,000
                shares of our common stock at the exercise price of $0.75 per share
                with
                an expiration date of January 6, 2016. At the time of Mr. Hunter’s
                resignation on December 31, 2006, 112,500 options had vested and
                are
                exercisable until March 31, 2007. The remaining 337,500 stock options
                with
                an associated compensation expense of $369,454 were forfeited.





·
            On
                January 6, 2006, we granted Harry Hopmeyer options to purchase 500,000
                shares of our common stock at the exercise price of $0.75 per share
                with
                an expiration date of January 6, 2016. At the time of Mr. Hopmeyer
                passing, options to purchase 125,000 shares of our common stock had
                vested
                and are exercisable until November 14, 2007 and the remaining 375,000
                unexercised options, with an associated compensation expense of $410,505,
                were forfeited.





·
            On
                January 6, 2006, we granted Thomas Ernst McGrail options to purchase
                200,000 shares of our common stock at the exercise price of $0.75
                per
                share with an expiration date of January 6, 2016. 100,000 of these
                stock
                options have vested and are exercisable, 50,000 become vested and
                exercisable on July 6, 2007, and the remaining 50,000 become vested
                and
                exercisable on January 6, 2008.





·
            On
                January 6, 2006, we granted Hernando Molina Velez options to purchase
                200,000 shares of our common stock at the exercise price of $0.75
                per
                share with an expiration date of January 6, 2016. 100,000 of these
                stock
                options have vested and are exercisable, 50,000 become vested and
                exercisable on July 6, 2007, and the remaining 50,000 become vested
                and
                exercisable on January 6, 2008.





·
            On
                January 6, 2006, we granted Robert E. Van Tassell options to purchase
                200,000 shares of our common stock at the exercise price of $0.75
                per
                share with an expiration date of January 6, 2016. 100,000 of these
                stock
                options have vested and are exercisable, 50,000 become vested and
                exercisable on July 6, 2007, and the remaining 50,000 become vested
                and
                exercisable on January 6, 2008.





·
            On
                July 31, 2006, we granted David Bikerman options to purchase 200,000
                shares of our common stock at the exercise price of $1.35 per share
                with
                an expiration date of July 31, 2016. 50,000 of these stock options
                become
                vested and are exercisable on January 31, 2007, 50,000 become vested
                and
                exercisable on July 31, 2007, 50,000 become vested and exercisable
                on
                January 31, 2008, and the remaining 50,000 become vested and exercisable
                on July 31, 2008.


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**Item
      11. Security Ownership of Certain Beneficial Owners and Management and Related****Stockholder
      Matters**





The
      following table sets forth, as of March 21, 2007, the beneficial ownership
      of
      our common stock by each executive officer and director, by each person known
      by
      us to beneficially own more than 5% of the our common stock and by the executive
      officers and directors as a group. Except as otherwise indicated, all shares
      are
      owned directly and the percentage shown is based on 65,056,849 shares of common
      stock issued and outstanding on March 21, 2007. Except as otherwise indicated,
      the address of each person named in this table is c/o Colombia Goldfields Ltd.,
      #208-8 King Street East, Toronto, Ontario, Canada M5C 1B5.





**Title
                of class**
            **Name
                and address**
              **of
                beneficial owner****(1)**
            **Amount
                of**
              **beneficial
                ownership**
            **Percent**
              **of
                class*****Executive
                Officers & Directors:**Common
            J.
                Randall Martin
            1,000,000
                shares
            1.9%(2)Common
            Stewart
                D. Redwood
            0
                shares
            0
                %(3)Common
            Thomas
                Ernest McGrail
            200,000
                shares
            0.5
                %(4)Common
            David
                Bikerman
            0
                shares
            0
                %(5)Common
            James
                Kopperson
            0
                shares
            0
                %(6)Common
            Terry
                Lyons
            0
                shares
            0
                %(7)Common
            James
                Verraster
            0
                shares
            0
                %(8)Common
            Edward
                Flood
            0
                shares
            0
                %(9)Common
            Jonathan
                Berg
            0
                shares
            0
                %(10)**Total
                of All Directors and Executive Officers:**
            1,200,000
                shares
            2.4
                %**More
                Than 5% Beneficial Owners:**Common
            Daniel
                Hunter
              47150
                Greenhills Rd.
              Chilliwack,
                B.C. Canada V2R 4T2
            3,507,900
                shares
            5.4 %
                (11)Common
            Investcol
                Limited(12)
            13,200,000
                shares
            20.3
                %





(1)
            As
                used in this table, "beneficial ownership" means the sole or shared
                power
                to vote, or to direct the voting of, a security, or the sole or shared
                investment power with respect to a security (i.e., the power to dispose
                of, or to direct the disposition of, a security). In addition, for
                purposes of this table, a person is deemed, as of any date, to have
                "beneficial ownership" of any security that such person has the right
                to
                acquire within 60 days after such
                date.


(2)
            Mr.
                Martin was granted options to purchase 500,000 shares of common stock
                at
                an exercise price of $1.65 per share of which 250,000 of these options
                have vested and are exercisable within 60
                days.


(3)
            Mr.
                Redwood was granted options to purchase 100,000 shares of common
                stock at
                an exercise price of $1.90 per share of which 25,000 of these options
                have
                vested and are exercisable within 60
                days.


(4)
            Mr.
                McGrail was granted options to purchase 200,000 shares of common
                stock at
                an exercise price of $0.75 per share and 100,000 shares of common
                stock at
                an exercise price of $1.17 of which 100,000 of these options have
                vested
                and are exercisable within 60 days.


(5)
            Mr.
                Bikerman was granted options to purchase 200,000 shares of common
                stock at
                an exercise price of $1.35 per share and 100,000 shares of common
                stock at
                an exercise price of $1.17 of which 50,000 of these options are
                exercisable within 60 days.


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(6)
            Mr.
                Kopperson was granted options to purchase 100,000 shares of common
                stock
                at an exercise price of $1.20 per share and 300,000 shares of common
                stock
                at an exercise price of $1.15 per share of which 25,000 of these
                options
                are exercisable within 60 days.


(7)
            Mr.
                Lyons was granted options to purchase 300,000 shares of common stock
                at an
                exercise price of $1.18 per share of which none of these options
                have
                vested and are exercisable within 60
                days.


(8)
            Mr.
                Verraster was granted options to purchase 300,000 shares of common
                stock
                at an exercise price of $1.18 per share of which none of these options
                have vested and are exercisable within 60
                days.


(9)
            Mr.
                Flood was granted options to purchase 300,000 shares of common stock
                at an
                exercise price of $1.18 per share of which none of these options
                have
                vested and are exercisable within 60
                days.


(10)
            Mr.
                Berg was granted options to purchase 300,000 shares of common stock
                at an
                exercise price of $1.18 per share of which none of these options
                have
                vested and are exercisable within 60
                days.


(11)
            Based
              on information provided in a Form 4 filed by Mr. Hunter on March 6,
              2007 (12)
            Mr.
                Martin is an officer and director of Investcol Limited. Pursuant
                to Rule
                13d-4 of the Securities and Exchange Act of 1934, Mr. Martin disclaims
                beneficial ownership over the shares held by Investcol Limited. The
                shares
                held by Investcol Limited have not been included in the calculation
                of
                beneficial ownership for Mr.
                Martin.





**Item
      12. Certain Relationships and Related
      Transactions**





Except
      as
      disclosed below, none of our directors or executive officers, nor any proposed
      nominee for election as a director, nor any person who beneficially owns,
      directly or indirectly, shares carrying more than 5% of the voting rights
      attached to all of our outstanding shares, nor any members of the immediate
      family (including spouse, parents, children, siblings, and in-laws) of any
      of
      the foregoing persons has any material interest, direct or indirect, in any
      transaction since
      the
      beginning of our last fiscal year on January 1, 2006 or
      in any
      presently proposed transaction which, in either case, has or will materially
      affect us.





Pursuant
      to a Stock Purchase Agreement (“Agreement”) we entered into on January 12, 2006
      with Investcol Limited and RNC (Colombia) Limited, a Belize corporation and
      a
      wholly-owned subsidiary of Investcol ("RNC"), the exercise of an option pursuant
      to the Stock Purchase Agreement on April 28, 2006, First Amendment to the
      Agreement executed on August 22, 2006, and the Second Amendment to the Agreement
      executed on December 14, 2006, we acquired ninety percent (90%) of the issued
      and outstanding stock of RNC and hold an option to acquire the remaining ten
      percent (10%) of RNC's issued until May 1, 2009. This option to acquire the
      final 10% interest in RNC until May 1, 2009, resulting in our owning 100% of
      RNC, can be exercised for the purchase price of $15,000,000. This payment can
      be
      made in either cash, shares of our common stock, or any combination thereof.
      Any
      shares issued shall be valued at 90% if the average closing price of our common
      stock as reported on a national securities exchange or national market or
      quotation system over the 30 day period immediately preceding the deliver of
      notice to Investcol of our intent to exercise this option. In consideration
      for
      this acquisition, we issued a total of 11,200,000 shares of our common stock
      to
      Investcol, paid $200,000 to Investcol, and provided non-interest bearing demand
      loans totaling to RNC in the amount of $10,200,000.




On
      April
      10, 2006, we acquired Investcol’s rights in certain mining contracts to
      exclusively engage in mining activities on Concessions 6993, 7039, 6821, and
      6770 (the “Contracts”) and options that Investcol holds to acquire the exclusive
      rights to engage in mining activities on Concessions HET-31, 32, 26, 27, and
      HETG-01 (the “Options”) all located within an area in Colombia referred to as
      the Caramanta location. In consideration for this acquisition, we issued


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to
      Investcol one million restricted shares of our common stock and paid to
      Investcol $350,000.




Mr.
      Martin, our Chief Executive Officer and member of our board of directors, was
      appointed as an officer and director of Investcol on February 23, 2006 and
      continues to serve in this capacity. Mr. Martin was also appointed as an officer
      and director of RNC (Colombia) Limited, a subsidiary of Investcol, on February
      23, 2006 and continues to serve in this capacity.





Luis
      Gabriel Correa Ocampo, who served as our Vice President of Exploration from
      June
      2005 to December 2006, was employed also by Cia Servicios Logísticos de Colombia
      Ltda. as its Chief Geologist until August 2006.





We
      retained Dr. Stewart D. Redwood to prepare a report in December 2005 entitled
      “The Geological Model of the Marmato Gold Deposit, Colombia” and in February
      2006 to prepare a report entitled “The Exploration Potential of the El Salto
      Gold Prospect, Caldas, Colombia.” Subsequent to preparing these reports, our
      board of directors appointed Dr. Redwood to serve as our Vice President of
      Exploration on December 1, 2006.




On
      August
      15, 2006, we entered into a consulting agreement with James Kopperson where
      Mr.
      Kopperson provided services to us at the rate of Cdn $200.00 / hr. Mr. Kopperson
      was later appointed to act as our Chief Financial Officer on December 1,
      2006.





On
      February 27, 2007, we entered into a promissory note (“Note”) with our Chief
      Executive Officer, J.R. Martin, T.W. Lough, and RNC (Management) Limited (the
      “Lenders”) for the purpose of providing us with short-term financing to sustain
      our operations and to continue our acquisition of property interests in the
      Zona
      Alta portion of the Marmato project in Colombia. This Note is for $3,700,000
      and
      is payable upon the completion of an ongoing private equity offering or April
      15, 2007, whichever is first. Mr. Martin provided $2,000,000 of the total
      financing, Mr. Lough provided $1,000,000 of the total financing, and RNC
      (Management) Limited provided the remaining $700,000. Mr. Lough is the President
      and a director of Investcol Limited. We purchased our 90% interest and have
      an
      option to acquire to remaining 10% interest in RNC (Colombia) Limited from
      Investcol Limited. The outstanding principal amount of this Note bears interest
      at a rate of ten percent (10%) per annum. In consideration of this Note, we
      agreed to pay each Lender a fee equal to five percent (5%) of the initial loan
      amount provided by the Lender.




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**Item
      13. Exhibits**





Exhibit
                Number
            Description2.1
            RNC
                Stock Purchase Agreement(1)3.1
            Articles
                of Incorporation, as amended(2)3.2
            By-laws,
                as amended(2)10.1
            Consulting
                Agreement with Stewart
                Redwood10.2
            Assignment
                Agreement with Investcol Limited(3)10.3
            Agreement
                with Investcol Limited(3)10.4
            Assignment
                Agreement with Investcol Limited regarding Concessions 6993, 7039,
                6821,
                and 6770 and options to acquire the exclusive rights to engage in
                mining
                activities on Concessions HET-31, 32, 26, 27, and
                HETG-01(4)10.5
            Amendment
                to Agreement with Investcol Limited regarding Concessions 6993, 7039,
                6821, and 6770 and options to acquire the exclusive rights to engage
                in
                mining activities on Concessions HET-31, 32, 26, 27, and
                HETG-01(4)10.6
            Contract
                for Purchase of Concessions 6993, 7039, 6821, and 6770 and options
                to
                acquire the exclusive rights to engage in mining activities on Concessions
                HET-31, 32, 26, 27, and HETG-01(4)10.7
            Consulting
                Services Agreement with J. Randall Martin(5)10.8
            Master
                Agreement for Acquisition of properties in Caramanta(6)10.9
            Second
                Amendment to Stock Purchase Agreement(7)14.1
            Code
                of Ethics(2)21.1
            Subsidiaries
                of Small Business Issuer(3)31.1
            Certification
                of Chief Executive Officer pursuant to Securities Exchange Act Rule
                13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            Certification
                of Chief Financial Officer pursuant to Securities Exchange Act Rule
                13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232.1
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002





(1)
            Incorporated
                by reference to Current Report on Form 8-K filed on February 26,
                2006


(2)
            Incorporated
                by reference to Registration Statement on Form SB-2 filed on July
                28,
                2006


(3)
            Incorporated
                by reference to Current Report on Form 8-K filed on September 28,
                2005


(4)
            Incorporated
                by reference to Annual Report on Form 10-KSB filed on April 17,
                2006


(5)
            Incorporated
                by reference to Current Report on Form 8-K filed on August 4,
                2006


(6)
            Incorporated
                by reference to Current Report on Form 8-K filed on September 29,
                2006


(7)
            Incorporated
                by reference to Current Report on Form 8-K filed on December 15,
                2006


(8)
            Incorporated
                by reference to Annual Report on Form 10KSB filed with the Securities
                and
                Exchange Commission on April 16,
                2005


(9)
            Incorporated
                by reference to Amended Registration Statement on Form SB-2/A filed
                on
                October 27, 2006


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**Item
      14. Principal Accountant Fees and Services**





**Audit
      Fees**





The
      aggregate fees billed by our auditors for professional services rendered in
      connection with a review of the financial statements included in our quarterly
      reports on Form 10-QSB and the audit of our annual consolidated financial
      statements for the fiscal years ended December 31, 2006 and December 31, 2005
      were approximately $191,000 and $8,988 respectively.





**Audit-Related
      Fees**





Our
      predecessor auditors did not bill any additional fees for assurance and related
      services that are reasonably related to the performance of the audit or review
      of our financial statements.  Our current auditor billed $25,000 in
      additional fees for assurance and related services that are reasonably related
      to the performance of the audit or review of our financial
      statements.





**Tax
      Fees**





The
      aggregate fees billed by our auditors for professional services for tax
      compliance, tax advice, and tax planning were $0 and $0 for the fiscal years
      ended December 31, 2006 and 2005.





**All
      Other Fees**





The
      aggregate fees billed by our auditors for all other non-audit services, such
      as
      attending meetings and other miscellaneous financial consulting, for the fiscal
      years ended December 31, 2006 and 2005 were $0 and $0 respectively.





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**SIGNATURES**





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





**Colombia
      Goldfields Ltd.**







By: 
/s/J.
                Randall Martin
            By: 
              /s/ James KoppersonJ.
                Randall Martin
              Chief
                Executive Officer
              March
                29, 2007
            James
                Kopperson
              Chief
                Financial Officer
              March
                29, 2007







In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated:




By: 
/s/
                J. Randall Martin
            By:  /s/ David
              BikermanJ.
                Randall Martin
              Director
              March
                29, 2007
            David
                Bikerman
              Director
              March
                29, 2007By:  /s/ Thomas Ernst
              McGrail
            By:  /s/ Terry LyonsThomas
                Ernst McGrail
              Director
              March
                29, 2007
            Terry
                Lyons
              Director
              March
                29, 2007By:  /s/ James
              Verraster
            By:  /s/ Edward
              FloodJames
                Verraster
              Director
              March
                29, 2007
            Edward Flood
              Director
              March
                29, 2007By: 
              /s/ Jonathan BergJonathan
                Berg
              Director
              March
                29, 2007