UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K Q
      ANNUAL REPORT UNDER SECTION 13 OR
      15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December
      31, 2008£
      TRANSITION REPORT UNDER SECTION 13
      OR 15(d) OF THE SECURITIES EXCHANGE ACTFor the transition period from
      _________ to ________Commission file number  000-51013
 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)
    361-9640Securities 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)


Indicated by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.      Yes
£                 No Q

Indicate by check mark whether the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act.      Yes
£                 No  Q

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NoteChecking the box above will not relieve any registrant required to
file reports pursuant to Section 13 or 15(d) of the Exchange Act from their
obligations under those Sections.

Indicate by check mark whether the registrant has (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.      Yes Q             No
£

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K.

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

|Large Accelerated filer | £ | Accelerated filer         | £
|----------------------- | - | ------------------------- | -
|Non-Accelerated filer   | £ | Smaller Reporting Company | Q

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

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)

Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.

$

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

104,524,486 shares of Common Stock as of February 27, 2009

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|TABLE OF CONTENTS
|-----------------
|                 
|PART I           
|                 
|Item 1.          
|Item 1A.         
|Item 1B.         
|Item 2.          
|Item 3.          
|Item 4.          
|                 
|PART II          
|                 
|Item 5.          
|Item 6.          
|Item 7.          
|Item 7A.         
|Item 8.          
|Item 9.          
|Item 9A.         
|Item 9B.         
|                 
|PART III         
|                 
|Item 10.         
|Item 11.         
|Item 12.         
|Item 13.         
|Item 14.         
|                 
|PART IV          
|                 
|Item 15.         

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PART I

Item 1.            Description of Business.

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. (CGL or the Company) on May
13, 2005. From the date of our incorporation until March 2005, we provided
electronic filing services to companies that were required to electronically
file reports with the Securities and Exchange Commission (SEC). After this
time, we reorganized our operations and our current focus is on the acquisition
and development of our interests in mining properties located in Western
Colombia. On July 31, 2006, our jurisdiction of incorporation was changed to the
state of Delaware.

We are an exploration stage company engaged in the acquisition
and exploration of mineral resource properties. The Company's head office is
located in Toronto, Canada and its exploration and administrative office is
located in the city of Medellín, Colombia. Our main activity is the exploration
and development of the Marmato Mountain Gold District in Western Colombia. The
Marmato Mountain Gold District is located 80 km south of Medellín. We are
focused on two areas within the Marmato Mountain Gold District. These are Zona
Alta of the Marmato Mountain and the Caramanta Exploration Properties. The
Caramanta Exploration Properties surround the Marmato Mountain.

Our objective is to define and consolidate a gold district in
the Marmato Mountain Region of Western Colombia. Our main target in this region
is the Marmato Mountain, that is divided by Zona Alta (Upper Zone) and Zona Baja
(Lower Zone). We currently own exploration rights to Zona Alta and are working
towards completing the acquisition of 100% of its legally registered property
titles.

Financial Information

The following summary information is derived from our audited
consolidated financial statements for the years ended December 31, 2008,
December 31, 2007 and December 31, 2006.

|                                 |   | Fiscal Year 2008 |   |   | Fiscal Year 2007 |   |   | Fiscal Year 2006 |  
|-------------------------------- | - | ---------------- | - | - | ---------------- | - | - | ---------------- | -
|Revenues from External Customers | $ | -                |   | $ | -                |   | $ | -                |  
|Net Loss and Comprehensive Loss  | $ | (60,197,000      | ) | $ | (14,575,000      | ) | $ | (6, 279,000      | )
|Total Assets                     | $ | 26,126,000       |   | $ | 74,519,000       |   | $ | 45,007,000       |  

Competitive Business Conditions and Competitive
Position

The mineral exploration industry is intensively competitive.
Many of our competitors have greater financial resources than we do. As a
result, we may experience difficulty competing with other businesses when
conducting mineral exploration activities or in the retention of qualified
personnel. No assurances can be given that we will be able to compete
effectively.

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

We do not own, either legally or beneficially, any patents or
trademarks.

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Research and Development

We did not incur any research and development expenditures in the fiscal years ended December 31, 2008, 2007, or 2006.

Existing and Probable Governmental Regulation

In Colombia, the subsoils are generally 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 state. However, as of 2001, Colombia's New Mining Code only permits 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 the exclusive right to carry out the studies, works and installations necessary within the given area to establish the existence of minerals and to exploit them according to the principles, rules
and criteria of the accepted techniques of geology and mining engineering. It also covers the right to install and build the equipment, services and works necessary to efficiently exercise the rights set forth in the Colombian Mining Code. The
concession contract will be agreed on for a term that the proponent requests, up to a maximum of thirty years. Such term will start from the date the contract is inscribed at the National Mining Register.

Compliance with Environmental Laws

Our properties 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, 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.

Drilling water is taken from the water permit for the Patacon Mill, which was ceded to CGL on purchase of the mill. This permit takes water from the head of three creeks: Cidrera, Candelaria and Cascabel. We will also be acquiring other water
permits with the purchase of certain mills and mines. The Company has also applied for a Superficial Water Permit for drilling water from a stream source in Piedra Labrada Creek, which will require an 1,800 m pipe to the drilling area.

We have also started an environmental monitoring program and prepared an Environmental Baseline Study.

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

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

- Surface disturbance and degradation, including deforestation.
- Ground instability, collapse and 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.
- Potential liability of prior operations, which had no waste dumps or
  tailings pond, and discharges of 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 approximately 10 employees, primarily consisting of
administrative and technical staff in Colombia. We also retain approximately 20
consultants to assist in operations on an as-needed basis.

Item 1A.        Risk Factors

As a smaller reporting company (as defined in Rule 12b-02 of
the Exchange Act), we are not required to provide the information called for by
this Item 1A.

Item 1B.        Unresolved Staff
Comments

As a smaller reporting company (as defined in Rule 12b02 of the
Exchange Act), we are not required to provide the information called for by this
Item 1B.

Item 2.            Properties

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,
Medellín, Poblado, Colombia.

Our principle mineral properties in Colombia are depicted on
the following map:

6

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7

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The Marmato Mountain

Location & Access

The Marmato Mountain is located in the Department of Caldas,
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 Mountain is
approximately 5o28'24 N, 75o35'57W.

The Zona Alta of the Marmato Mountain is located on Cerro El
Burro, which is also known unofficially as Alto del Burro, on the west side of
the 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 Mountain 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. We hold our interest in the Marmato project through
our Colombian subsidiary, Compania Minera de Caldas S.A. (Caldas). Caldas
holds a number of mineral licenses in the Marmato Zona Alta (Upper Zone) which
has an area of 178.9489 ha.

The Marmato Mountain is a three-hour drive from Medellín, via
the Medellín to Cali highway, 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), then
via a secondary road to Marmato (8 km, the road is asphalted in the initial part
and unsurfaced for the rest).

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

A description of our interest in the Marmato Mountain
properties is included in the section Management Discussion and Analysis of
Financial Condition and Results of Operations.

History of Previous Operations

The Marmato Mountain has been mined since pre-Colombian times
and was an important mine during the Spanish colonial era from 1525 until 1819.
From then until 1925, various English companies mined at Marmato. The first
English companies were Goldschmidt and Company, Powles & Illingsworth, the
Colombian Mining Association, and later the Mariquita Mining Company. From 1872
to 1909, 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 the Mineros Nacionales plant in
the Zona Baja). The mine was expropriated in 1925 (Law 87).

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.

8

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Marmato was divided into two zones, Alta (Upper) and Baja (Lower), in 1954 (Decree 2223). The following year, the government signed a contract with Mining Enterprises Corporation, USA which covered mining in both the Zona Alta and the Zona Baja.
This venture failed and the mines were returned to the government. Subsequently, 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. 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 MINERCOL (1997 to 2004), and since then by the Unidad de Delegación
Minera de Caldas (Caldas Mining Delegation Unit). The Exclusion Zone of the Marmato Mining District (Zona de Exclusion del Distrito Minero de Marmato) was created in the Zona Alta in 1998.

Minera Phelps Dodge de Colombia S.A., a subsidiary of the Phelps Dodge Corporation, USA, explored the Zona Baja of Marmato in 1984 and 1985. It carried out surface and underground sampling and drilled 7 underground core holes.

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 started mining the Zona Baja with a 300 t/d underground mine under contract No. 041-89M. This is an Aporte Minero contract which is still valid and is now administered by the Unidad de Delegación 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 and upgraded the
mine and mill. Mineros ownership of Mineros Nacionales was subsequently increased to 94.5% . 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. The plant capacity has been expanded and currenly has a throughput of 800 t/d.

Conquistador Mines Ltd. (Conquistador) explored Marmato between 1996 and 2000 through its Colombian subsidiary, Corona Goldfields S.A. . Conquistador had an option to explore the Zona Baja over 4 years and to acquire 50.1% of Mineros
Nacionales (it bought 13.15%, which it 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. We purchased the Conquistador data and access to the drill core and samples in 2007.

Gran Colombia Resource Inc. (Gran Colombia) carried out exploration of the Echandia and Chaburquia properties on the northern portion of the Marmato system between 1995 and 1997. Gran Colombia drilled 75 diamond drill holes for 15,000 m.
A scoping study was conducted by Geosystems International, Denver, in 1997, which concluded that there was insufficient 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.

Colombia Gold has carried out exploration of the Echandia and La Maria properties since 2004 through Minera Croesus S.A., a Colombian corporation. This work included the drilling of 5,959.6 meters in 21 holes.

We began exploration of Marmato and surrounding areas in 2005. Our objective was 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 when and if appropriate
resources are available.

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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 800
m, from Cerro El Burro (1,705 m altitude) to the deepest hole drilled by
Conquistador, which ended in mineralization at 863 m altitude. 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 Zona
Alta 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.

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 with iron-rich sphalerite (marmatite) and
minor galena and chalcopyrite. The veinlets have minor gangue which is comprised
of quartz, calcite, sericite and, in places, chlorite.

Exploration, Drilling, & Sampling

Topography

A detailed topographic map with 2 meter contour intervals
derived from Ikonos satellite imagery was commissioned by the Company.

Geological Mapping

We have conducted detailed surveying, geological mapping and
channel sampling of the accessible underground workings within the Zona Alta to
which we have had access. A few mines, principally illegal ones, remain to be
surveyed and sampled once permission is granted for access. Surface geological
mapping has been carried out.

Geophysics

An airborne magnetic and radiometric survey of the Marmato
Mountain and surrounding Caramanta Project was started in December 2007 and
completed in 2008.

Drilling

Our initial exploration program comprised 8,000 meters of
diamond drilling plus a comprehensive program of channel sampling of underground
mines. Diamond drilling started in February 2007 and by the end of fiscal 2007,
a total of 11,500 meters in 67 holes had been completed. At the end of December
2008 a total of 46,000 meters had been drilled.

10

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Sampling

We have conducted channel sampling of the accessible
underground workings within the Zona Alta to which we have had access. A few
mines, principally illegal ones, remain to be sampled once permission is granted
for access. The program comprises continuous saw-cut channel samples from all
cross-cuts, mine faces and at regular intervals along the backs in the numerous
artisanal mines in the Zona Alta. A program of mine maintenance and
rehabilitation is also being carried out for access for sampling, surveying and
diamond drilling.

Resource Study

We have contracted Micon International Limited of Toronto,
Ontario to carry out an estimate of mineral resources to Canadian National
Instrument 43-101 standards of the Zona Alta of Marmato.

Metallurgy

SGS Lakefield Research Limited (SGS) of Lakefield, Ontario
has been contracted by us to carry out preliminary scoping metallurgy test work
to develop a process flow sheet for our Scoping Study.

Geotechnical Studies

Golder Associates Ltd. (Golder) of Mississagua, Ontario has
been contracted by us to carry out geotechnical data collection and
interpretation for open pit design, and to make a preliminary selection and
evaluation of sites for waste rock and tailings disposal. This will form part of
the Scoping Study. Geotechnical logs are being made of the drill core by our
geologists and Golders will use this and other data to carry out data analysis
and pit slope determination at a scoping study level.

Environmental Studies

An Environmental Baseline Study was started in October 2006 by
LHC Consultores Ambientales (LHC) of Colombia and completed in December 2007.
The study gives a full year of environmental data for incorporation into the
Scoping Study. The study will form the basis for our future environmental
permits and our Social and Environmental Impact Statement (EIS). We believe that
we have no current environmental liability for past practices of others and we
have received approval for drilling from Corpocaldas under an approved
Environmental Management Plan. Nevertheless, we intend to meet or exceed modern
global standards of environmental stewardship in the preparation of the Baseline
study and subsequent EIS.

Knight Piesold of Denver, Colorado have been contracted to
carry out validation of environmental data collection and management, and a
social impact study, including independent supervision of the baseline study
being carried out by LHC. SGS has been contracted by us to carry out a
preliminary acid rock drainage study (ARD) on tailings and waste rock.

Scoping Study

We have contracted Micon International Limited of Toronto,
Ontario to carry out a Scoping Study and preliminary evaluation assessment of
Marmato.

Caramanta Exploration Properties

Location & Access

The Caramanta Exploration Properties are located in the
Departments of Caldas and Antioquia, Colombia and are approximately 80 km due
south of the city of Medellín, which is the capital of Antioquia. The El Salto prospect in the Caramanta Exploration Properties 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.

11

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We hold our interest in the Caramanta Exploration Properties
through our Colombian subsidiaries, Compania Minera de Caldas, S.A. ("Caldas") and Gavilan Minerales S.A.
(Gavilan). Caldas and Gavilan hold a number of mineral licenses in the area
surrounding the Marmato Zona Alta, which are referred to as the Caramanta
project.

Marmato is about a two-hour drive from Medellín on the paved
Pan American Highway. We use Marmato as a base for exploration of the Caramanta
Exploration Properties. Access to the different parts of the Caramanta
Exploration Properties from Marmato is by unimproved roads, mule trails and foot
paths. The topography of the area is steep.

Description of Our Interest in Property

A description of our interest in the Caramanta Exploration
properties is included in the section Management Discussion and Analysis of
Financial Condition and Results of Operations.

History of Previous Operations

The Caramanta Exploration Properties surrounding the Marmato
Mountain have also experienced small scale mining since the pre-colonial era. At
the present time, small scale surface artisanal gold mining is being conducted
at El Salto in the area of the Caramanta Exploration Properties.

Surface geochemical exploration comprising rock and soil
sampling of certain parts of the Caramanta Exploration Properties was carried
out by Conquistador in the late 1990s until 2001, partly funded by AngloGold
(now AngloGold Ashanti). Kedahda carried out a systematic stream sediment
geochemical survey of the Kedahda Properties in 2004 to 2005, with follow up of
some areas by soil and rock sampling. We purchased the exploration data of the
Conquistador and Kedahda exploration programs as part of the purchase of the
Kedahda Properties on August 30, 2006.

Mineralization

Our exploration has indicated five surface gold targets in the
Caramanta Exploration Properties at El Salto, Oro Fino, Pácora, Campana, and San
Bartolomé. Mineralization at El Salto, Pácora, Campana and San Bartolomé is very
similar in style to the Marmato Mountain and comprises stockworks of veins and
veinlets of massive sulphide formed by pyrite with minor black sphalerite,
galena and chalcopyrite, and a low percentage of quartz and calcite gangue.
Visible native gold occurs in some areas. Mineralization at Oro Fino is porphyry
style and anomalous gold, copper and molybdenum are associated with a stockwork
of veinlets of quartz and magnetite.

Exploration, Drilling, & Sampling

Topography

A detailed topographic map with 2 m contour intervals derived
from Ikonos satellite imagery has been made by us and it is expected that the
coverage will be expanded in the future to cover all of the five defined target
areas.

Geological Mapping

Reconnaissance geological mapping of the Caramanta Exploration
Projects was carried out in 2007 and 2008.

12

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Geophysics

A helicopter-borne magnetic and radiometric survey was started
in the fourth quarter of 2007 and is scheduled to be completed in fiscal 2009.

Sampling

Reconnaissance surface exploration work on the Caramanta
project comprising rock sampling and geological mapping was completed in the
third quarter of fiscal 2007, following up on anomalies identified by stream
sediment sampling. In the third quarter of fiscal 2007, we announced the
discovery of five large, distinct gold targets in the area surrounding Marmato.
The targets are El Salto, Oro Fino, Pácora, Campana, and San Bartolomé. These
targets are based on gold anomalies on surface rock and soil samples.

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, 2008.

13

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PART II

Item 5.            Market for Common Equity and Related
Stockholder Matters

Market Information

Our common stock is quoted on The Toronto Stock Exchange (the
TSX) under the symbol GOL and on the OTC Bulletin Board (OTCBB) under the
symbol CGDF. Our common stock has been listed on the TSX since August 27,
2007.

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 TSX and the OTCBB. These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions.

*The Toronto Stock Exchange*

|Fiscal Year Ending December 31, 2008            
|------------------------------------------------
|Quarter Ended                                   
|March 31,
      2008                            
|June 30, 2008                                   
|September
      30, 2008                        
|December 31, 2008                               
|                                                
|Fiscal Year Ending December 31, 2007            
|Quarter Ended                                   
|September 30, 2007
      (period from August 27,
|2007
      through September 30, 2007)          
|December 31, 2007                               
|                                                
|OTC Bulletin Board                              
|                                                
|Fiscal Year Ending December 31, 2008            
|Quarter Ended                                   
|March 31, 2008                                  
|June 30,
      2008                             
|September 30, 2008                              
|December
      31, 2008                         
|                                                
|Fiscal Year Ending December 31,
      2007      
|Quarter Ended                                   
|March 31,
      2007                            
|June 30, 2007                                   
|September
      30, 2007                        
|December 31, 2007                               

14

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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 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, 2008 we had approximately 82 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 of 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 having a distribution
preference.

15

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Securities Authorized for Issuance Under Equity
Compensation Plans

The Company maintains two Stock Incentive Plans, a 2006 Stock
Incentive Plan (the 2006 Plan) and a 2008 Stock Incentive Plan (the 2008
Plan), (collectively, the Plans) 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 advisors and consultants to,
the Company. A total of 10,422,449 common shares have been approved and reserved
by shareholders and the Toronto Stock Exchange for issuance at December 31, 2008
(6,500,000 under the 2006 Plan and 3,922,449 under the 2008 Plan).

All stock options and rights vest over a period determined by
the Board of Directors and expire not more than ten years from the date granted.
All outstanding stock options currently vest at a rate of 25% every six months
over a period of two years, and have a life of 10 years, unless certain change
in control provisions are triggered, in which cases the Plans provide for
accelerated vesting.

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, 2008.

Equity Compensation Plans as of December 31, 2008

|                                                                          |  | A                    |  |   | B                    |  |  | C                     | 
|------------------------------------------------------------------------- |  | -------------------- |  | - | -------------------- |  |  | --------------------- | 
|                                                                          |  |                      |  |   |                      |  |  | Number of securities  | 
|                                                                          |  |                      |  |   |                      |  |  | remaining available   | 
|                                                                          |  |                      |  |   |                      |  |  | for future issuance   | 
|                                                                          |  | Number of securities |  |   |                      |  |  | under equity          | 
|                                                                          |  | to be issued upon    |  |   | Weighted-average     |  |  | compensation plans    | 
|                                                                          |  | exercise of          |  |   | exercise price of    |  |  | (excluding securities | 
|                                                                          |  | outstanding options, |  |   | outstanding options, |  |  | reflected in column   | 
|                                                                          |  | warrants and rights  |  |   | warrants and rights  |  |  | (A))                  | 
|Plan Category                                                             |  |                      |  |   |                      |  |  |                       | 
|Equity compensation plans approved by
      security Holders (i)(ii)(iii) |  | 5,170,000            |  | $ | 1.29                 |  |  | 5,077,449             | 
|Equity compensation plans not approved by security Holders                |  | -                    |  |   | -                    |  |  | -                     | 
|Total                                                                     |  | 5,170,000            |  | $ | 1.29                 |  |  | 5,077,449             | 

|(i)   | 5,170,000 shares are issuable upon exercise of
      outstanding options under the 2006 Stock Incentive Plan and there have
      been no options issued under the 2008 Plan at December 31, 2008.                                                                                                                                    
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                       
|(ii)  | 1,155,000 options remain issuable under the 2006 Stock
      Incentive Plan and 3,922,449 options remain issuable under the 2008 Stock
      Incentive Plan at December 31, 2008.                                                                                                                                                     
|      |                                                                                                                                                                                                                                                                                                                                       
|(iii) | 10,422,449 shares in total have been reserved for
      issuance under the Plans and 175,000 shares have been issued pursuant to
      the exercise of options under the 2006 Plan; 7,790,000 options have been
      issued, 175,000 options have been exercised and 2,445,000 options have
      been forfeited under the 2006 Plan.

16

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Subsequent to December 31, 2008, we did not issue any options
as equity compensation for services rendered.

Recent Sales of Unregistered Securities

We did not issue any securities without registration under the
Securities Act during fiscal 2008 other than issuances of securities that were
previously included in a Current Report on Form 8-K.

Item 6.            Selected Financial Data

As a smaller reporting company (as defined in Rule 12b-02 of
the Exchange Act), we are not required to provide the information called for by
this Item 6.

Item 7.            Managements Discussion and Analysis
of Financial Condition and Results of Operations

Introduction

This Managements Discussion and Analysis (MD&A), prepared as of February 27, 2009, is intended to supplement and complement our unaudited interim consolidated financial statements and notes thereto (our Financial
Statements) for the year ended December 31, 2008 prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). 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 and www.sedar.com. All dollar amounts in our MD&A are
expressed in U.S. dollars, unless otherwise specified.

Forward-Looking Statements

This MD&A contains forward-looking statements that are based on the beliefs of our management and reflect our current expectations as contemplated under section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.  When used in this MD&A, the words estimate, project, believe, anticipate, intend, expect, plan, predict,
may, should, will, can, the negative of these words, or such other variations thereon, or comparable terminology, are all intended to identify forward-looking statements.  Such statements reflect the
current views of Colombia Goldfields Ltd. with respect to future events based on currently available information and are subject to numerous assumptions, risks and uncertainties, including but not limited to, risks and uncertainties pertaining to
development of mining properties, changes in economic conditions and other risks, uncertainties and factors, which may cause the actual results, performance, or achievement expressed or implied by such forward-looking statements to differ materially
from the forward looking statements.

See Risks and Uncertainties elsewhere in this MD&A. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

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. (CGL or the Company) on May 13, 2005. On July 31,
2006, our jurisdiction of incorporation was changed to the state of Delaware.

We are an exploration stage company engaged in the acquisition and exploration of mineral resource properties.  The Companys head office is located in Toronto, Canada and its exploration and administrative office is located in the city of
Medellin, Colombia. Our main activity is the exploration and development of the Marmato Mountain Gold District in Western Colombia.  The Marmato Mountain Gold District is located 80 km south of Medellin. We are focused on two areas within the
Marmato Mountain Gold District. These are Zona Alta (Upper Zone) of Marmato Mountain and the Caramanta Exploration Properties. The Caramanta Exploration Properties surround the Marmato Mountain.

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Fiscal 2008 Overview

In light of recent economic instability, created primarily by the banking and credit crisis in the U.S. and the resulting deterioration of global financial markets, at the end of the third quarter of fiscal 2008 the Company determined it necessary
to revisit its short-term operating plan.  In connection with this review, in the fourth quarter of 2008 we announced the suspension of additional drilling beyond the completed 46,000 meters on Zona Alta to reduce our ongoing operating expenses.
Results from the 46,000 meters of Zona Alta drilling are currently being reviewed to update our resource estimate for the Marmato Project. In light of current market conditions, we also commenced evaluating strategic options to address our
short-term and long-term project development goals and liquidity issues.  During the fourth quarter of fiscal 2008, the Companys ongoing operations continued to be financed by unsecured working capital advances from a company controlled by i)
the Companys President, and ii) the Companys Vice Chairman, Chief Executive Officer.

As a result of the recent turmoil in worldwide financial markets and the reluctance of investors to participate in the exploration sector, the Company has been unable to raise the required capital necessary to complete the Zona Baja (Mineros)
transaction and address the Companys current working capital deficiency. On October 31, 2008 Mineros S.A. notified the Company that it was unwilling to extend the closing of the Mineros transaction further and terminated the transaction.
Mineros exercised its right to the nonrefundable advance and deposit previously provided by the Company in connection with the transaction.

The Company is therefore unable at this time to advance its ultimate goal of combining Zona Alta and Zona Baja continues to review all strategic alternatives, including a potential sale of all or some of the Companys assets. The Company has
canvassed a number of qualified parties with respect to a possible strategic transaction with the Company and several interested parties continue to review information regarding the Company pursuant to confidentiality agreements. In addition, the
Company continues to explore potential financing opportunities. At the present time there is no certainty that these initiatives or any financing or strategic transaction will be completed.

At December 31, 2008 the Company has a significant working capital deficiency including $19,150,000 in current liabilities as follows:

Bank indebtedness
	$ 200,000Accounts payable and accrued liabilities
	8,452,000Mineral property purchase obligations
	4,957,000Related party advances
	2,875,000Short-term promissory note
	2,666,000$ 19,150,000


In the fourth quarter of 2008 the Company commenced discussions with its creditors and parties to the Companys mineral property purchase obligations to ascertain their willingness to work with the Company to restructure its obligations. As
well, the Company terminated all but essential personnel in both its Toronto and Medellin offices in order to further reduce the Companys monthly operating cash requirements.  There can be no assurance that impacted parties will cooperate with
the Company in respect to these initiatives.  Both the Companys i) President, and ii) Vice Chairman, CEO are supportive of the Companys efforts to restructure its operations given the current gold prices, however
their ability to provide significant additional working capital advances has become increasingly difficult. There can be no assurance that additional funding from these individuals will be available on acceptable terms to the Company or at all.

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The Company has outstanding a short-term promissory note to Global Resource Fund (Global). The note is collateralized by the Companys investment in RNC (Colombia) Ltd. and collateralized by a pledge of the Companys
investments in Caldas and Gavilan.  Caldas is the Companys principal operating subsidiary and the titleholder of the Companys mineral rights and legal mine titles. The loan was due December 29, 2008 and the Company was unable to repay
the note at that time. In connection with the Companys attempts to advance other strategic and/or financing alternatives, the Company has advised the holder of the Companys plans. There can be no assurance the Companys short-term
promissory note will be repaid or that the holder will not call the loan or exercise its rights to the loans underlying collateral, which includes a pledge of the Companys mineral and exploration properties and rights.

The ability of the Company to continue as a going concern is dependent on the ongoing discussions and/or forbearance with its lenders, creditors, and mineral property obligation holders, as well as obtaining additional financing. There is no
assurance that our lenders will cooperate with the Company, that the Companys creditors will provide accommodations, or that a financing or other transaction can be completed on terms acceptable to the Company.

The Company has reduced its staffing levels from approximately 200 at September 30, 2008 to approximately 30 at December 31, 2008 and has suspended further exploration activities while management reviews the results of the 46,000 meters drilled to
date and continues its ongoing review of strategic alternatives.  The Company has recorded all contractual obligations in respect of these reductions at December 31, 2008.

Events Subsequent to Year-End and Impact of Market Conditions

As of the date of the MD&A, the current economic uncertainty and weakness in the capital markets continues to negatively impact the industry with the average junior mining company experiencing share price declines in excess of 75% and market
capitalization declines in excess of $250 million. Similar to other companies in the industry, we continue to experience difficulty raising the additional capital necessary to fund our ongoing operations.  The Company continues to canvass
qualified parties regarding a potential merger or sale of some or all of the Companys assets, however management believes there are a large number of junior mining companies pursuing similar strategies and a finite number of potential
acquirers given the current economic environment.

The Company has been unable to pay its $2,600,000 promissory note with Global Resource Fund that was due December 29, 2008. The note holder has not demanded repayment of the note and continues to work with the Company while the Company reviews
its strategic alternatives. In return, subsequent to year-end the Company has agreed to pledge the Companys Colombian mineral and exploration properties and rights as additional security for the note.

Management believes that it is able to continue as a going concern based on the reduced level of expenditures and continued unsecured working capital advances received from a company controlled by i) the Companys President, and ii) the
Companys Vice Chairman and CEO. Should these working capital advances become unavailable or should the Companys creditors become unwilling to work with
the Company while it endeavors to secure additional financing or a strategic partner, the going concern assumption may cease to be valid in the future and the impact on the Companys ability to continue operations could be significant.

19

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Impact on Carrying Value of Recorded Assets

In an effort to manage the Companys working capital deficiency, the Company disposed of $751,000 of non-secured assets.  The Company believes the carrying values of the Companys remaining fixed assets, consisting primarily of
vehicles, equipment, and the Companys Medellin office building remains appropriate.

In preparing the Companys December 31, 2008 consolidated financial statements the Company also reviewed the carrying value of mineral and exploration properties and rights at the balance sheet date, considering external economic factors and
the status of the capital markets as of the date of this MD&A. As a result of this review, a write-down of $40,545,000 was recognized in the consolidated statements of operations for the year ended December 31, 2008.

Marmato Mountain  Zona Alta

As at December 31, 2008, the Zona Alta of Marmato Mountain in Colombia hosts approximately 275 small mines, and Compañia Minera de Caldas, S.A. (Caldas), our Colombian subsidiary, is seeking to purchase each of these. We own 95%
of Caldas, with the remaining 5% held directly or indirectly by directors, officers, and senior management of the Company, as Colombian law requires a minimum of five shareholders. Of these mines, 83 have registered titles in the Ministry of Mines
in the province of Caldas. We refer to these mines as Category 1. Another 36 mines, referred to as Category 2, are located in an area called CHG-081, in which there is one mining concession contract, and we refer to these mines as Category 2. Once
the Category 2 mines have been purchased, Caldas will own the entire CHG-081 contract. Our objective is to secure ownership of these 119 properties. Approximately 90 of the remaining mines have made applications for legalization. We refer to these
mines as Category 3. Of the applications made, management believes that less than 20 will be approved. Approximately 66 are illegal mines.

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 mining titles acquired by Caldas at December 31, 2008 is 109, compared to 80 at
December 31, 2007. Of these mines, 92 are currently registered in the name of Caldas.

Marmato Mountain  Zona Baja

On January 29, 2008 we entered into a Share Purchase and Sale Agreement with Mineros. Under the terms of the agreement, we agreed to purchase all the issued and outstanding shares of Mineros, for cash consideration of $35,000,000.  The agreement
provided that the transaction would be completed on April 29, 2008, unless extended by mutual agreement. We provided a deposit guarantee in the amount of 4.9 billion pesos (approximately $2,296,000) in respect to this transaction.  On April 29,
2008 the Company and Mineros agreed to extend the completion date to June 30, 2008, unless further extended by mutual agreement. In connection with this extension, we advanced a further $7,000,000 towards the purchase price on June 19, 2008 with
the balance due upon closing.

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On June 27, 2008 the Company and Mineros entered into an agreement to extend the closing date until the third business day after the transaction is approved by Colombian regulators without going beyond July 30, 2008.  In June, 2008 we filed a
request for review of the transaction with the Colombian Government in an effort to accelerate closing of the transaction. In July, 2008 the Colombian officials requested additional information from both parties and regulatory approval was
ultimately granted in September, 2008. The closing date of the transaction was further extended by Mineros until October 31, 2008 as we endeavored to complete our previously announced debt offering to fund the balance of the purchase price. Both the
deposit guarantee and the advance were non-refundable if the transaction was not completed for any reason.  In connection with the turmoil in the worldwide financial and credit markets that intensified in the fourth quarter of 2008, on October 31,
2008 Mineros notified the Company that it was unwilling to extend the closing of the transaction beyond October 31, 2008 and exercised its right to both the nonrefundable advance and deposit guarantee.

The Echandia Property

On November 20, 2007, we entered into a letter of intent with Colombia Gold, a corporation incorporated under the laws of England.  Colombia Golds main assets are the mining rights to the Echandia Property, located adjacent to Marmato
Mountain. We believe that the Echandia Property contains an extension of the mineralized zone from Marmato Mountain. Completion of the transaction is subject to negotiation and execution of a definitive agreement, satisfactory completion of
technical, financial, legal, and other commercial due diligence and customary conditions, including all shareholder, court and regulatory approvals.  The proposed transaction was a share exchange with the Company exchanging its shares for those of
Colombia Gold. We have experienced difficulty in receiving certain information specified in our Letter of Intent with Colombia Gold that we require to complete our due diligence investigation.  Given these ongoing delays there is no assurance that
we will be able to complete our due diligence investigation, that a definitive agreement will be executed, or that the acquisition will be completed. In addition, the Board of Directors of Colombia Gold have indicated that they intend to terminate
the Letter of Intent. We have informed Colombia Gold that it does not have the ability to terminate the Letter of Intent at this time, however we are working with Colombia Gold to resolve the situation as part of our review of strategic
alternatives.

Principal factors affecting our results of operations

Our consolidated financial statements are prepared in accordance with U.S. GAAP, and we maintain our accounts in U.S. Dollars.

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

|(a) | The state of capital markets, which affects our ability to finance acquisitions and 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 deposits, or if it is not economic to recover the gold deposits, our business and operations will be materially adversely affected.

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Revenues

We have not yet completed our economic feasibility studies to establish the existence of proven or probable reserves for our properties. To date, we have not produced any gold, and, as a result, we have not recognized any revenues from mining
activities for the period since incorporation to December 31, 2008.

Expenses

Our primary expenses consist of mineral property 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 of our financial condition and results of operations 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 $82,602,000 for the period from inception on March 25, 2003 to December 31, 2008, and we are not presently generating any revenue. We have a working capital deficiency of $19,065,000 at December 31, 2008.
Furthermore, we have used $61,661,000 during this period to fund our operations and mineral acquisitions program.

As at December 31, 2008 we do not have any cash resources and we will need to raise additional debt or equity financing during fiscal 2009 to continue to execute our business plan. We currently do not have any secure arrangements for additional
financing. There can be no assurance that 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 adjustments 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 we cease to continue as a going concern. Readers of this
MD&A should refer to the Companys Annual Consolidated Financial Statements for the year ended December 31, 2008 and in particular Note 1  Going Concern and Nature of Operations to these consolidated financial statements
for further information.

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 wholly-owned subsidiary RNC (Colombia) Limited, a Belize corporation and its 95% owned subsidiary, Compania Minera de
Caldas, S.A., a Colombia corporation, and (iii) our 94% interest in Gavilan Minerales, S.A. (Gavilan), a Colombia Corporation. Colombian law requires a minimum of five shareholders for Colombian companies; as a result, the remaining 5%
ownership of Caldas and 6% ownership of Gavilan are held by directors, and senior management of the Company. The directors and senior management of Caldas and Gavilan have executed voting and support agreements in favor of the Company.  All
significant inter-company transactions and balances are eliminated upon consolidation.

Mineral Property Rights Acquisition and Exploration and Development Expenditures

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 participants in our stock option plan.

Costs of acquiring mining properties, including interest costs attributable to mineral property acquisitions, are capitalized upon acquisition. Pursuant to Statement of Financial Accounting Standards (SFAS) No.34, Capitalization of Interest
Costs, interest costs attributable to mineral property acquisitions are also capitalized. 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 commercially mineable. 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. We evaluate 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 values 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 SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets.

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 of many mining properties.  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 in Colombia.

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 is
measured at the fair value at the grant date, using the Black-Scholes option pricing model and a graded approach 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 in 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.

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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, 2008 and December 31, 2007. 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 for the year ended December 31, 2008 and the related note disclosures.

|                                       |   |              |   |                |   | Cumulative     
|-------------------------------------- | - | ------------ | - | -------------- | - | ---------------
|                                       |   |              |   |                |   | from Inception 
|                                       |   |              |   |                |   | (March 25, 2003
|                                       |   | Year Ended   |   | Year Ended     |   | through        
|                                       |   | December 31, |   | December 31,   |   | December 31,   
|In Thousands, except Per Share Amounts |   | 2008         |   | 2007           |   | 2008)          
|Statement of Loss and Deficit          |   |              |   |                |   |                
|Total Operating Expenses               | $ | 71,411,000   | $ | 16,370,000     | $ | 96,657,000     
|Net loss and comprehensive loss        | $ | (60,197,000) | $ | (14,575,000)   | $ | (82,602,000)   
|Loss per Share-basic and diluted       | $ | (0.64)       | $ | (0.21)         |   |                
|Balance Sheet Data                     |   | As at        |   |                |   |                
|                                       |   | December 31, |   | As at December |   |                
|                                       |   | 2008         |   | 31, 2007       |   |                
|Total Assets                           | $ | 26,126,000   | $ | 74,519,000     |   |                
|Total Long-Term Debt                   | $ | -            | $ | -              |   |                
|Total Liabilities                      | $ | 19,150,000   | $ | 23,433,000     |   |                
|Total Shareholders Equity             | $ | 6,976,000    | $ | 51,086,000     |   |                

Results of Operations Fiscal Year 2008 Compared with Fiscal Year 2007

For the year ended December 31, 2008, we incurred a net loss of $60,197,000 (2007-$14,575,000). We generated interest and other income of $156,000 (2007-$20,000). The primary contributors to our net loss for the year ended December
31, 2008 were mineral property exploration expenses of $16,521,000 (of which $586,000 related to non-cash stock-based compensation expenses) and general and administrative expenses of $6,463,000 (of which $2,028,000 related to
non-cash stock-based compensation expenses), along with foreign exchange gains of $1,642,000, primarily related to unrealized foreign exchange gains on the translation of foreign currency-denominated accounts payable and accrued liabilities,
mineral property purchase obligations, and deferred income tax balances. We
also recorded a $9,296,000 write-down of the Mineros advance and deposit in connection with Mineros decision to terminate its agreement with us and a write-down of $40,545,000 of mineral and exploration properties and rights in
connection with our year-end impairment review based on current market conditions.

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For the comparative period, the primary contributors to our net loss were mineral property exploration expenses of $8,102,000 (of which $900,000 related to non-cash stock-based compensation expenses) and general and administrative expenses
of $6,066,000 (of which $2,175,000 related to non-cash stock-based compensation expenses).

Our operations typically involve the following activities and expenditures:

|i)   | The acquisition of mineral concessions: To December 31, 2008, this has consisted primarily of payments for the assignment contracts and subsequent full legal titles associated with the Caramanta properties, the acquisition
of Zona Alta concessions via our purchases of RNC, and the purchase of the Kedahda properties. The concessions we acquire typically grant to the concessionaire the right to carry out, within the given area, the studies, works and installations
necessary to establish the existence of the minerals and to exploit them according to rules and criteria belonging to the accepted techniques of geology and mining engineering. During the year ended December 31, 2008, we did not expend any cash on
the acquisition of mineral concessions.                                                                                                                                                                                                                                                          
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|ii)  | The acquisition of mineral and exploration rights. 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% when title to all documentation has been submitted to the local mining department and the final 50% payment when the mining claim has been registered in
the name of Caldas. Satisfactory resolution of local landowner
concerns is essential to the eventual development and operation of modern gold mines on Marmato Mountain. As at December 31, 2008, we had reached agreements with the titleholders to secure 109 legal titles deemed desirable in our business plan, with
92 titles registered in the name of Caldas. During the year ended December 31, 2008, we expended a total of $926,000 on mineral and exploration rights and have obligations as at December 31, 2008 to make payments of $4,957,000 pursuant to
amounts owing under our purchase agreements; and
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|iii) | The exploration of acquired mineral properties and related activities. This typically involves the payment of salaries, wages, and other costs attributable to furthering our mineral concessions and rights, along with
allocated stock-based compensation costs. During the year ended December 31, 2008, we expended a total of $16,521,000 on exploration activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

As a result of our fiscal 2008 efforts to explore and evaluate the Marmato Mountain District, our mineral property exploration expenses increased significantly for the year ended December 31, 2008 to $16,521,000 (including $586,000 in
stock-based compensation) from $8,102,000 (including $900,000 in stock-based compensation) for the year ended December 31, 2007. The primary reason for the increase was the significant drilling expenses incurred to complete the 46,000 meters
of drilling described elsewhere in this MD&A. With the suspension of additional drilling at the end of the third quarter of fiscal 2008, we expect that exploration expenses will be reduced in future periods.

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General and administrative expenses remained relatively constant in the year ended December 31, 2008 at $6,463,000 compared to $6,066,000 for the year ended December 31, 2007, reflecting the completion of our transition from a start-up
enterprise to a company with an exploration program and infrastructure sufficient to support field activities for the majority of 2008. A significant component of general and administrative expenses in fiscal 2008 was allocated stock-based
compensation, which totaled $2,028,000 compared to $2,175,000 in fiscal 2007. The remainder of the Companys fiscal 2008 general and administrative costs included accounting and legal fees of $1,300,000 (approximately $250,000
relating to Sarbanes-Oxley compliance requirements, $650,000 relating to the Companys proposed acquisitions of Mineros and Colombia Gold, and the balance relating to legal costs associated with maintaining the Companys dual
U.S./Canadian public company status), investor relations costs of $480,000, and the balance relating to corporate salaries, travel and head office expenses. As well, in fiscal 2008 the Company incurred $1,642,000 in foreign exchange gains on
the translation of foreign currency-denominated monetary assets and liabilities, as the majority of the Companys accounts payable, accrued liabilities, and deferred income taxes in Caldas and Gavilan are denominated in Colombian pesos and are
impacted by fluctuations in foreign currency rates.  During fiscal 2008 the U.S. dollar strengthened against the Colombian peso by approximately 10%, resulting in the aforementioned foreign exchange gains on translation of foreign currency
denominated working capital and deferred income taxes. Approximately $800,000 of these gains relate solely to the translation of deferred tax taxable temporary differences associated with the Companys historical acquisitions of RNC and
Gavilan.

For the year ended December 31, 2008 we incurred a net loss of $60,197,000 compared to $14,575,000 for the year ended December 31, 2007.  The primary contributors to our fiscal 2008 loss were $16,521,000 in mineral property exploration
expenses, $6,463,000 in general and administrative expenses, $9,296,000 related to the write-down of the Mineros advance and a deposit, a $40,545,000 write-down of our mineral rights, foreign exchange gains of $1,642,000 and
amortization of $228,000. We generated $156,000 in interest and other income during fiscal 2008 and recorded a deferred income tax recovery of $11,058,000 related to deductable temporary differences associated with our Colombian
subsidiaries and the write down of our mineral exploration properties and rights.

During fiscal 2008, we used cash of $13,466,000 in operations (2007-$9,607,000). The majority of our operating cash requirements consisted of exploration costs incurred in our Colombian operations, and consulting fees, travel expenses, and
audit and legal fees related to regulatory compliance.

During fiscal 2008, we received $2,875,000 in related party advances, experienced an increase in bank indebtedness of $200,000 and expended $3,284,000 on the acquisition of mineral exploration rights, resulting in a net cash decrease of
$6,939,000.

As at December 31, 2008, our working capital deficiency of $19,065,000 consisted of i) prepaid expenses and deposits of $85,000;  and ii) current liabilities of $19,150,000, consisting primarily of amounts owing to Marmato titleholders
under our mineral and exploration rights purchase agreements (at December 31, 2008, $4,957,000 is owing pursuant to these agreements), $2,666,000 related to our short-term promissory note with Global Resource Fund, $2,875,000 in related
party advances and the balance associated with accounts payable and accrued liabilities.  While we endeavor to manage the timing of these payments, the timing of settlement of these liabilities remain uncertain. Payment of our mineral and
exploration rights agreements are typically due as the contracts progress through the Colombian government approval process.

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Liquidity and Capital Resources

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

As at
	
	As atDecember 31, 2008
	December 31, 2007Cash and cash equivalents
	$
	-
	$
	6,939,000Working capital deficiency
	$
	(19,065,000)
	$
	(3,680,000)


We have historically relied on equity capital to fund our operations and mineral property acquisition and exploration activities. For the cumulative period from March 25, 2003 to December 31, 2008, we have raised $61,661,000 from the issuance of
shares of common stock, special warrants, share purchase warrants, and short-term bridge loans (net of repayments) and used $61,661,000 to fund operations and mineral property acquisition and exploration activities, leaving nominal cash
resources and a working capital deficiency of $19,065,000 as at December 31, 2008.

On March 31, 2008, we completed a private equity offering of 6,342,411 Units at $0.85 per Unit to a total of 7 investors. Each Unit consists of one share of common stock and one warrant (the Warrant) for a total of 6,342,411 common
shares and 6,342,411 warrants issued. The total gross proceeds raised were $5,391,000. Each warrant is exercisable for one common share at an exercise price of $1.10 and the Warrants are exercisable at any time up to two years from the date
of issuance. In connection with this private equity offering, we paid commissions of $158,000, and incurred issue costs of $50,000.

On June 18, 2008 we completed a private equity offering of 11,167,000 special warrants (the Special Warrants) at a price of $0.85 per Special Warrant to a total of 16 investors for net proceeds of $8,558,000. Each Special Warrant
entitled the holder to receive upon exercise one common share of the Company and one common share purchase warrant (the Warrant). Each Warrant entitled the holder to acquire one common share at a price of $1.50 for 60 months
following the date of the offering.

In connection with the offering, we paid as a commission $664,000 and incurred issue costs of $270,000. The Company issued 781,690 special broker warrants (the Special Broker Warrants) to the agents retained for the offering,
each Special Broker Warrant exercisable for no additional consideration into one broker warrant of the Company (Broker Warrants), and each Broker Warrant entitling the holder to purchase one common share at an exercise price of $0.85
per common share for 24 months following the date of the offering.

On September 30, 2008 the 11,167,000 Special Warrants issued in connection with the June 8, 2008 private placement were automatically exercised pursuant to their terms into 11,167,000 common shares and 11,167,000 common share purchase warrants
exercisable at a price of $1.50 per common share up to June 18, 2013.  The 781,690 Special Broker Warrants were also converted into 781,690 Broker Warrants exercisable at a price of $0.85 per common share up to June 18, 2010.

On February 8, 2008, we borrowed $2,500,000 from Global Resource Fund (Global) pursuant to a promissory note issued to Global (the Promissory Note). Auramet Trading, LLC is a participant in the loan and one of our
directors, James Verraster, serves as Chief Executive Officer of Auramet Trading, LLC. The Promissory Note provided for a $2,500,000 secured loan maturing on July 31, 2008. The borrowing under the Promissory Note is secured by guarantees and
pledges of our subsidiaries. The guarantee is, in turn, secured by first priority pledges of the shares of such subsidiaries held directly and
indirectly by the Company. The borrowing under the Promissory Note bore interest at the rate of 12.5% per annum, and interest payments are due monthly on the last day of the month, commencing on February 29, 2008. Proceeds from the borrowing were
used in connection with the Companys bid to acquire all the issued and outstanding shares of Mineros, as described elsewhere in the MD&A, as well as for general corporate purposes.  In connection with the loan, we issued 350,000 common
share purchase warrants to Global and we paid an up-front fee equal to 3.0% of the borrowing under the promissory note. Each warrant entitles the holder to purchase one common share at an exercise price of CDN $1.10 for a period of 24 months
from the date of closing. If the warrants were not exercised by the expiration date, pursuant to the loan the holder could require us to repurchase the warrants for $50,000.

27

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On August 7, 2008 the lender extended the maturity of the loan to September 30, 2008 in exchange for an extension fee of $50,000 and the issuance by the Company of 125,000 shares of our common stock. On October 7, 2008 the lender further
extended the loan to December 29, 2008 in exchange for an extension fee of $50,000 and the issuance by the Company of 300,000 shares of our common stock. In addition, the agreement provides that the price that the lender could require the
Company to repurchase its 350,000 warrants was increased to $100,000.

We were unable to make certain required interest payment in the fourth quarter of fiscal 2008 and were unable to repay the loan on December 29, 2008. As a result, the lender has the right to exercise its right to the loans underlying security.
There can be no assurance that the lender will exercise its right to its security, in which included our investments in RNC (Colombia), Caldas and Gavilan. Subsequent to year-end we have also agreed to pledge as additional security the
Companys mineral and exploration properties and rights while we continue to review our strategic and financing alternatives.

As at December 31, 2008, we do not have any cash resources and we will need to raise additional equity financing to continue 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, our rights to certain Zona Alta mineral properties, and there can be no assurance that such
additional financing will be available to us on acceptable terms or at all.

Off-balance sheet arrangements, Commitments, and Contingencies

i)

Letter of Intent with Colombia Gold

As described earlier in this MD&A, we have entered into a letter of intent to acquire Colombia Gold. Completion of the transaction is subject to the negotiation of a definitive agreement, satisfactory completion of technical, financial, legal,
and commercial due diligence and customary conditions, including all shareholder, court and regulatory approvals. We have experienced difficulty in obtaining certain due diligence information from Colombia Gold necessary to complete our due
diligence investigation. In addition, the Board of Directors of Colombia Gold have recently indicated that they intend to terminate the Letter of Intent. We have informed Colombia Gold that it does not have the ability to terminate the Letter of
Intent at this time. The Company intends to enforce its rights under the Letter of Intent.

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ii)

Mineros Deposit and Advance

As described earlier in this MD&A, we had previously entered into an agreement to purchase Mineros for cash consideration of $35,000,000. We provided a deposit guarantee secured by a term deposit of 4.9 billion Colombian pesos (approximately
$2,296,000), which was payable to the vendors if the transaction was not completed for any reason. We also paid an additional advance of $7,000,000 against the purchase price in connection with the extension of the closing, which was also
nonrefundable.

On September 22, 2008 we entered into an agreement with Mineros to extend the closing of the transaction to October 31, 2008. On October 31, 2008 Mineros indicated they were unwilling to further extend the transaction beyond October 31, 2008 and
exercised their right to both the deposit and advance.

|iii) | Caramanta Properties
|---- | --------------------

a)

Concession No. 669-17

Pursuant to an option agreement to purchase concession No. 669-17 in the Caramanta region, in the event that we determine it in the best interest of the Company to continue exploration, the contract specifies the following scheduled payments
required to obtain a 100% interest in the project: fiscal 2007 - 300 million pesos; fiscal 2008  660 million pesos and fiscal 2009  1.44 billion pesos. To December 31, 2008 we have made payments totalling 543 million pesos (approximately
$242,000) against the total 2.4 billion pesos (approximately $1,070,000) contract. We intend to continue exploration of the project in order to determine whether we will continue to make scheduled payments towards acquiring a 100% interest.
In the event we chose not to continue the project, no further payments are required and the option would be terminated.

b)

Concession No. 653-17

Pursuant to an option agreement to purchase concession No. 653-17 in the Caramanta region, in the event that we determine it in the best interest of the Company to continue exploration, the contract specifies the following scheduled payments
required to obtain a 100% interest in the project: fiscal 2008  450 million pesos; fiscal 2009  350 million pesos; fiscal 2010-200 million pesos. To December 31, 2008 we have made payments totalling 300 million pesos (approximately
$134,000) against the total 1.0 billion pesos (approximately $446,000) contract. We intend to continue exploration of the project in order to determine whether we will continue to make scheduled payments towards acquiring a 100% interest. In
the event we chose not to continue the project, no further payments are required and the option would be terminated.

c)

Other Concessions and Legalization Proposals (644-17, 805-17)

The Company has other options with various unrelated parties that provide us with options to acquire other property interests in the Caramanta Region.  The Company has options to pay a total of 730 million pesos (approximately $326,000) to
acquire 100% interests in the properties, subject to the concessions being granted to the underlying applicants and subsequently being transferred to and registered in the name of the Company. To date we have made payments totalling 635 million
pesos (approximately $283,000).

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Contractual obligations

We have a two-year employment contract with Mr. J. Randall Martin, our Chief Executive Officer and Vice Chairman, through September 30, 2009. Under the contract, Mr. Martin is entitled to receive monthly compensation of $20,000, 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 to receive a lump sum equal to 12 months monthly compensation and accelerated vesting of his options. 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. Stewart Redwood, our Vice President of Exploration, through September 30, 2010. Under the contract, Dr. Redwood is entitled to receive compensation at the rate of $1,000 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 a two-year contract with Mr. Thomas Lough, our President, through October 15, 2009. Mr. Lough is also the President and a director of Investcol. We purchased our 100% interest in RNC from Investcol. Under the contract, Mr. Lough is entitled
to receive monthly compensation of CDN $15,000. In addition, Mr. Lough is entitled to reimbursement of all reasonable out-of-pocket expenses incurred in the performance of his duties. If Mr. Loughs contract is terminated without cause, he
is entitled to recover a lump sum equal to 12 months monthly compensation and accelerated vesting of his options. Under the contract, Mr. Lough 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. Lough will be subject to a one year non-competition covenant.

Related Party Transactions

Certain transactions described under The Caramanta Properties and Marmato Propertieselsewhere 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 prior 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
Related Party Transactions.

On February 8, 2008, we borrowed $2,500,000 from Global Resource Fund (Global) pursuant to a promissory note issued to Global (the Promissory Note). Auramet Trading, LLC is a participant in the loan and a former and then
director, James Verraster, serves as Chief Executive Officer of Auramet Trading, LLC. The Promissory Note provided for a $2,500,000 secured loan maturing on July 31, 2008. The borrowing under the Promissory Note is secured by guarantees and
pledges of our subsidiaries. The borrowing under the Promissory Note bore interest at the rate of 12.5% per annum, and interest payments are due monthly on the last day of the month, commencing on February 29, 2008.

In connection with the loan, we issued 350,000 common share purchase warrants to Global and we paid an up-front fee equal to 3.0% of the borrowing under the promissory note. Each warrant entitles the holder to purchase one common share at an
exercise price of CDN $1.10 for a period of 24 months from the date of closing. If the warrants are not exercised by the expiration date, the holder may require us to
repurchase the warrants for $100,000.  The Company has also agreed to pay $100,000 and issued 425,000 common shares (125,000 in connection with the first extension and 300,000 in connection with the second extension) in connection with
extensions of the loan to December 29, 2008.

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The Company has received from time to time advances totaling $2,875,000 at December 31 2008 from RNC (Management) Ltd., a Company controlled by i) the Companys President, and ii) the Companys Vice Chairman and CEO.  The advances are
unsecured, non-interest bearing, and are being used to finance the Companys ongoing operations while alternative sources of financing are pursued.

One of our directors, Edward Flood, serves as Managing Director, Investment Banking with Haywood Securities, UK, Limited. The Company pays fees to Haywood from time to time for services rendered as agent in connection with financings undertaken by
the Company.  Certain of our directors also receive consulting fees from the Company as described elsewhere in this annual report.

Risks and Uncertainties

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in the prospectus and amendments thereto we filed in connection with our recent private placements
(available on www.sec.gov.com) before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed.

Going Concern

We incurred a net loss of $82,602,000 for the period from inception on March 25, 2003 to December 31, 2008, and we are not presently generating any revenue. Furthermore, we have used $61,661,000 during this period to fund our operations and
mineral acquisitions program. At December 31, 2008, we have a $19,065,000 working capital deficiency. Our future and ability to meet our anticipated exploration expense, mineral properties, and rights acquisitions is dependent upon our ability
to obtain additional financing and upon future acquisition, exploration and development of profitable operations from our mineral properties. We have made efforts to reduce or eliminate certain costs in order to continue as a going concern.
Management expects to monitor and control the Companys operating costs to a minimum until cash is available through external financing sources.  In the interim, a Company controlled by certain officers of the Company has provided unsecured
working capital advances to maintain the continuity of our operations.

As at December 31, 2008 we do not have any cash resources and we will need to raise additional equity financing during fiscal 2009 to continue operations. We will also need to negotiate with our creditors to reduce our external amounts owing to
creditors and there can be no assurance we will be successful in these negotiations. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our consolidated 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 we cease to continue as a going concern.

Limited Operating History

We have a very limited operating history upon which an evaluation of our future success or failure can be made. It was only recently that we took steps in a plan to engage in the acquisition of interests in
exploration and development properties in Western Colombia, and it is premature to evaluate the likelihood that we will be able to operate our business successfully. To date, we have been involved primarily in the acquisition of property interests
and mining rights in Western Colombia. We have not earned any revenues from our current operations and we have experienced significant losses and have a working capital deficiency as of December 31, 2008.

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Title Risk

We do not maintain insurance against title. 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 of many mining properties. Currently, we are in the process of investigating the title of mineral concessions for which we hold either directly or through our equity interest in our Colombian subsidiaries. We
cannot give any assurance that title to properties we acquired individually or through historical share acquisitions 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 or we may be unable to convince currently illegal miners to vacate our
properties. Furthermore, although the Company believes that mechanisms exist to integrate the titles of legal mineral properties currently not owned by the Company, there is a risk that this process could be time consuming and costly. As the Company
begins the processes of integration, the costs of acquiring the remaining properties and associated surface rights could rise significantly or become cost prohibitive. Furthermore, the risk exists that one or more of the remaining titleholders could
delay the integration process through administrative avenues. The possibility also exists that title to existing properties or future prospective properties may be lost due to an omission in the claim of title, or by our inability to honor our
contractual purchase obligations. Furthermore, given our current financial condition, and the continued deterioration of the global capital markets, if we are unable to secure further financing our trade and/or other creditors may seek to lay claims
against our assets or otherwise impede our business. As a result, any claims against us may result in liabilities or costs we will not be able to afford or significant delays resulting in the failure of our business.

Town Relocation Risk

Our business plan includes the relocation of the town of Marmato from its current location on the Marmato Mountain to a safer location. While we are currently working with city, state, and federal governments to facilitate this relocation, we are
subject to the risk of political, economic, or social circumstances that could delay our ability to complete the town relocation. If we are unable to complete the town relocation, our ability to advance our Marmato project could be impaired.

Political and Economic Uncertainties

Our property interests and proposed exploration activities in Western Colombia 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, and 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 us. Any changes in regulations or shifts in political attitudes are beyond our control and may adversely affect our
business. Exploration may be affected in varying degrees by government regulations with respect
to restrictions on future exploitation and production, price controls, export controls, foreign exchange controls, income and/or mining taxes, expropriation of property, environmental legislation and mine and/or site safety.  No assurances can be
given that our plans and operations will not be adversely affected by future developments in Colombia. Colombia is home to South Americas largest and longest running insurgency. Any changes in regulations or shifts in political attitudes are
beyond the control of the Company and may adversely affect our business.

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Government, Environmental, and Legal Risks

Our operations 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 changes in these laws could affect our operations and economics.
Environmental, employment and laws and regulations change frequently, and the implementation of new, or the modification of existing, laws or regulations could harm us. We cannot predict how agencies or courts in Colombia will interpret existing
laws and regulations or the effect these adoptions and interpretations may have on our business or financial condition. We may be required to make significant expenditures to comply with governmental laws and regulations.

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, and 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. While we believe we do not currently have any material environmental obligations,
exploration activities may give rise in the future to significant liabilities on our part to the government and third parties and may require us to incur substantial costs of remediation.

Additionally, we do not maintain insurance against environmental risks. As a result, any claims against us may result in liabilities we will not be able to afford resulting in the failure of our business. Failure to comply with applicable laws,
regulations, and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment, or remedial actions. Parties engaged in exploration operations may be required to compensate those suffering loss or damage by reason of the exploration activities and may have civil or criminal
fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws.

Our plans to significantly curtail our Medellin and Toronto operations may result in unforeseen expenses and/or restructuring liabilities.  Given our termination of all but essential personnel in Toronto and Medellin, there can be no assurance that
the Company will not be subject to government or civil penalties or additional severance costs should individuals and/or government agencies impacted by the Companys termination plans choose to bring legal actions against the Company or
otherwise impede our restructuring plans. Furthermore, we may not have adequate resources to resolve any unforeseen restructuring issues or costs.

Amendments to current laws, regulations and permits governing operations and activities of exploration companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in expenditures and
costs, or require abandonment or delays in developing new mining properties.

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Competition

The mineral exploration business is highly competitive. Many of our competitors have greater financial resources than we do. As a result, we may experience difficulty competing with other businesses when conducting mineral exploration activities or
in the retention of qualified personnel.  Our plans to significantly curtail our Medellin and Toronto operations may result in unforeseen expenses and/or restructuring liabilities. No assurances can be given that we will be able to compete
effectively.

Commodity Fluctuations

The availability of markets and the volatility of market prices are beyond our control and represent a significant risk. Even if commercially viable deposits of gold are found to exist on our property interests, a ready market may not exist for the
sale of the reserves. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of 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. These factors could inhibit our ability to sell gold in the event that commercially viable deposits
are found to exist.

Production Risks

We have limited prior experience in placing mineral properties into production and our ability to do so will be dependent upon us using the services of appropriately experienced personnel or entering into agreements with other major resource
companies that can provide such expertise. There can be no assurance that we will have available to us the necessary expertise when and if we place our resource properties into production.

Dependence on Key Management

The ability to identify, negotiate and consummate transactions that will benefit us is dependent upon the efforts of our management team. The loss of the services of any member of management could have a material adverse effect on us. Our future
drilling activities may require significant investment in additional personnel and capital equipment. Given the current shortage of equipment and experienced personnel within the mining industry, there can be no assurance that we will be able to
acquire the necessary resources to successfully implement our business plan.  We have historically experienced significant delays in recovering quality assay and verified assay results from our third-party analytical laboratories. The delays stem
from issues with our third-party labs quality control systems, as we have implemented a rigorous in-house quality control program that our external labs have experienced difficulty meeting. While we believe our current Quality Control programs
to be comprehensive due to our, and the industry in general, reliance on third-party labs to complete resource estimates, there can be no assurance that we will be able to complete and update our resource estimates on a timely basis.

Dependence on a Single Exploration Region

The Company is currently dependent upon one principal mineral exploration region, that being the Marmato Mountain Gold District in Colombia. The Marmato Mountain Gold District may never develop
into commercially viable ore bodies, which would have a materially adverse affect on the Companys potential mineral resource production, profitability, financial performance and results of operations.

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Exploration and Mining Risks

The business of exploring for and mining of minerals involves a high degree of risk.  Only a small proportion of the properties that are explored are ultimately developed into producing mines. At present, none of our properties have proven or
probable reserves and the proposed programs are an exploratory search for proven or probable reserves. The mining areas presently being assessed by us may not contain economically recoverable volumes of minerals or metals. Our operations may be
disrupted by a variety of risks and hazards which are beyond our control, including fires, power outages, labor disruptions, flooding, explosions, cave-ins, land slides and the inability to obtain suitable or adequate machinery, equipment or labor
and other risks involved in the operation of mines and the conduct of exploration programs. We have relied and may continue to rely upon consultants and others for operating expertise. Should economically recoverable volumes of minerals or metal be
found, substantial expenditures will be required to establish reserves through drilling, to develop metallurgical processes, and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial
benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities or having sufficient grade to justify commercial operations or that funds required for
development can be obtained on a timely basis. The economics of developing gold and other mineral properties are affected by many factors, including: the cost of operations, variations of the grade of ore mined, fluctuations in the price of gold or
other minerals produced, costs of processing equipment, the government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. In addition, the grade of
mineralization ultimately mined may differ from that indicated by drilling results and such differences could be material. Short term factors, such as the need for orderly development of ore bodies or the processing of new or different grades, may
have an adverse effect on mining operations and on our results of operations. There can be no assurance that minerals recovered in small scale laboratory tests will be duplicated in large scale tests under on-site conditions or in production scale
operations. Material changes in geological resources, grades, stripping ratios or recovery rates may affect the economic viability of projects. Depending on the price of gold or other minerals produced, which have fluctuated widely in the past, we
may determine that it is impractical to commence or continue commercial production.

Risks Inherent in Estimating Mineral Reserves and Production

No assurance can be given that any proven or probable reserves will be discovered or that any particular level of recovery of minerals will in fact be realized or that any identified reserves will ever qualify as a commercially mineable (or viable)
deposit which can be legally and economically exploited. In addition, the grade of mineralization which may ultimately be mined may differ from that indicated by drilling results and such differences could be material. Production can be affected by
such factors as permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions.

Conflicts of Interest

The Companys directors and officers may serve as directors or officers of other companies or have significant shareholdings in other resource companies and, to the extent that such other companies may
participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that such a conflict of interest
arises at a meeting of the Companys directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In accordance with the laws of the State of Delaware, the directors of
the Company are required to act honestly, in good faith and in the best interests of the Company. In determining whether or not the Company will participate in a particular program and the interest therein to be acquired by it, the directors will
primarily consider the degree of risk to which the Company may be exposed and its financial position at that time.

35

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Repatriation of Earnings

There are currently no restrictions on the repatriation from Colombia of earnings to foreign entities. However, there can be no assurance that restrictions on repatriations of earnings from Colombia will not be imposed in the future.

Currency Fluctuations

The Companys operations in Colombia make it subject to foreign currency fluctuations and such fluctuations may materially affect the Companys financial position and results. We report our financial results in U.S. dollars and incur
expenses in U.S. dollars, Canadian dollars, and Colombian pesos. As the exchange rate between the Canadian dollar and Colombian peso fluctuates against the U.S. dollar, we will experience foreign exchange gains and losses, both realized and
unrealized, and such gains and losses may be significant. We do not hedge any of our foreign currency exposure.

Enforcement of Civil Liabilities

Substantially all the assets of the Company are located outside of the Unites States, and certain of the directors and officers of the Company are resident outside of the United States. As a result, it may be difficult or impossible to enforce
judgments granted by a court in the United States against the assets of the Company or the directors and officers of the Company residing outside of the United States.

Internal Controls

Effective internal controls are necessary for us to provide reliable financials reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed. We have in the past
discovered, and may in the future discover, areas of our internal controls that need improvement. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, or lack of resources to properly
implement internal controls, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a
negative effect on the trading price of our stock.

Sarbanes Oxley

The Sarbanes-Oxley Act of 2002 was enacted in the United States in response to public concerns regarding corporate accountability in connection with recent accounting scandals. The stated goals of the Sarbanes-Oxley Act are to increase corporate
responsibility, to provide for enhanced penalties for
accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally applies to all
companies that file or are required to file periodic reports with the SEC, under the Securities Exchange Act of 1934. As a public company, we are required to comply with the Sarbanes-Oxley Act. The enactment of the Sarbanes-Oxley Act of 2002 has
resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may deter qualified individuals
from accepting these roles. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. Sarbanes Oxley 404 compliance, is a costly and time-consuming process and
there can be no assurance that we will continue to be compliant. We have limited internal and external resources to devote to maintaining SOX 404 compliance and there can be no assurance that we can maintain compliance. We continue to evaluate and
monitor developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

36

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Completion of Colombia Gold Transaction

As described earlier in this MD&A, the Company has announced the proposed acquisition of Colombia Gold. There can be no assurance that this transaction will be completed, as significant regulatory, due diligence, and legal matters are
outstanding. Furthermore, the acquisition of Colombia Gold continues to be delayed primarily due to delays by Colombia Gold in delivering certain outstanding due diligence materials.  In addition, the Board of Directors of Colombia Gold has
indicated that they intend to terminate the Letter of Intent. We have informed Colombia Gold that it does not have the ability to terminate the Letter of Intent at this time. There can be no assurance that we will have the financial and management
resources to successfully complete this transaction in the future.

Recently Issued Accounting Standards

In September, 2006 the FASB issued FAS 157  Fair Value Measurements that provides enhanced guidance for using fair value to measure assets and liabilities. FAS 157 applies whenever U.S. GAAP requires or permits measurement of assets or
liabilities at fair value. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 (further deferred for certain non financial assets and liabilities). The adoption of FAS 157 had no impact on the
Companys consolidated financial statements.

In February 2007 the FASB issued FAS 159  The Fair Value Option for Financial Assets and Financial Liabilities. FAS 159 offers an irrevocable option to carry eligible financial assets and liabilities at fair value, with the election to
be made on an instrument by instrument basis, with changes in fair value recorded in earnings. FAS 159 is expected to expand the use of fair value measurement for many companies, which is consistent with the FASBs long-term measurement
objectives for accounting for financial instruments.  FAS 159 is effective as of an entitys first fiscal year that begins after November 15, 2007 and is applied prospectively.  The adoption of FAS 159 had no impact on the Companys
consolidated financial statements.

In December 2007, the FASB issued FAS 141(R), Business Combinations, which will replace FAS 141 prospectively effective for business combinations consummated in the first annual reporting period commencing after December 15, 2008. Early
adoption is not permitted. Under FAS 141(R), business
acquisitions will be accounted for under the acquisition method, compared to the purchase method mandated by FAS 141.

37

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In December 2007, the FASB issued FAS 160  Non-Controlling Interests in Consolidated Financial Statements which is effective for periods beginning after December 15, 2008. Under FAS 160, non-controlling interests are measured at 100% of
the fair value of assets acquired and liabilities assumed. Under current standards, the non-controlling interest is measured at book value. For presentation and disclosure purposes, non-controlling interests will be classified as a separate
component of shareholders equity.  In addition, FAS 160 will change the manner in which increases/decreases in ownership percentages are accounted for.  Changes in ownership percentages will be recorded as equity transactions and no gain or
loss will be recognized as long as the parent retains control of the subsidiary. When a parent company deconsolidates a subsidiary but retains a non-controlling interest, the non-controlling interest is re-measured at fair value on the date control
is lost and a gain or loss is recognized at that time. Finally, under FAS 160, accumulated losses attributable to the non-controlling interests are no longer limited to the original carrying amount, and therefore non-controlling interests could have
a negative carrying balance.  The provisions of FAS 160 are to be applied prospectively with the exception of the presentation and disclosure, which are to be applied for all prior periods presented in the financial statements. Early adoption is not
permitted.

Share Data

At December 31, 2008, we had 104,524,486 common shares outstanding. In addition, we had outstanding:

|i)  | 5,170,000 stock options, each of which is exercisable into one common share; and              
|--- | ----------------------------------------------------------------------------------------------
|    |                                                                                               
|ii) | 25,259,673 common share purchase warrants, each of which is exercisable into one common share;

Fiscal 2008 Exploration Activities and Exploration Outlook

Marmato Properties

We have been working on the Marmato Mountain Development Project since 2005. The main focus of work since then has been to negotiate the purchase of numerous small mines that comprise the Zona Alta portion of the mountain. In the third quarter of
2008 we continued technical studies started in 2007 to carry out a scoping study scheduled for completion in the second quarter of 2008 and a pre-feasibility study scheduled for fiscal 2009, should the Company be able to secure the necessary
additional resources. We completed a preliminary resource estimate in the second quarter of 2008 based on the results of the initial drilling and underground mine sampling.

Drilling and Underground Sampling

Our original objective was to drill a cumulative total of 60,000 meters by the end of fiscal 2008.

On September 23, 2008 we announced that we had completed 46,000 meters of our drilling program on Zona Alta. Results from this drilling are being used to update the Companys resource estimate for the entire mountain. In connection with the
recent turmoil in the worldwide financial markets, the Company temporarily suspended additional drilling in order to reduce the Companys ongoing operating expenses.

38

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The underground channel sampling program at Marmato continued during 2008 and was completed before site work was temporarily suspended. The program comprised continuous saw-cut channel samples from all cross-cuts, mine faces and at regular intervals
along the backs in the numerous artisanal mines in the Zona Alta. This was carried out in conjunction with detailed surveying of the mine portals by differential global positioning system instruments and detailed surveying of the underground mines
by theodolite and total station survey instruments. This has enabled a three-dimensional model of the mines and veins to be constructed. A total of 1,572 channel samples with a total length of 2,200 meters were taken in this program, and a total of
30,263 meters of underground mine working were surveyed. A program of mine maintenance and rehabilitation was carried out for access for surveying and sampling. In addition, drill chambers were prepared underground in order to carry out diamond
drilling from underground.

Resource Estimate

We contracted Micon International Limited of Toronto, Ontario to carry out a resource estimate of the Zona Alta of Marmato based on our drilling and underground sampling results. A preliminary inferred resource estimate was announced on May 12, 2008
based on the first 12,000 meters of diamond drilling in 68 holes, 1165 meters of cross-cut samples, and 500 meters of individual underground samples. On September 2, 2008 we announced the results of our drill program.

Metallurgy

SGS Lakefield Research Limited (SGS) of Lakefield, Ontario was contracted by us to carry out preliminary scoping metallurgy test work to develop a process flow sheet for our Scoping Study. The report was received in April, 2008, a
summary of which was disclosed in our press release in April, 2008.

Geotechnical Studies

Golder Associates Ltd. (Golder) of Mississagua, Ontario was contracted by us to carry out geotechnical data collection and interpretation for open pit design, to make a preliminary selection and evaluation of sites for waste rock and
tailings disposal, and to carry out preliminary heap leach pad design. This will form part of the Scoping Study. Geotechnical logs were made of the drill core by our geologists and Golder used this and other data to carry out data analysis and pit
slope determination at a scoping study level. These studies continued until the third quarter of 2008. A preliminary report on the pit slope study was received in June, 2008, and a preliminary report on waste rock and tailings was received in
December, 2008.

Environmental Studies

An Environmental Baseline Study was completed in 2007 by LHC Consultores Ambientales (LHC) of Colombia. This study gives a full year of environmental data for incorporation into the Scoping Study. The study will form the basis for our
future environmental permits and our Social and Environmental Impact Statement (EIS). We believe that we have no current environmental liability for past practices of others and we have received approval for drilling from Corpocaldas under an
approved Environmental Management Plan. Nevertheless, we intend to meet or exceed modern global standards of environmental stewardship in the preparation of the Baseline study and subsequent EIS.

39

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Knight Piesold of Denver, Colorado were contracted to carry out validation of environmental data collection and management, and a social impact study, including independent supervision of the baseline study that was carried out by LHC. SGS was
contracted by us to carry out a preliminary and rock drainage study (ARD) on tailings and waste rock and the report was received in 2007. Collection of environmental data continued in 2008 to give a second year of baseline data.

Scoping Study

We have contracted Micon International Limited of Toronto, Ontario to carry out a Scoping Study and preliminary evaluation assessment of Marmato. This work was temporarily suspended in October 2008.

Caramanta Properties

We currently control 19,060 hectares (191 square kilometers) of exploration licenses in the Caramanta Exploration Project. This includes five new and distinctive gold targets that we defined by surface exploration and sampling in 2007. These show
that a cluster of gold targets surrounds the Marmato Mountain Development Project and form a 12 km-diameter gold district. These five targets are named Oro Fino, El Salto, Pácora, Campana, and San Bartolome. Our objective was to acquire
additional licenses to consolidate the district and to carry out initial drill testing of these targets in 2008. None of these targets has been drilled before. The program consisted of 2,000 meters of drilling on each of the targets for a total of
10,000 meters. The drill testing has been postponed for financial reasons and to focus resources on Marmato. We believe that there is good potential for discovery of additional gold deposits in the Caramanta Exploration Region in a cluster of
targets surrounding our core Marmato Mountain Development Project.

The results of a helicopter-borne magnetic and radiometric survey were received in the third quarter of 2008. Additional high resolution (1 meter) satellite imagery and derived 2 meter contour topographic map and digital elevation model (DEM) were
contracted from PhotoSat of Vancouver in the first quarter of 2008 to cover the five new gold targets identified in the Caramanta Exploration Project. This was merged with and extends our previous coverage centered on Marmato to give high resolution
imagery and topography over an area of 329 square kilometers. The satellite image requires cloud-free weather conditions and was collected in December 2008, and the final products were received in March 2009. The results of these programs will be
used to better define drill targets.

Item 7A.        Quantitative and Qualitative
Disclosures About Market Risk

As a smaller reporting company (as defined in Rule 12b-02 of
the Exchange Act), we are not required to provide the information called for by
this Item 7A.

40

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Item 8.             Financial Statements and Supplementary Data

Report of Independent Auditors

To the stockholders of Colombia Goldfields Ltd.:

We have audited the accompanying consolidated balance sheets of
Colombia Goldfields Ltd. (the Company)as at December 31, 2008 and 2007,
and the related consolidated statements of operations and comprehensive loss,
stockholders' equity (deficiency) and of cash flows for each of the years in the
two year period ended December 31, 2008. 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
audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States of America). 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 examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall  financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, these consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Colombia Goldfields Ltd. at December 31, 2008 and 2007, and the results of its
operations and its cash flows for each of the years in the two year period ended
December 31, 2008 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.

/s/ PricewaterhouseCoopers LLPChartered Accountants,
Licensed Public AccountantsToronto, CanadaMarch 27, 2009

41

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COLOMBIA GOLDFIELDS LTD.(An Exploration Stage
Company)CONSOLIDATED BALANCE SHEETS(Amounts in US
Dollars, In Thousands, Except Share and Per Share Amounts)

|                                                                              |   | December 31, |   |   | December 31, |  
|----------------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                                              |   | 2008         |   |   | 2007         |  
|                                                                              |   |              |   |   |              |  
|ASSETS                                                                        |   |              |   |   |              |  
|                                                                              |   |              |   |   |              |  
|Current                                                                       |   |              |   |   |              |  
|                                                                              |   |              |   |   |              |  
|Cash and cash equivalents                                                     | $ | -            |   | $ | 6,939        |  
|Prepaid expenses and deposits                                                 |   | 85           |   |   | 579          |  
|Prepaid consulting fees                                                       |   | -            |   |   | 367          |  
|                                                                              |   | 85           |   |   | 7,885        |  
|                                                                              |   |              |   |   |              |  
|Non Current                                                                   |   |              |   |   |              |  
|                                                                              |   |              |   |   |              |  
|Mineral and exploration properties and rights (Note 4)                        |   | 25,758       |   |   | 65,377       |  
|Property and equipment, net of accumulated amortization
      (Note 5)        |   | 283          |   |   | 1,257        |  
|                                                                              | $ | 26,126       |   | $ | 74,519       |  
|                                                                              |   |              |   |   |              |  
|LIABILITIES                                                                   |   |              |   |   |              |  
|                                                                              |   |              |   |   |              |  
|Current                                                                       |   |              |   |   |              |  
|                                                                              |   |              |   |   |              |  
|Bank indebtedness (Note 5)                                                    | $ | 200          |   | $ | -            |  
|Accounts payable and accrued liabilities                                      |   | 8,452        |   |   | 2,818        |  
|Mineral property purchase obligations (Notes 4 and 7)                         |   | 4,957        |   |   | 8,747        |  
|Related party advances (Note 8)                                               |   | 2,875        |   |   | -            |  
|Short-term
      promissory note (Notes 8 and 15)                             |   | 2,666        |   |   | -            |  
|                                                                              |   | 19,150       |   |   | 11,565       |  
|Non-current                                                                   |   |              |   |   |              |  
|                                                                              |   |              |   |   |              |  
|Deferred income
      tax liability (Notes 4 and 9)                           |   | -            |   |   | 11,868       |  
|                                                                              |   | 19,150       |   |   | 23,433       |  
|                                                                              |   |              |   |   |              |  
|STOCKHOLDERS EQUITY                                                          |   |              |   |   |              |  
|                                                                              |   |              |   |   |              |  
|Common stock (Note 6)                                                         |   |              |   |   |              |  
|Authorized:                                                                   |   |              |   |   |              |  
|200,000,000
      common shares, $0.00001 par value                           |   |              |   |   |              |  
|Issued and outstanding:                                                       |   | 1            |   |   | 1            |  
|104,524,486
      common shares (December 31, 2007: 86,590,075 common shares) |   |              |   |   |              |  
|                                                                              |   |              |   |   |              |  
|Additional
      paid-in capital (Note 6)                                     |   | 89,577       |   |   | 73,490       |  
|                                                                              |   | 89,578       |   |   | 73,491       |  
|Deficit
      accumulated during the exploration stage                        |   | (82,602      | ) |   | (22,405      | )
|                                                                              |   | 6,976        |   |   | 51,086       |  
|                                                                              | $ | 26,126       |   | $ | 74,519       |  

See accompanying Notes to Consolidated Financial
Statements

|* | Going Concern (Note 1)                   
|- | -----------------------------------------
|  |                                          
|* | Commitments and Contingencies (Note
  14)

42

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COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS(Amounts in US Dollars, In Thousands, Except Share and Per Share
Amounts)

|                                                                     |   |              |   |   |              |   |   | Cumulative   |  
|-------------------------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                                                     |   |              |   |   |              |   |   | From         |  
|                                                                     |   |              |   |   |              |   |   | Inception    |  
|                                                                     |   |              |   |   |              |   |   | (March 25,   |  
|                                                                     |   |              |   |   |              |   |   | 2003         | )
|                                                                     |   |              |   |   |              |   |   | through      |  
|                                                                     |   | Year Ended   |   |   | Year Ended   |   |   | December 31, |  
|                                                                     |   | December 31, |   |   | December 31, |   |   | 2008         |  
|                                                                     |   | 2008         |   |   | 2007         |   |   | (Unaudited)  |  
|                                                                     |   |              |   |   |              |   |   |              |  
|REVENUES                                                             | $ | -            |   | $ | -            |   | $ | -            |  
|                                                                     |   |              |   |   |              |   |   |              |  
|OPERATING EXPENSES                                                   |   |              |   |   |              |   |   |              |  
|                                                                     |   |              |   |   |              |   |   |              |  
|Mineral property exploration expenses
      (Notes 4 and 6)          |   | 16,521       |   |   | 8,102        |   |   | 29,101       |  
|General and administrative (Note 6)                                  |   | 6,463        |   |   | 6,066        |   |   | 16,870       |  
|Write-down of Mineros deposit and advance
      (Note 3)             |   | 9,296        |   |   | -            |   |   | 9,296        |  
|Write-down of mineral and exploration properties and rights (Note 4) |   | 40,545       |   |   | -            |   |   | 40,545       |  
|Foreign exchange loss (gain)                                         |   | (1,642       | ) |   | 2,085        |   |   | 432          |  
|Amortization                                                         |   | 228          |   |   | 117          |   |   | 413          |  
|Total operating expenses                                             |   | 71,411       |   |   | 16,370       |   |   | 96,657       |  
|Other income                                                         |   | (156         | ) |   | (20          | ) |   | (293         | )
|Loss before deferred income taxes                                    |   | (71,255      | ) |   | (16,350      | ) |   | (96,364      | )
|Deferred income tax recovery (Note 9)                                |   | 11,058       |   |   | 1,775        |   |   | 13,762       |  
|Net loss and comprehensive loss                                      | $ | (60,197      | ) | $ | (14,575      | ) | $ | (82,602      | )
|LOSS PER SHARE  BASIC AND DILUTED                                   | $ | (0.64        | ) | $ | (0.21        | ) |   |              |  
|WEIGHTED AVERAGE NUMBER OF                                           |   |              |   |   |              |   |   |              |  
|COMMON SHARES OUTSTANDING                                            |   |              |   |   |              |   |   |              |  
|Basic and diluted                                                    |   | 94,329,724   |   |   | 67,946,276   |   |   |              |  

See accompanying Notes to Consolidated Financial
Statements

* Going Concern (Note 1)

43

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COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY)(Amounts in US Dollars, In Thousands, Except Share and Per Share
Amounts)

|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   | Deficit           |   |   |               |  
|--------------------------------------------------- |  | ---------- |  | - | --------------- |  | - | -------- |  | - | -------- |  | - | ----------------- | - | - | ------------- | -
|                                                    |  |            |  |   | Capital/Stock   |  |   | Share    |  |   |          |  |   | Accumulated       |   |   | Total         |  
|                                                    |  | Common     |  |   | Additional      |  |   | Purchase |  |   | Special  |  |   | During the        |   |   | Stockholders |  
|                                                    |  | Shares     |  |   | Paid-in Capital |  |   | Warrants |  |   | Warrants |  |   | Exploration Stage |   |   | Equity        |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Balance, December 31, 2006                          |  | 56,036,849 |  | $ | 34,290          |  | $ | 2,750    |  | $ | -        |  | $ | (7,830            | ) | $ | 29,210        |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Year Ended December 31, 2007                        |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issue of Common stock for cash at $1.00             |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|per share less agents fee of $541 on               |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|March 21, 2007                                      |  | 9,020,000  |  |   | 8,075           |  |   | -        |  |   | -        |  |   | -                 |   |   | 8,075         |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issue of 541,200 agents warrants in                |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|connection with March 21, 2007 common               |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|stock issuance                                      |  | -          |  |   | -               |  |   | 404      |  |   | -        |  |   | -                 |   |   | 404           |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issue of common stock for consulting                |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|services                                            |  | 650,000    |  |   | 967             |  |   | -        |  |   | -        |  |   | -                 |   |   | 967           |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issue of common stock to non-                       |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|management directors                                |  | 60,000     |  |   | 73              |  |   | -        |  |   | -        |  |   | -                 |   |   | 73            |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issue of common stock for cash at CDN               |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|$1.40 per unit (common shares and                   |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|warrants) less allocated agents fee of $611        |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|on August 14, 2007                                  |  | 8,483,000  |  |   | 9,260           |  |   | -        |  |   | -        |  |   | -                 |   |   | 9,260         |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issue of 4,241,500 share purchase                   |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|warrants with August 14, 2007 common                |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|stock issuance less allocated agents fee of        |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|$59  (Note 6B)                                     |  | -          |  |   | -               |  |   | 926      |  |   | -        |  |   | -                 |   |   | 926           |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issue of 508,980 agents warrants in                |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|connection with August 14, 2007 common              |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|stock issuance  (Note 6B)                          |  | -          |  |   | -               |  |   | 308      |  |   | -        |  |   | -                 |   |   | 308           |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issuance of common stock for mineral                |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|concessions at $1.47 on September 14, 2007          |  | 3,000,000  |  |   | 4,410           |  |   | -        |  |   | -        |  |   | -                 |   |   | 4,410         |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issuance of common stock for cash at CDN            |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|$1.10 per unit (common shares and                   |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|warrants) less agents fees and issue costs         |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|of $649 on December 28, 2007                        |  | 9,165,226  |  |   | 7,581           |  |   | -        |  |   | -        |  |   | -                 |   |   | 7,581         |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issuance of 4,582, 613 share purchase               |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|warrants with December 28, 2007 common              |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|stock issuance less agents fees and issue          |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|costs of $139  (Note 6B)                           |  | -          |  |   | -               |  |   | 1,690    |  |   | -        |  |   | -                 |   |   | 1,690         |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Issuance of 595,739 agents warrants in             |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|connection with December 28, 2007                   |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|common stock issuance  (Note 6B)                   |  | -          |  |   | -               |  |   | 224      |  |   | -        |  |   | -                 |   |   | 224           |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Exercise of common stock options on May             |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|3, 2007 and November 14, 2007                       |  | 175,000    |  |   | 131             |  |   | -        |  |   | -        |  |   | -                 |   |   | 131           |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Stock based compensation                            |  | -          |  |   | 2,402           |  |   | -        |  |   | -        |  |   | -                 |   |   | 2,402         |  
|                                                    |  |            |  |   |                 |  |   |          |  |   |          |  |   |                   |   |   |               |  
|Net
      loss for the year ended December 31, 2007 |  | -          |  |   | -               |  |   | -        |  |   | -        |  |   | (14,575           | ) |   | (14,575       | )
|Balance December 31, 2007                           |  | 86,590,075 |  | $ | 67,189          |  | $ | 6,302    |  | $ | -        |  | $ | (22,405           | ) | $ | 51,086        |  
|                                                    |  |            |  |   |                 |  |   |          |  |  

See accompanying Notes to Consolidated Financial
      Statements

* Going concern (Note 1)

44

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIENCY)(Amounts in US Dollars, In Thousands, Except Share and Per Share
Amounts)

|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   | Deficit           |   |   |               |  
|--------------------------------------------------- |  | ----------- |  | - | --------------- |  | - | -------- | - | - | -------- | - | - | ----------------- | - | - | ------------- | -
|                                                    |  |             |  |   | Capital/Stock   |  |   | Share    |   |   |          |   |   | Accumulated       |   |   | Total         |  
|                                                    |  | Common      |  |   | Additional      |  |   | Purchase |   |   | Special  |   |   | During the        |   |   | Stockholders |  
|                                                    |  | Shares      |  |   | Paid-in Capital |  |   | Warrants |   |   | Warrants |   |   | Exploration Stage |   |   | Equity        |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Balance, December 31, 2007                          |  | 86,590,075  |  | $ | 67,189          |  | $ | 6,302    |   | $ | -        |   | $ | (22,405           | ) | $ | 51,086        |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Year Ended December 31, 2008                        |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Issue of 350,000 share purchase warrants            |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|with February 8, 2008 short-term                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|promissory note  (Note 6B)                         |  | -           |  |   | -               |  |   | 100      |   |   | -        |   |   | -                 |   |   | 100           |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Issue of common stock for cash at $0.85             |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|per unit (common shares and warrants)               |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|less agents fees and issue costs of $160           |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|on March 31, 2008                                   |  | 6,342,411   |  |   | 3,931           |  |   | -        |   |   | -        |   |   | -                 |   |   | 3,931         |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Issue of 6,341,411 share purchase                   |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|warrants with March 31, 2008 common                 |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|stock issuance less agents fees and issue          |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|costs of $48                                        |  | -           |  |   | -               |  |   | 1,252    |   |   | -        |   |   | -                 |   |   | 1,252         |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Expiry of 6,500,666 share purchase                  |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|warrants on April 25, 2008                          |  | -           |  |   | 2,750           |  |   | (2,750   | ) |   | -        |   |   | -                 |   |   | -             |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Issue of 11,167,000 special warrants for            |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|cash at $0.85 per special warrant less              |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|agents fees and issue costs of $934 on             |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|June 18, 2008                                       |  | -           |  |   | -               |  |   | -        |   |   | 8,558    |   |   | -                 |   |   | 8,558         |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Issuance of 125,000 common shares on                |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|August 8, 2008 in connection with first             |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|bridge loan extension                               |  | 125,000     |  |   | 50              |  |   | -        |   |   | -        |   |   | -                 |   |   | 50            |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Expiry of 4,241,500 share purchase                  |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|warrants on August 14, 2008                         |  | -           |  |   | 926             |  |   | (926     | ) |   | -        |   |   | -                 |   |   | -             |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Conversion of 11,167,000 special                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|warrants into 11,167,000 common shares              |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|and 11,167,000 share purchase warrants              |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|on September 30, 2008                               |  | 11,167,000  |  |   | 6,121           |  |   | 2,437    |   |   | (8,558   | ) |   | -                 |   |   | -             |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Issuance of 300,000 common shares on                |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|October 7, 2008 in connection with                  |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|second bridge loan extension                        |  | 300,000     |  |   | 30              |  |   | -        |   |   | -        |   |   | -                 |   |   | 30            |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Stock based compensation                            |  | -           |  |   | 2,166           |  |   | -        |   |   | -        |   |   | -                 |   |   | 2,166         |  
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Net
      loss for the year ended December 31, 2008 |  | -           |  |   | -               |  |   | -        |   |   | -        |   |   | (60,197           | ) |   | (60,197       | )
|                                                    |  |             |  |   |                 |  |   |          |   |   |          |   |   |                   |   |   |               |  
|Balance December 31, 2008                           |  | 104,524,486 |  | $ | 83,163          |  | $ | 6,415    |   | $ | -        |   | $ | (82,602           | ) | $ | 6,976         |  

See accompanying Notes to Consolidated Financial
Statements

* Going concern (Note 1)

45

---

COLOMBIA GOLDFIELDS LTD. (An Exploration
Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in
US Dollars, In Thousands, Except Share and Per Share Amounts)

|                                                                    |   |              |   |   |              |   |   | Cumulative from   |  
|------------------------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ----------------- | -
|                                                                    |   |              |   |   |              |   |   | Inception (March  |  
|                                                                    |   |              |   |   |              |   |   | 25, 2003) through |  
|                                                                    |   | Year Ended   |   |   | Year Ended   |   |   | December 31,      |  
|                                                                    |   | December 31, |   |   | December 31, |   |   | 2008              |  
|                                                                    |   | 2008         |   |   | 2007         |   |   | (Unaudited)       |  
|                                                                    |   |              |   |   |              |   |   |                   |  
|                                                                    |   |              |   |   |              |   |   |                   |  
|OPERATING ACTIVITIES:                                               |   |              |   |   |              |   |   |                   |  
|Net loss                                                            | $ | (60,197      | ) | $ | (14,575      | ) | $ | (82,602           | )
|Items not requiring cash outlay:                                    |   |              |   |   |              |   |   |                   |  
|- Consulting fees                                                   |   | -            |   |   | -            |   |   | 54                |  
|-
      Amortization                                                |   | 228          |   |   | 117          |   |   | 413               |  
|- Mineral property
      exploration                                |   | -            |   |   | -            |   |   | 250               |  
|-
      Stock based compensation                                    |   | 2,614        |   |   | 3,075        |   |   | 7,682             |  
|- Write down of
      Mineros deposit and advance                   |   | 9,296        |   |   | -            |   |   | 9,296             |  
|-
      Write down of mineral and exploration properties and rights |   | 40,545       |   |   | -            |   |   | 40,545            |  
|- Deferred income
      taxes                                       |   | (11,058      | ) |   | (1,775       | ) |   | (13,762           | )
|Changes in non-cash working capital items                           |   |              |   |   |              |   |   |                   |  
|- Prepaid expenses
      and deposits                               |   | 699          |   |   | (403         | ) |   | 120               |  
|-
      Accounts payable, accrued and other liabilities             |   | 4,407        |   |   | 3,954        |   |   | 8,790             |  
|- Due to/from related parties                                       |   | -            |   |   | -            |   |   | 5                 |  
|Net cash used in operating activities                               |   | (13,466      | ) |   | (9,607       | ) |   | (29,209           | )
|                                                                    |   |              |   |   |              |   |   |                   |  
|                                                                    |   |              |   |   |              |   |   |                   |  
|FINANCING ACTIVITIES:                                               |   |              |   |   |              |   |   |                   |  
|Issuance of equity securities, net of issue
      costs and fees    |   | 13,741       |   |   | 28,468       |   |   | 55,955            |  
|Issuance of promissory notes and related warrants                   |   | 2,500        |   |   | 9,700        |   |   | 12,200            |  
|Repayment of promissory notes                                       |   | -            |   |   | (9,700       | ) |   | (9,700            | )
|Related party advances                                              |   | 2,875        |   |   | -            |   |   | 2,875             |  
|Increase in bank indebtedness                                       |   | 200          |   |   | -            |   |   | 200               |  
|Exercise of stock
      options                                     |   | -            |   |   | 131          |   |   | 131               |  
|Net cash provided by financing activities                           |   | 19,316       |   |   | 28,599       |   |   | 61,661            |  
|                                                                    |   |              |   |   |              |   |   |                   |  
|INVESTING ACTIVITIES:                                               |   |              |   |   |              |   |   |                   |  
|Purchase of mineral exploration rights                              |   | (3,284       | ) |   | (11,982      | ) |   | (21,505           | )
|Purchase of equipment                                               |   | (5           | ) |   | (954         | ) |   | (1,426            | )
|Website development costs                                           |   | -            |   |   | -            |   |   | (21               | )
|Mineros deposit and advance                                         |   | (9,500       | ) |   | -            |   |   | (9,500            | )
|Net cash used in investing activities                               |   | (12,789      | ) |   | (12,936      | ) |   | (32,452           | )
|                                                                    |   |              |   |   |              |   |   |                   |  
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                    |   |              |   |   |              |   |   |                   |  
|                                                                    |   | (6,939       | ) |   | 6,056        |   |   | -                 |  
|                                                                    |   |              |   |   |              |   |   |                   |  
|CASH AND CASH EQUIVALENTS AT BEGINNING
      OF PERIOD              |   |              |   |   |              |   |   |                   |  
|                                                                    |   | 6,939        |   |   | 883          |   |   | -                 |  
|CASH AND CASH EQUIVALENTS AT END OF
      PERIOD                    |   |              |   |   |              |   |   |                   |  
|                                                                    | $ | -            |   | $ | 6,939        |   | $ | -                 |  
|                                                                    |   |              |   |   |              |   |   |                   |  
|SUPPLEMNTAL CASH FLOW INFORMATION                                   |   |              |   |   |              |   |   |                   |  
|                                                                    |   |              |   |   |              |   |   |                   |  
|Interest and financing fees                                         | $ | 701          |   | $ | 425          |   | $ | 1,126             |  
|Income taxes                                                        | $ | -            |   | $ | -            |   | $ | -                 |  

See accompanying Notes to Consolidated Financial Statements

* Going Concern (Note 1)

46

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

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. On July 31, 2006, the Companys jurisdiction
of incorporation was changed to the state of Delaware. The Company is currently
in the exploration stage and its operational focus is on the acquisition and
exploration of, and development of mineral properties.

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. The Company has incurred a
cumulative net loss since inception on March 25, 2003 to December 31, 2008 of
$82,602 and has no source of operating revenue. The Companys ability to meet
its obligations and continue as a going concern is dependent on securing future
funding. As a result of the recent turmoil in worldwide financial markets the
Company has been unable to raise the required capital necessary to address the
Companys current working capital deficiency at December 31, 2008. As a result,
the Company is reviewing strategic alternatives, including a sale process for
all or some of the Companys assets. The Company has canvassed a number of
qualified parties with respect to a sale or financing transaction for some or
all of the Companys assets and has also provided data room access pursuant to
confidentiality agreements to interested parties. At the present time there is
no certainty that these initiatives or any financing or sale of one or more of
the Companys projects or the Company itself will be completed.

At December 31, 2008 the Company has a significant working
capital deficiency including $19,150 in current liabilities as follows:

| | Bank indebtedness                        | $ | 200    | 
| | ---------------------------------------- | - | ------ | 
| | Accounts payable and accrued liabilities |   | 8,452  | 
| | Mineral property purchase obligations    |   | 4,957  | 
| | Related party advances                   |   | 2,875  | 
| | Short-term promissory note               |   | 2,666  | 
| |                                          | $ | 19,150 | 

The Company continues discussions with its creditors and
parties to the Companys mineral property purchase obligations to ascertain
their willingness to work with the Company to restructure its obligations. As
well, the Company has terminated all but essential personnel in both its Toronto
and Medellin offices in order to further reduce the Companys monthly operating
cash requirements. While both i) the Companys President, and ii) the Companys
Vice Chairman, and CEO are supportive of the Companys efforts to restructure
its operations given the current gold prices, their ability to provide
significant additional working capital advances has become increasingly
difficult. While they have not requested repayment of their related party
advances there can be no assurance that additional funding from these
individuals will be available on acceptable terms to the Company or at all. No
interest has been charged or requested on the working capital advances.

47

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

The Company has a short-term promissory note obligation with
Global Resource Fund (the Note). The Note is collateralized by the Companys
investment in RNC (Colombia) Ltd. and collateralized by a pledge of the
Companys investments in Compania Minera de Caldas (Caldas) and Gavilan
Minerales S.A. (Gavilan). Caldas is the Companys principal operating
subsidiary and the titleholder of the Companys mineral rights and legal mine
titles. The Note was due December 29, 2008 and the Company has been unable to
repay the Note as of the date of these financial statements. There can be no
assurance that the Companys short-term promissory note will be repaid or that
the holder will not call the loan or exercise its rights to the loans
underlying collateral interests. Subsequent to December 31, 2008 the Company
agreed to register as additional security with Global the underlying mineral
properties held by Caldas and Gavilan.

These circumstances lend substantial doubt as to the ability of
the Company to meet its obligations as they become due, and, accordingly, as to
the appropriateness of the use of accounting principles applicable to a going
concern. 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.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been
prepared in accordance with the accounting principles generally accepted in the
United States.

Use of Estimates

The preparation of financial statements in accordance 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.

48

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

Consolidation

Entities that 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., a Delaware corporation (ii) the Companys 100%
interest in RNC (Colombia) Limited (RNC), a Belize corporation and its 95%
owned subsidiary  Compania Minera De Caldas, S.A. (Caldas), a Colombia
corporation, and (iii) the Companys 94% interest in Gavilan Minerales, S.A.
(Gavilan) a Colombia corporation. Colombian law requires Colombian companies
to have at least five shareholders and, as a result, the remaining 5% of Caldas
and 6% of Gavilan is held by directors and senior management of the Company. All
significant inter-company transactions and balances have been eliminated upon
consolidation.

Since the non-controlling shareholders of RNC and Gavilan have
no obligation to contribute any additional capital and the Company is the
primary entity obligated to fund future exploratory work, no non-controlling
interest related to RNC or Gavilan has been recognized in the consolidated
statements of operations for the years ended December 31, 2008 and December 31,
2007 and in the consolidated balance sheets at December 31, 2008 and December
31, 2007. The directors and senior management of Caldas and Gavilan have
executed voting and support agreements in favour of the Company.

Mineral Property Rights Acquisition and Exploration and
Development Expenditures

Costs of acquiring mining properties are capitalized upon
acquisition. Pursuant to Statement of Financial Accounting Standards (SFAS) No.
34,Capitalization of Interest Costs, interest costs attributable to
mineral property acquisitions are also capitalized. 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 values 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 SFAS No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets.

49

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

Asset Retirement Obligations

The Company applies SFAS No. 143, Accounting for Asset
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 using a credit-adjusted risk free interest rate, of the estimated
site restoration costs with a corresponding increase to the carrying amount of
the related long-lived assets. The liability is accreted until it has been fully
incurred and the asset is amortized over the life of the related assets.
Adjustments are made 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. As at December 31, 2008 and December 31, 2007 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.

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 |       
|Buildings               | Straight line |       
|Equipment and computers | Straight line |       

The Company evaluates the carrying values of property and
equipment to determine if these costs are in excess of their net recoverable
amount whenever events or changes in circumstances indicate that the carrying
amounts may not be recoverable. The periodic evaluation of the carrying values
of property and equipment costs is based on expected future cash flows and
estimated salvage value.

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.

Comprehensive Income

In accordance with SFAS No. 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
and foreign currency translation gains and losses when a subsidiary has a
functional currency other than US dollars. For all periods presented, the
Companys financial statements do not include any of the additional elements
that affect comprehensive income. Accordingly, net loss and comprehensive loss
are identical.

50

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

Stock-Based Compensation

The Company applies 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 is measured at the fair value at the grant date using
the Black-Scholes option pricing model and a graded approach and recognized over
the expected vesting period. In the event stock options are forfeited, any
previously recognized compensation expense related to unvested and expiring
awards in excess of estimated forfeitures 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 Company provides direct stock awards to certain directors,
officers, and consultants. Direct stock awards are recorded at fair value on the
grant date, with compensation expense recognized on a straight-line basis over
the agreed upon vesting period.

Foreign Currency Translation

The Companys functional currency is the US dollar.
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 gains and losses.

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 equity-based financial instruments is not
presented where anti-dilutive. For the years ended December 31, 2008 and
December 31, 2007, 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 anti-dilutive as a result of losses
incurred in these periods.

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.

51

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

Financial Instruments

The Companys financial instruments have consisted of cash and
cash equivalents, bank indebtedness, accounts payable and accrued liabilities,
related party advances short-term promissory notes, and mineral property
purchase obligations. 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 or credit risk
arising from these financial instruments.

NOTE 3  MINEROS DEPOSIT AND ADVANCE

On January 29, 2008 the Company entered into a Share Purchase
and Sale Agreement (the Agreement) to purchase all of the issued and
outstanding shares of Mineros Nacionales S.A., (Mineros) a corporation
organized under the laws of the Republic of Colombia, for cash consideration of
$35,000. The Mineros Agreement provided that the transaction would be completed
on April 29, 2008, unless such closing date is extended by mutual agreement. The
Company provided a deposit guarantee in the amount of 4.9 billion pesos (US
$2,296), which would be payable to the vendors if the transaction was not
completed for any reason. The guarantee was collateralized by a term deposit
held by the Company in the amount of 4.9 billion pesos (US $2,296).

The Company and Mineros subsequently agreed to modify the
Agreement and extend the completion date of the Mineros transaction from April
29, 2008 to July 31, 2008. In connection with this extension, on June 19, 2008
the Company advanced $7,000, representing 20% of the $35,000 purchase price with
the balance due upon completion of the transaction.

On September 22, 2008 the Company and Mineros agreed to further
extend the completion date to October 31, 2008. Both the deposit and guarantee
were non-refundable if the transaction was not completed for any reason. On
October 31, 2008 Mineros notified the Company it was unwilling to extend the
closing of the transaction beyond October 31, 2008 and terminated the
transaction. Mineros exercised its right to the non refundable advance and term
deposit. As a result, a write-down of $9,296 with respect to these items has
been recognized in the Consolidated Statements of Operations for the year ended
December 31, 2008.

NOTE 4  MINERAL PROPERTIES AND EXPLORATION RIGHTS

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 SFAS No.
      123(R).              

52

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

During the fourth quarter of 2008, problems with the global
financial system accelerated. This impacted and continues to impact the
Companys ability to access the capital markets in order to fund the Companys
operations and, like many junior exploration companies, the decline in the
Companys market capitalization suggests that the previously recognized carrying
amounts of mineral and exploration properties and rights may not be recoverable.
At December 31, 2008 there are 92 legal and valid mining titles in the name of
Caldas. While the Company continues to hold these titles, in preparing these
consolidated financial statements, the carrying value of the Companys mineral
rights was reviewed for recoverability and impairment based on the Companys
enterprise value and feedback received from the Companys discussions with
potential strategic partners. As a result of the Companys review, a write-down
of $40,545 ($34,194 net of deferred tax recoveries of $6,351) was recognized in
the consolidated statement of operations and comprehensive loss for the year
ended December 31, 2008.

The following table summarizes the Companys mineral and
exploration properties and rights and mineral property exploration expenses for
the years ended December 31, 2008 and December 31, 2007.

|                                       |   | Mineral and    |   |   |                  | 
|-------------------------------------- | - | -------------- | - | - | ---------------- | 
|                                       |   | Exploration    |   |   | Mineral Property | 
|                                       |   | Properties and |   |   | Exploration      | 
|                                       |   | Rights         |   |   | Expenses         | 
|Balance, December 31, 2006             | $ | 43,528         |   | $ | 4,478            | 
|Additions  fiscal
      2007          |   | 21,849         |   |   | 8,102            | 
|Balance, December 31, 2007             |   | 65,377         |   |   | 12,580           | 
|Additions  fiscal 2008                |   | 926            |   |   | 16,521           | 
|Write-down of investment  fiscal 2008 |   | (40,545        | ) |   | -                | 
|Balance, December
      31, 2008       | $ | 25,758         |   | $ | 29,101           | 

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. When the Company acquires title to mineral properties either
individually or through the acquisition of subsidiaries, the conveyance of such
titles can be time consuming and subject to the interpretation of Colombian
laws. Furthermore, as disclosed in Note 7, certain mineral properties remain
subject to contractual obligations. The Company cannot give any assurance that
title to its 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. As disclosed in Note 1, the ability of
the Company to continue as a going concern and realize the carrying value of the
Companys mineral and exploration properties and rights is dependent upon a
number of external factors. Should the Company be unable to continue as a going
concern, or be able to successfully advance its discussions with its creditors,
the carrying values of the rights could be further impacted in future periods
and such adjustments may be significant.

53

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

NOTE 5  PROPERTY AND EQUIPMENT

|                              |   |       |  |   | Accumulated  |   |   | Net Book | 
|----------------------------- | - | ----- |  | - | ------------ | - | - | -------- | 
|As at December
      31, 2008 |   | Cost  |  |   | Amortization |   |   | Value    | 
|                              |   |       |  |   |              |   |   |          | 
|Equipment and computers       | $ | 243   |  | $ | (89          | ) | $ | 154      | 
|Building                      |   | 87    |  |   | (12          | ) |   | 75       | 
|Vehicles                      |   | 99    |  |   | (45          | ) |   | 54       | 
|                              |   |       |  |   |              |   |   |          | 
|Total                         | $ | 429   |  | $ | (146         | ) | $ | 283      | 
|                              |   |       |  |   |              |   |   |          | 
|                              |   |       |  |   |              |   |   |          | 
|                              |   |       |  |   | Accumulated  |   |   | Net Book | 
|As at December 31, 2007       |   | Cost  |  |   | Amortization |   |   | Value    | 
|                              |   |       |  |   |              |   |   |          | 
|Equipment and computers       | $ | 1,018 |  | $ | (84          | ) | $ | 934      | 
|Building                      |   | 87    |  |   | (6           | ) |   | 81       | 
|Vehicles                      |   | 310   |  |   | (68          | ) |   | 242      | 
|                              |   |       |  |   |              |   |   |          | 
|Total                         | $ | 1,415 |  | $ | (158         | ) | $ | 1,257    | 

The Companys bank indebtedness of $200 is collateralized by a
mortgage against the Companys office building in Medellin, Colombia.

NOTE 6  STOCKHOLDERS EQUITY

A) Common Stock and Special Warrants

|                           |   | December 31, 2008 |  |   | December 31, 2007 | 
|-------------------------- | - | ----------------- |  | - | ----------------- | 
|                           |   |                   |  |   |                   | 
|Authorized:                |   |                   |  |   |                   | 
|200,000,000 common shares, |   |                   |  |   |                   | 
|$0.00001 par value         |   |                   |  |   |                   | 
|Issued and Outstanding:    |   |                   |  |   |                   | 
|104,524,486 common         |   |                   |  |   |                   | 
|shares (December 31, 2007: |   |                   |  |   |                   | 
|86,590,075 common shares)  | $ | 1                 |  | $ | 1                 | 



|i) | During the year ended December 31, 2008 the Company
      completed the following transactions:
|-- | -----------------------------------------------------------------------------------------------



| | a) | On March 3, 2008 the Company issued 250,000 options to
      purchase the Companys common stock to an employee.
| | -- | ----------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                 
| | b) | On March 19, 2008 the Company issued 50,000 options to
      purchase the Companys common stock to a director. 

54

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

| | c) | On March 31, 2008 the Company completed a private equity
      offering of 6,342,411 Units at $0.85 per Unit to a total of 7 investors.
      Each Unit consists of one share of common stock and one warrant, for a
      total of 6,342,411 common shares and 6,342,411 warrants issued. The total
      gross proceeds raised were $5,391. Each warrant is exercisable for one
      common share at an exercise price of $1.10 and exercisable at any time up
      to two years from the issue date.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | In connection with this private equity offering, the
      Company paid as a commission $158 and incurred issue costs of
  $50.                                                                                                                                                                                                                                                                                                                                                                          

The Company has allocated the total
net proceeds from the offering of $5,183 to the underlying equity instruments
comprising the equity offering, based on the estimated relative fair value of
each instrument at the offering date as follows:

| |                                                            |   | Net Proceeds | 
| | ---------------------------------------------------------- | - | ------------ | 
| | Common shares and                                          |   |              | 
| | Additional paid in capital  common shares                 | $ | 3,931        | 
| | Additional paid in
      capital  share purchase warrants |   | 1,252        | 
| | Total net proceeds
      from private equity offering      | $ | 5,183        | 



| | d) | On June 18, 2008 the Company completed a private equity
      offering of 11,167,000 special warrants (the Special Warrants) at a
      price of $0.85 per Special Warrant to a total of 16 investors. Each
      Special Warrant was automatically exercisable for no additional
      consideration to acquire one unit (the Units) upon the earlier of a) the
      issuance of a receipt for the prospectus of the Units and b) four months
      following the closing date of the offering. Each Unit consisted of one
      common share of the Company (the Common Shares) and one common share
      purchase warrant (the Warrant). Each Warrant entitles the holder to
      acquire one Common Share at a price of $1.50 up to June 18,
2013.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | In connection with the offering, the Company paid as a
      commission $664 and incurred issue costs of $270. The Company issued
      781,690 special broker warrants (the Special Broker Warrants) to the
      agents retained for the offering, each Special Broker Warrant exercisable
      for no additional consideration into one broker warrant of the Company
      (Broker Warrants), and each Broker Warrant entitling the holder, to
      purchase one Common Share at an exercise price of $0.85 per Common Share
      up to June 28, 2010.                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | In connection with the Offering, the Company entered into
      registration rights agreements with the holders and agents pursuant to
      which the Company agreed to prepare and file with the SEC a registration
      statement to register the resale of Common Shares and the Common Shares
      issuable upon exercise of the Warrants by the purchasers in the Offering
      as well as the Common Shares issuable upon exercise of the Broker
      Warrants.                                                                                                                                                                                                                                                                                       

55

---

COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company) NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Amounts in US Dollars, In Thousands, Except
Share and Per Share Amounts)

In the event the registration
statement registering the resale of the Common Shares issued in connection with
the Offering i) did not become effective on or before October 18, 2008 and,
subject to certain exceptions; ii) ceased to be effective and available for use
any time it is required to be effective and available for use or, if, at a time
the registration statement is not available for use, Rule 144 is not available
for use for a period of five consecutive business days by holders of such
securities because of certain breaches by the Company, the Company was obligated
i) to issue to each purchaser of Special Warrants that hold Common Shares or
Warrants issued pursuant to the Special Warrants or Common Shares issued
pursuant to the Warrants a number of Common Shares and Warrants (together
referred to as Additional Units), equal to 10% of the number of Special
Warrants purchased by purchasers in the Offering and issue to the agents a
number of Broker Warrants equal to 10% of the Broker Warrants initially issued
to the agents; and is obligated ii) to issue to each such purchaser 279,175
Additional Units (subject to an aggregate maximum of 558,350 Additional Units)
for each 30 days after the four month anniversary of the closing date of the
Offering (whether or not continuous) when neither the registration statement nor
Rule 144 is available for resale of securities of the Company. In lieu of
issuing such Additional Units, the Company had the option, or if shareholder
approval was not obtained, to pay the cash equivalent of such Additional Units,
deemed to be $0.85 per Additional Unit.

On September 17, 2008 the SEC declared
the Companys registration statement effective and on September 30, 2008 the
Company requested shareholder approval for items i) and ii) above and the
Company has received these approvals from its shareholders.

| | e) | On August 6, 2008 the Company issued 100,000 options to
      purchase the Companys common stock to an employee.                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | f) | On August 8, 2008 the Company issued 125,000 common
      shares in connection with the first extension of the Companys bridge loan
      with Global Resource Fund.                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | g) | On August 13, 2008 the Company issued 100,000 options to
      purchase the Companys common stock to an employee.                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | h) | On August 14, 2008 4,241,500 Stock Purchase Warrants
      expired unexercised.                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | i) | On September 30, 2008 the Company converted 11,167,000
      Special Warrants issued in connection with the Companys June 18, 2008
      private placement into 11,167,000 common shares and 11,167,000 Common
      Share Purchase Warrants exercisable at a price of $1.50 per common share
      up to June 18, 2013. The Company also converted 781,690 Special Broker
      Warrants into 781,690 Broker Warrants exercisable at a price of $0.85 per
      common share up to June 18, 2010.

The Company has allocated the total
net proceeds from the June 18, 2008 offering of $8,558 to the underlying equity
instruments comprising the offering, based on the estimated relative fair value
of each instrument at the offering date as follows:

| |                                                                    |   | Net
      Proceeds | 
| | ------------------------------------------------------------------ | - | ------------------ | 
| | Common shares and Additional paid in capital  common
      shares | $ | 6,121              | 
| | Additional paid in
      capital  share purchase warrants         |   | 2,437              | 
| |                                                                    | $ | 8,558              | 

56

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

| | j) | On October 7, 2008 the Company issued 300,000 common
      shares in connection with the second extension of the Companys bridge
      loan with Global Resource Fund.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ii) | During the year ended December 31, 2007, the Company
      completed the following transactions:
|--- | ------------------------------------------------------------------------------------------------
|    |                                                                                                 
|    | a)                                                                                              
|    |                                                                                                 
|    | b)                                                                                              
|    |                                                                                                 
|    | c)                                                                                              
|    |                                                                                                 
|    | d)                                                                                              
|    |                                                                                                 
|    | e)                                                                                              
|    |                                                                                                 
|    | f)                                                                                              
|    |                                                                                                 
|    |                                                                                                 

57

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

The Company has allocated the net
proceeds of $10,494 from the offering to the underlying equity instruments
comprising the offering, based on the estimated relative fair value of each
instrument at the closing date, as follows:

| |                                                                      |   | Net Proceeds | 
| | -------------------------------------------------------------------- | - | ------------ | 
| | Common shares and additional paid in capital-common shares           |   | 9,568        | 
| | Additional paid in
      capital-share purchase and agents warrants |   | 926          | 
| |                                                                      | $ | 10,494       | 



| | g) | On September 14, 2007 in connection with the acquisition
      of the final 10% of RNC, the Company issued 3,000,000 common shares at
      $1.47 per share to Investcol.                                                                                                                                                                                                                                                                                                                                                                                    
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | h) | On October 1, 2007 the Company issued 150,000 options to
      purchase the Companys common stock to certain consultants in exchange for
      services rendered.                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | i) | On November 8, 2007 the Company issued 1,850,000 options
      to purchase the Companys common stock to certain directors, officers and
      employees.                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | j) | On November 14, 2007 the Company issued 125,000 common
      shares pursuant to the exercise of 125,000 options for proceeds of
    $94.                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | k) | On December 28, 2007, the Company completed a private
      equity offering of 9,165,226 Units at $1.10 CDN per Unit to a total of 11
      investors. Each Unit consists of one share of common stock and one-half
      warrant, for a total of 9,165,226 common shares and 4,582,613 warrants
      issued. The total gross proceeds raised were $10,283 ($10,082 CDN). Each
      warrant is exercisable for one common share at an exercise price of $2.00
      CDN and the Agents Warrants are exercisable at any time up to December
      28, 2012.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | In connection with this private equity offering, the
      Company paid as a commission $668 ($665 CDN), incurred issue costs of
      $120, and issued additional warrants (Agents Warrants) to purchase
      595,739 shares of the Companys common stock with each Agents Warrant
      exercisable for one common share at an exercise price of $1.20 CDN. The
      Agents Warrants are exercisable at any time up to December 28,
    2009.                                                                                                      

The Company has allocated the net
proceeds from the offering of $9,495 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:

| |                                                       |   | Net Proceeds | 
| | ----------------------------------------------------- | - | ------------ | 
| | Common shares and                                     |   |              | 
| | Additional paid in capital  common shares            | $ | 7,581        | 
| | Additional paid in capital  share purchase and       |   | 1,914        | 
| | agents warrants                                      |   |              | 
| | Total net proceeds
      from private equity offering | $ | 9,495        | 

58

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

B) Fair Value Disclosures

The 4,241,500 warrants and 508,980 Agents Warrants issued in
connection with the Companys August 14, 2007 private placement, the 4,582,613
warrants and 595,739 Agents Warrants issued in connection with the Companys
December 28, 2007 private placement and the 350,000 Warrants issued in
connection with the Companys February 8, 2008 short-term promissory note
issuance are denominated in Canadian dollars while the Companys functional and
reporting currency is the U.S. Dollar. As a result, the fair value of the
warrants and Agents Warrants fluctuates based on their time and expiry and
changes in the exchange rate between the U.S. and Canadian dollar.

EITF 07-5 indicates warrants with exercise prices denominated
in a different currency than an entitys functional currency should not be
classified as equity for years beginning on or after December 15, 2008. As a
result, these instruments would be treated as derivatives and recorded as
liabilities carried at their fair value, with period to period changes in the
fair value recorded as a gain or loss in the statement of operations and
comprehensive loss. The Company expects to adopt the recommendations of EITF
07-05 on January 1, 2009 and adjust the warrants to liabilities when
required.

If the Company had recorded such instruments as liabilities at
fair value at December 31, 2008, it would have reported the following unrealized
cumulative gain:

| |                                             |   | Total  |  
| | ------------------------------------------- | - | ------ | -
| | Fair value  At Inception of instruments    | $ | 3,865  |  
| | Decrease in fair
      value of instruments |   | (3,850 | )
| | Fair value 
      December 31, 2008        | $ | 15     |  

In connection with certain of the Companys historical private
placements totalling $51,586, the Company historically committed to penalties
ranging between 1.5% and 15% of the gross proceeds received in the event the
subsequent registration statements are not declared effective by the SEC and/or
remain effective within specified periods following the closing of the
offerings. Pursuant to EITF 00-19-2 Accounting for Registration Payment
Arrangements, the Company concluded that at inception and at the balance
sheet date, payments under these commitments are not probable. As a result, no
liabilities for registration payment obligations are required to be recognized
in the consolidated balance sheets at December 31, 2008 and December 31,
2007.

59

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

C) Warrants

As at December 31, 2008, the following warrants were issued and
outstanding:

|Number of
      Warrants | Exercise Price           | Expiry Date        
|------------------------ | ------------------------ | -------------------
|390,040                  | $ 2.00 USD per share     | April 25, 2009     
|541,200                  | 1.00 USD per share       | March 22, 2010     
|508,980                  | 1.40 CDN per share       | August 14, 2010    
|4,582,613                | 2.00 CDN per share       | December 28, 2012  
|595,739                  | 1.20 CDN per share       | December 28, 2009  
|350,000                  | 1.10 CDN per share       | February 8, 2010   
|5,992,411                | 1.10 USD per share       | March 28, 2010     
|350,000                  | 1.10 USD per share       | March 31, 2010     
|11,167,000               | 1.50 USD per share       | June 18, 2013      
|781,690                  | 0.85
      USD per share | June
      18, 2010
|25,259,673               | $ 1.45 USD per share     |                    

D) Stock Options and Other Stock-Based Compensation

Stock Options

The Company maintains two Stock Incentive Plans, a 2006 Stock
Incentive Plan and a 2008 Stock Incentive Plan, (collectively, the Plans)
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 advisors and consultants to, the Company.

All stock options and rights vest over a period determined by
the Board of Directors and expire not more than ten years from the date granted.
All outstanding stock options currently vest at a rate of 25% every six months
over a period of two years, and have a life of 10 years, unless certain change
in control provisions are triggered, in which cases the Plans provide for
accelerated vesting.

The following is a summary of the Plans at December 31, 2008:

|          | Options Available for | Shares Reserved for
|--------- | --------------------- | -------------------
|          | Issue                 | Issuance           
|2006 Plan | 1,155,000             | 6,325,000          
|2008 Plan | 3,922,449             | 3,922,449          
|          | 5,077,449             | 10,247,449         

60

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

A summary of stock options granted, and exercised and
outstanding, under the Plans are as follows:

|                                           |  |            |   |   | Weighted Average | 
|------------------------------------------ |  | ---------- | - | - | ---------------- | 
|                                           |  |            |   |   | Exercise         | 
|                                           |  | Shares     |   |   | Price            | 
|                                           |  |            |   |   |                  | 
|Options outstanding at December 31, 2007   |  | 5,890,000  |   | $ | 1.30             | 
|Granted in fiscal 2008                     |  | 500,000    |   |   | 0.74             | 
|Exercised in fiscal 2008                   |  | -          |   |   | -                | 
|Forfeited and
      expired in fiscal 2008 |  | (1,220,000 | ) |   | 1.10             | 
|Options outstanding at December 31, 2008   |  | 5,170,000  |   | $ | 1.29             | 



|                                                                       |   | Fiscal 2008 |  |   | Fiscal 2007 | 
|---------------------------------------------------------------------- | - | ----------- |  | - | ----------- | 
|Weighted average fair value of options
      granted during the period | $ | 0.57        |  | $ | 1.06        | 
|Weighted average fair value of options vested during the
      period  | $ | 1.09        |  | $ | 1.12        | 
|                                                                       |   |             |  |   |             | 



|                    |  |             |  |   |          |  |  | Weighted    |  |  |             |  |   |          | 
|------------------- |  | ----------- |  | - | -------- |  |  | ----------- |  |  | ----------- |  | - | -------- | 
|                    |  |             |  |   | Weighted |  |  | Average     |  |  |             |  |   | Weighted | 
|Range of            |  |             |  |   | Average  |  |  | Remaining   |  |  |             |  |   | Average  | 
|Exercise            |  | Number      |  |   | Exercise |  |  | Contractual |  |  | Number      |  |   | Exercise | 
|Prices              |  | Outstanding |  |   | Price    |  |  | Life (yrs)  |  |  | Exercisable |  |   | Price    | 
|                    |  |             |  |   |          |  |  |             |  |  |             |  |   |          | 
|$0.42 - $1.00       |  | 400,000     |  | $ | 0.68     |  |  | 7.94        |  |  | 262,500     |  | $ | 0.75     | 
|$1.01
      - $1.90 |  | 4,770,000   |  |   | 1.34     |  |  | 8.23        |  |  | 3,465,000   |  |   | 1.35     | 
|$0.42 - $1.90       |  | 5,170,000   |  | $ | 1.29     |  |  | 8.21        |  |  | 3,727,500   |  | $ | 1.31     | 

61

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

The fair value of options granted in 2008 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 4.5%, dividend yield 0%, an
estimated average volatility of 69%, and expected term of 10 years, equal to the
full life of the options as at the grant date the Company did not expect any
material option awards to be forfeited or exercised early.

The fair value of options granted in 2007 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 4.5%, dividend yield 0%, an
estimated average volatility of 74%, and expected term of 10 years, equal to the
full life of the options as at the grant date the Company did not expect any
material option awards to be forfeited or exercised early.

Other Stock-Based Compensation

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. The shares were issued on March 22, 2007 and the Company is accounting
for this award by recognizing compensation expense ratably over twenty-four
months, commencing on the agreement date.

On January 15, 2007, the Company agreed to grant 150,000 common
shares to a consultant. The fair value of the common stock award, based on the
market price of the Companys common shares at the agreement date, was $166. The
shares were issued on March 22, 2007 and the Company accounted for this award by
recognizing compensation expense ratably over three months, commencing on the
agreement date.

On May 6, 2007, the Company granted 60,000 common shares to
non-management directors. The fair value of the common stock awards, based on
the market price of the Companys common shares at the grant date, was $73. The
Company accounted for this award by recognizing compensation expense ratably
over twelve months, commencing on the grant date.

62

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

On August 11, 2008 the Company issued 125,000 common shares to
Global Resource Fund (Global) as consideration for extending the Companys
bridge loan from July 31, 2008 to September 30, 2008. The fair value of this
common stock award was $50, based on the market price of the Companys common
shares at the issue date. The Company accounted for this award by recognizing an
expense ratably over the extension period, commencing on the grant date.

On October 7, 2008 the Company issued 300,000 common shares to
Global as consideration for extending the Companys bridge loan from September
30, 2008 to December 29, 2008. The fair value of this common stock award was
$30, based on the market price of the Companys common shares at the issue date.
The Company accounted for this award by recognizing an expense ratably over the
extension period, commencing on the grant date.

Summary of Stock-Based Compensation Expenses

The following table summarizes stock-based compensation
recorded in the consolidated statements of operations:

|                                     |   |              |  |   |              |  |   | Cumulative      |  
|------------------------------------ | - | ------------ |  | - | ------------ |  | - | --------------- | -
|                                     |   |              |  |   |              |  |   | From Inception  |  
|                                     |   |              |  |   |              |  |   | (March 25, 2003 | )
|                                     |   | Year Ended   |  |   | December     |  |   | through         |  
|                                     |   | December 31, |  |   | December 31, |  |   | December 31,    |  
|                                     |   | 2008         |  |   | 2007         |  |   | 2008            |  
|Mineral property                     |   |              |  |   |              |  |   |                 |  
|exploration expenses                 | $ | 586          |  | $ | 900          |  | $ | 1,699           |  
|General and administrative           |   | 2,028        |  |   | 2,175        |  |   | 5,983           |  
|Total stock-based
      compensation | $ | 2,614        |  | $ | 3,075        |  | $ | 7,682           |  

As at December 31, 2008, there was $397 of unrecognized
compensation cost related to unamortized stock options. (December 31, 2007:
$2,677)

NOTE 7  MINERAL PROPERTY PURCHASE OBLIGATIONS

In the normal course of business the Company enters into
contractual obligations with Colombian titleholders to acquire mineral and
exploration rights. Upon signing, typically 25% of the negotiated purchase price
is immediately due and payable with an additional 25% due when all required
documentation has been submitted to the local mining department and the final
50% due when the mining claim has been successfully transferred and registered
in the Companys name. The Company records the full contractual obligation as a
contract liability upon signing. The timing and magnitude of repayment of these
obligations will vary between periods as will cash flows related to these
obligations.

NOTE 8  SHORT TERM PROMISSORY NOTE AND RELATED PARTY
ADVANCES

On February 8, 2008 the Company entered into a $2,500
short-term promissory note with Global. One of the Companys former directors
serves as Chief Executive Officer of a company that is a participant in the note
(this Director resigned from his position on the Companys Board of Directors on
January 31, 2009). The loan, collateralized by a joint and several guarantee of
RNC (Colombia), Caldas and Gavilan, in turn secured by the Companys investment
in Caldas and Gavilan, was due and payable on or before July 31, 2008. Upon
signing, a $75 fee was paid to the note holder. The note bears interest at 12.5%
per annum, with monthly interest payments commencing February 29, 2008.

63

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

In connection with this promissory note, the Company issued
warrants to purchase 350,000 shares of the Companys common stock with each
warrant exercisable at any time up to February 8, 2010 at an exercise price of
CDN $1.10 per share. If the warrants are not exercised by the expiration date,
the lender may require the Company to repurchase the warrants for $50.

The Company has allocated the total net proceeds received of
$2,500 to the underlying instruments, based on the estimated relative fair value
of each instrument as follows:

|                                                           |   | Net Proceeds | 
|---------------------------------------------------------- | - | ------------ | 
|Short-term promissory note                                 | $ | 2,400        | 
|Additional paid in
      capital  share purchase warrants |   | 100          | 
|                                                           | $ | 2,500        | 

On August 7, 2008 Global agreed to extend repayment of the loan
until September 30, 2008 (the first extension). In return for this extension,
the Company agreed to pay Global $50 upon maturity and issued 125,000 shares of
the Companys common stock.

On October 7, 2008 Global agreed to extend repayment of the
short-term promissory note until December 29, 2008 (the second extension). In
return for this extension, the Company agreed to pay Global a further $50 and
issued to Global 300,000 shares of the Companys common stock. In connection
with this extension, the interest rate payable on the loan from the date of the
second extension was increased to 15% per annum, and the Companys commitment to
repurchase the lenders 350,000 warrants was increased from $50 to $100 in the
event the warrants expire unexercised.

Included in the $2,666 amount reflected on the consolidated
balance sheet at December 31, 2008 is outstanding principle of ($2,600,
representing the original $2,500 principal and August 7, 2008 and October 11,
2008 extension fees) and interest of ($66, representing unpaid interest for
November and December, 2008).

The Company was unable to repay the Note on December 29, 2008
and as a result, pursuant to the Notes contractual terms, Global has the right
to exercise its right to the Notes underlying security interest, being the
Companys investment in RNC (Colombia), Caldas and Gavilan. Global has not
demanded payment of the note and continues to work with the Company while the
Company reviews its strategic alternatives. In return, subsequent to year-end
the Company agreed to pledge to Global additional security in the form of the
Companys mineral exploration properties and rights held by Caldas and
Gavilan.

Certain of the Companys officers have provided working capital
advances totalling $2,875 at December 31, 2008 (December 31, 2007 - $ NIL).
These advances, which are unsecured, are non-interest bearing, and have no
specified repayment terms, have been classified as current liabilities in the
consolidated balance sheet.

64

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

NOTE 9  INCOME TAXES

The full potential benefit of net operating loss carry forwards
has not been recognized in the financial statements, since it is not 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:

The components of the Companys provision for (recovery of)
income taxes are as follows:

|a) | Components of income tax
provision:
|-- | -----------------------------------



| |                    |   | Year Ended        |   |   | Year Ended        |  
| | ------------------ | - | ----------------- | - | - | ----------------- | -
| |                    |   | December 31, 2008 |   |   | December 31, 2007 |  
| | Current: Domestic  | $ | -                 |   | $ | -                 |  
| | Foreign            |   | -                 |   |   | -                 |  
| |                    | $ | -                 |   | $ | -                 |  
| |                    |   |                   |   |   |                   |  
| |                    |   |                   |   |   |                   |  
| |                    |   | Year Ended        |   |   | Year Ended        |  
| |                    |   | December 31, 2008 |   |   | December 31, 2007 |  
| | Deferred: Domestic | $ | -                 |   | $ | -                 |  
| | Foreign            |   | (11,058           | ) |   | (1,775            | )
| |                    | $ | (11,058           | ) | $ | (1,775            | )



|b) | Income tax rate
reconciliation:
|-- | -------------------------------



| | i) | The Companys loss before deferred income tax recoveries
      is as follows:
| | -- | -----------------------------------------------------------------------------



| |          |   | Year Ended        |   |   | Year Ended        |  
| | -------- | - | ----------------- | - | - | ----------------- | -
| |          |   | December 31, 2008 |   |   | December 31, 2007 |  
| | Domestic | $ | (7,103            | ) | $ | (6,965            | )
| | Foreign  |   | (64,152           | ) |   | (9,385            | )
| |          | $ | (71,255           | ) | $ | (16,350           | )

65

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

| | ii) | 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        |   |  | Year Ended        |  
|------------------------------- |  | ----------------- | - |  | ----------------- | -
|                                |  | December 31, 2008 |   |  | December 31, 2007 |  
|                                |  |                   |   |  |                   |  
|US federal income tax rate      |  | 34.0%             |   |  | 34.0%             |  
|                                |  |                   |   |  |                   |  
|Decrease in                     |  |                   |   |  |                   |  
|Income tax rate resulting       |  |                   |   |  |                   |  
|From:                           |  |                   |   |  |                   |  
|Losses not recognized for       |  |                   |   |  |                   |  
|tax
      purposes              |  | (17.4             | ) |  | (17.0             | )
|Tax rate differences in foreign |  |                   |   |  |                   |  
|subsidiaries                    |  | (1.5              | ) |  | (2.8              | )
|Other permanent differences     |  | 0.4               |   |  | (3.3              | )
|Effective income tax rate       |  | 15.5%             |   |  | 10.9%             |  

The components of the temporary differences, which resulted in
the deferred income tax recovery, are as follows:

|c) | Components of deferred income tax
  provision:
|-- | ----------------------------------------------



|                                            |   | Year Ended        |   |   | Year Ended        |  
|------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                            |   | December 31, 2008 |   |   | December 31, 2007 |  
|Losses carried forward                      | $ | (1,686            | ) | $ | (1,928            | )
|Tax depreciation (greater than) less than   |   |                   |   |   |                   |  
|accounting depreciation                     |   | (678              | ) |   | 78                |  
|Mineral concessions                         |   | (14,573           | ) |   | -                 |  
|Foreign exchange on mineral concessions and |   |                   |   |   |                   |  
|foreign exploration costs                   |   | 810               |   |   | -                 |  
|Foreign exploration costs                   |   | (4,275            | ) |   | (1,775            | )
|                                            |   | (20,402           | ) |   | (3,625            | )
|Change in valuation allowance               |   | 9,344             |   |   | 1,850             |  
|Deferred income tax recovery                | $ | (11,058           | ) | $ | (1,775            | )



|d) | Components of deferred tax asset and
  liability:
|-- | -------------------------------------------------

The components of the temporary differences, which resulted in
deferred tax assets, are:

|                           |   | December 31, 2008 |   |   | December 31, 2007 |  
|-------------------------- | - | ----------------- | - | - | ----------------- | -
|Tax depreciation less than |   |                   |   |   |                   |  
|depreciation               | $ | 1,002             |   | $ | 324               |  
|Foreign exploration costs  |   | 6,978             |   |   |                   |  
|Losses carried forward     |   | 4,367             |   |   | 2,680             |  
|                           |   | 12,347            |   |   | 3,004             |  
|Valuation allowance        |   | (12,347           | ) |   | (3,004            | )
|Deferred tax asset         | $ | -                 |   | $ | -                 |  

66

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

|e) | The components of the temporary differences, which have
      resulted in the deferred tax liability, are:
|-- | ----------------------------------------------------------------------------------------------------------



|                                                                   |   | December 31, 2008 |  |   | December 31, 2007 |  
|------------------------------------------------------------------ | - | ----------------- |  | - | ----------------- | -
|                                                                   |   |                   |  |   |                   |  
|Tax depreciation less than Accounting
      depreciation           | $ | -                 |  | $ | -                 |  
|Tax basis less than accounting basis for mineral
      concessions |   | -                 |  |   | (14,572           | )
|Foreign exploration costs                                          |   | -                 |  |   | 2,704             |  
|Deferred tax liability                                             | $ | -                 |  | $ | (11,868           | )
|                                                                   |   |                   |  |   |                   |  

|f) | The Company has income tax losses available for carry
      forward of which expire as follows:
|-- | -----------------------------------------------------------------------------------------------

|            |   |          |  |   |         |  |   |        | 
|----------- | - | -------- |  | - | ------- |  | - | ------ | 
|Expiry Year |   | Domestic |  |   | Foreign |  |   | Total  | 
|            |   |          |  |   |         |  |   |        | 
|2023        | $ | 37       |  | $ | -       |  | $ | 37     | 
|2024        |   | 23       |  |   | -       |  |   | 23     | 
|2025        |   | 310      |  |   | -       |  |   | 310    | 
|2026        |   | 1,535    |  |   | -       |  |   | 1,535  | 
|2027        |   | 5,550    |  |   | -       |  |   | 5,550  | 
|2028        |   | 5,380    |  |   | -       |  |   | 5,380  | 
|            | $ | 12,835   |  | $ | -       |  | $ | 12,835 | 



|g) | The Company files tax returns in the United States and
      Colombia. For all jurisdictions, all years remain subject to tax authority
      examination.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 10  RELATED PARTY TRANSACTIONS

During the normal course of operations, the Company engages in
transactions with certain directors, senior officers, and shareholders of the
Company.

Related party transactions reflected within the Companys
consolidated financial statements include:

|a) | Management and consulting fees paid to certain directors,
      senior officers, and shareholders of the Company in fiscal 2008 and
      2007.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------

67

---

COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

|b) | The issuance and repayment of a short-term promissory
      note during the first quarter of fiscal 2007 year. On February 27, 2007
      the Company entered into a $3,700 promissory note between the Company and
      the Companys i) President, ii) Vice Chairman and CEO, and iii) a company
      controlled by these individuals. The loan, collateralized by the Companys
      investment in RNC, was due and payable upon closing of a planned equity
      financing, but in no case later than April 15, 2007. Upon repayment, an
      $185 loan origination fee was payable to the note holders. The note bore
      interest at 10% per annum, with monthly interest payments commencing
      February 28, 2007. In connection with the Companys March 21, 2007 private
      placement a total of $3,931 (representing the principal amount of the
      promissory note of $3,700 the loan origination fee of $185, and accrued
      interest of $46) was paid to the holders in full satisfaction of all
      amounts owing.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|c) | The issuance of a short-term promissory note during the
      second quarter of fiscal 2007. On June 6, 2007 the Company entered into a
      $3,500 promissory note between the Companys i) President, ii) Vice
      Chairman and CEO, and iii) a company controlled by these individuals. The
      loan, collaterized by the Companys investment in RNC, was due and payable
      upon the closing of a planned equity financing, but in no case later than
      August 15, 2007. Upon repayment, a $52 fee was payable to the note
      holders. The note bore interest at 10% per annum, with monthly interest
      payments commencing June 30, 2007. In connection with the Companys August
      14, 2007 private placement a total of $3,634 (representing the principal
      amount of the promissory note of $3,500, the loan origination fee of $52,
      and accrued interest of $82) was paid to the holders in full satisfaction
      of all amounts owing.                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|d) | The issuance of a short-term promissory note during the
      fourth quarter of fiscal 2007. On November 12, 2007 the Company entered
      into a $2,500 promissory note between the Company and the Companys i)
      President, ii) Vice Chairman and CEO, and iii) a company controlled by
      these individuals. The loan, collateralized by the Companys investment in
      RNC, was due and payable upon closing an equity financing, but in no case
      later than December 31, 2007. Upon repayment a $37 fee was payable to the
      note holders. The note bore interest at 10% per annum with monthly
      interest payments commencing November 30, 2007. In Connection with the
      Companys December 28, 2007 private placement, a total of $2,559
      (representing the principal amount of the promissory notes of $2,500, the
      loan origination fee of $37 and accrued interest of $22) was paid to the
      holders in full satisfaction of all amounts owing.                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|e) | The issuance of a short-term promissory note during the
      first quarter of fiscal 2008 whereby one of the Companys former directors
      serves as an executive of a company that is a participant in the note as
      disclosed in Note 8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|f) | Unsecured working capital advances provided by a Company
      controlled by i) the Companys President, and ii) the Companys Vice
      Chairman and CEO in fiscal 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

During the year ended December 31, 2008 the Company:

|a) | Paid $135 for board and committee meeting fees to
      non-management directors of the Company (year ended December 31, 2007:
      $24).          
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                     
|b) | Paid $121 in management, salary, and consulting fees to
      non-management directors of the Company (year ended December 31, 2007:
      $89).    
|   |                                                                                                                                                     
|c) | Paid $170 in management, salary, and consulting fees to
      non-management shareholders of the Company (year ended December 31, 2007:
      $302).

68

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COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

|d) | Paid $NIL for interest and administration fees on
      short-term bridge loans provided by a Company controlled by i) the
      Companys President, and ii) Vice Chairman, CEO (year ended December 31,
      2007: $425).
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Included in accounts payable and accrued liabilities at
December 31, 2008 is $333 owing to directors and senior management of the
Company. Related party advances at December 31, 2008 total $2,875.

Included in prepaid expenses and deposits at December 31, 2007
is $45 related to a director of the Company. Included in accounts payable and
accrued liabilities at December 31, 2007 is $78 owing to directors and officers
of the Company.

NOTE 11  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 12  FAIR VALUE OF FINANCIAL INSTRUMENTS

The Companys bank indebtedness is with major Colombian
financial institutions. Colombian account balances are converted to U.S. dollars
at the closing exchange rate on December 31, 2008 and accordingly are classified
within Level 1 of the fair value hierarchy. The Companys short term promissory
note was extended in the fourth quarter of 2008 based on arms lengths
negotiations with an unrelated third party. Accordingly it is classified within
Level 1 of the fair value hierarchy. The Companys related party advances are
classified within Level 2 of the fair value hierarchy. For all financial
instruments fair value is equivalent to carrying value at December 31, 2008.

NOTE 13  ACCOUNTING DEVELOPMENTS

|a) | In September, 2006 the FASB issued FAS 157  Fair
      Value Measurementsthat provides enhanced guidance for using fair
      value to measure assets and liabilities. FAS 157 applies whenever US GAAP
      requires or permits measurement of assets or liabilities at fair value.
      FAS 157 is effective for financial statements issued for fiscal years
      beginning after November 15, 2007 (further deferred for certain non
      financial assets and liabilities pursuant to FAS 157- 2). The adoption of
      FAS 157 had no impact on the Companys financial statements.                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|b) | In February 2007 the FASB issued FAS 159  The Fair
      Value Option for Financial Assets and Financial Liabilities. FAS 159
      offers an irrevocable option to carry eligible financial assets and
      liabilities at fair value, with the election to be made on an instrument
      by instrument basis, with changes in fair value recorded in earnings. FAS
      159 is expected to expand the use of fair value measurement for many
      companies, which is consistent with the FASBs long-term measurement
      objectives for accounting for financial instruments. FAS 159 is effective
      as of an entitys first fiscal year that begins after November 15, 2007
      and is applied prospectively. The adoption of FAS 159 had no impact on the
      Companys financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|c) | In December 2007, the FASB issued FAS 141(R), Business
      Combinations, which will replace FAS 141 prospectively effective for
      business combinations in the first annual reporting period after December
      15, 2008. Early adoption is not permitted. Under FAS 141(R), business
      acquisitions will be accounted for under the acquisition method,
      compared to the purchase method mandated by FAS
141.                                                                                                                                                                                                                                                                                                                                                                               

69

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COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

|d) | In December 2007, the FASB issued FAS 160 
      Non-Controlling Interests in Consolidated Financial Statementswhich is effective for periods beginning after December 15, 2008.
      Under FAS 160, non-controlling interests are measured at 100% of the fair
      value of assets acquired and liabilities assumed. Under current standards,
      the non-controlling interest is measured at book value. For presentation
      and disclosure purposes, non-controlling interests will be classified as a
      separate component of shareholders equity. FAS 160 will change the manner
      in which increases/decreases in ownership percentages are accounted for.
      Changes in ownership percentages will be recorded as equity transactions
      and no gain or loss will be recognized as long as the parent retains
      control of the subsidiary. When a parent company deconsolidates a
      subsidiary but retains a non-controlling interest, the non-controlling
      interest is re-measured at fair value on the date control is lost and a
      gain or loss is recognized at that time. Finally, under FAS 160,
      accumulated losses attributable to the non-controlling interests are no
      longer limited to the original carrying amount, and therefore
      non-controlling interests could have a negative carrying balance. The
      provisions of FAS 160 are to be applied prospectively with the exception
      of the presentation and disclosure, which are to be applied for al prior
      periods presented in the financial statements. Early adoption is not
      permitted.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 14  COMMITMENTS AND CONTINGENCIES

|i) | Caramanta Properties
|-- | --------------------
|   |                     
|   | a)                  
|   |                     
|   | b)                  
|   |                     
|   | c)                  

70

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COLOMBIA GOLDFIELDS LTD. (An Exploration Stage
Company) NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Amounts in US Dollars, In Thousands, Except Share and Per
Share Amounts)

NOTE 15  SUBSEQUENT EVENTS

As disclosed in Note 8, the Company has been unable to repay
its promissory note to Global. Global has not demanded repayment of the note and
continues to work with the Company while the Company reviews its strategic
alternatives. In return, the Company has agreed to pledge to Global additional
security in the form of the Companys mineral and exploration properties and
rights held by Caldas and Gavilan.

NOTE 16  RECLASSIFICATIONS

Certain prior period amounts have been reclassified to conform
to the current period presentation.

71

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Item 9.            Changes In and Disagreements with
Accountants on Accounting and Financial Disclosure

None.

Item 9A.        Controls and Procedures

Disclosure Controls and
Procedures

We carried out an evaluation of the
effectiveness of our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2008 (the Evaluation
Date). This evaluation was carried out under the supervision and with the
participation of our Chief Executive Officer and President. Based upon that
evaluation, our Chief Executive Officer and President concluded that our
disclosure controls and procedures were effective as of the Evaluation Date.

Disclosure controls and procedures are those controls and
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 President,
to allow timely decisions regarding required disclosure.

Management's Annual Report on Internal Control Over
Financial Reporting

The Company's management is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the
Company.

The Company's internal control over financial reporting
includes those policies and procedures that: (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the Company's assets; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that the Company's receipts and expenditures are being made only
in accordance with authorizations of its management and directors; and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company's assets that could
have a material effect on the financial statements.

Under the supervision and with the participation of the
Company's Chief Executive Officer and President, management conducted an
evaluation of the effectiveness of the Company's internal control over financial
reporting, as of the Evaluation Date, based on the framework set forth in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on its evaluation under
this framework, management concluded that the Company's internal control over
financial reporting was effective as of the Evaluation Date.

72

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This annual report does not include an attestation report of
the Company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only management's report in this annual
report.

Changes in internal control over financial
reporting

As of the Evaluation Date, there were no changes in the
Company's internal control over financial reporting that occurred during the
fiscal quarter ended December 31, 2008 that have materially affected, or that
are reasonably likely to materially affect, the Company's internal control over
financial reporting.

Limitations on the effectiveness of controls and
procedures

The Company's management, including the Chief Executive Officer
and the President, does not expect that the Company's controls and procedures
will prevent all potential error and fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met.

Item 9B.        Other Information

None

73

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PART III

Item 10.        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 directors
and executive officers, at December 31, 2008 their ages and their present
positions.

|Name                | Age | Position(s) and Office(s) Held                           
|------------------- | --- | ---------------------------------------------------------
|                    |     |                                                          
|Jonathan Berg       | 65  | Chairman and Director                                    
|J. Randall Martin   | 52  | Chief Executive Officer, Vice Chairman
      and Director
|Thomas Lough        | 58  | President                                                
|Dr. Stewart Redwood | 48  | Vice President of Exploration                            
|Thomas McGrail      | 58  | Director                                                 
|David Bikerman      | 49  | Director                                                 
|Terry Lyons         | 59  | Director                                                 
|James Verraster     | 53  | Director                                                 
|Edward Flood        | 63  | Director                                                 

Set forth below is a brief description of the background and
business experience of each of our executive officers and directors at December
31, 2008.

Jonathan Berg. On March 14, 2007, our Board of Directors
appointed Mr. Berg to serve as a member of the Board, and on December 20, 2007,
he was appointed the Non-Executive Chairman of the Board. Mr. Berg has more than
30 years' experience in finance and investments. From March 1983 to December
2004, Mr. Berg served as President, CIO, and was also the founder, of Berg
Capital Corporation, a registered investment advisor, based in NYC. Since April
2005, he has served as VP Finance of a small bio-pharmaceutical start-up, where
he oversees the various non-medical business activities of the company. He has
been involved with the start-up of several companies, acting as a consultant on
finance and corporate structure; he has assisted in the funding of early stage
companies in the fields of energy, technology, healthcare, and consumer
electronics. Prior to Berg Capital, Mr. Berg served as VP/ Portfolio Manager
with Oppenheimer Capital Corporation from September 1971 to March 1983, and with
Standard & Poor's InterCapital from May 1970 to September 1971. He holds a
B.S. from the University of California, Berkeley, and an MBA from the Wharton
School of Finance at the University of Pennsylvania.

J. Randall Martin. On March 1, 2006, our Board of
Directors appointed Mr. Martin to act as our Chief Executive Officer and as a
member of our board of directors. On October 15, 2007, Mr. Martin was also
appointed Vice Chairman of the Company. Mr. Martin served as Chairman and CEO of
RNC Gold Inc. ("RNC Gold") from May 2005 to February 2006, and served as CEO
from December 2003 to May 2005. Following its inception as a private company in
2000, he proceeded to list RNC Gold on the Toronto Stock Exchange 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. 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 has served as Chairman and a principal of RNC (Management) Limited, a privately-held mine management and
investment company, since 2003.

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Thomas Lough. On October 15, 2007, Mr. Lough was appointed as our President. Mr. Lough has extensive experience managing mines in South and Central America. He has served as President and Director of Investcol Limited since March 2006. Mr.
Lough has served as a director of RNC Gold and its predecessor companies since March 2001. He was appointed President of RNC Gold on May 13, 2005 and served in such capacity until its acquisition by Yamana Gold Inc. on February 28, 2006. From March
2001 to May 2005, Mr. Lough was a director and Vice-President, Finance of RNC Gold and its predecessor companies. Mr. Lough has been a principal of RNC (Management) Limited, a privately-held mine management and investment company since its inception
in January, 2003.

Dr. Stewart Redwood.On December 1, 2006, our Board of Directors appointed Dr. Redwood to act as Vice President of Exploration. Dr. Redwood has accumulated 26 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 1986 to 1988 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 was with Inmet Mining Corporation (formerly Minnova Inc and Metall Mining Corp) as Project Geologist and a Senior Geologist in South and Central America. This
included secondment from 1996 to 1997 to Compania Minera Antamina, Peru to work on the Antamina resource definition and feasibility study. In 2000, he worked as Senior Evaluations Geologist for AngloGold South America Ltd. on the company's mine site
and greenfields gold exploration in South America. From 2000 to May 2004, Dr. Redwood co-founded and served as the COO and director of Exploration & Discovery Latin America (Panama) Inc. ("EDLAP") to carry out gold and silver exploration in the
Dominican Republic, Central America and Peru. From August 2002 to April 2005, he was also the Chief Geologist of Minmet plc, a company conducting exploration and mining in Brazil, Sweden and Spain and the then parent company of EDLAP. He
participated in the listing on the TSX-V of GoldQuest Mining Corp. in May 2004, a company involved in gold exploration in the Dominican Republic formed by the spin-off of the EDLAPs Dominican projects from Minmet, and from May 2004 to April
2005, he was President, CEO and Director of GoldQuest. From May 2005 until joining our company, Dr. Redwood provided geological consulting to various firms. Dr. Redwood is a Fellow of the Institute of Materials, Minerals and Mining, a Fellow of the
Geological Society of London, and a Fellow of the Society of Economic Geologists.

Thomas 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. Mr. McGrail has served as a consultant to Cia
Minera de Caldas, S.A., a subsidiary of the Company, from October 2003 to July 2006 and from July 2007 to present. Mr. McGrail served as construction manager for Minero Cerro Quema from January 2002 to March 2006, where his responsibilities included
obtaining all appropriate government approvals prior to commencing mining operations and participating in the feasibility study. Mr. McGrail also acted as a consultant to Minerales de Copan from January 2002 to March 2006 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 and again from
July 2005 to November 2005. Mr. McGrail served as president and general manager of HEMCO de Nicaragua, S.A. from June 1999 to April 2001, and has served as a consultant to such company from April 2001 to present.

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 founded Bikerman Engineering & Technology Associates, Inc. in May 1997 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.

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Mr. Bikerman was a director of Megastar Development Corp. from June 2007 to May 2008, and President and CEO of Megastar from October 2007 to May 2008. Mr. Bikerman was President, China Operations for East Delta Resources Corp. from August 1, 2006 to
June 2007 and advisor to the Board from May 2006 to July 2007. He was President and CEO of Sino Silver Corp. from June 2005 through dissolution in September 2007. Mr. Bikerman served as the Manager of Mining for RNC Resources Ltd. from February 2005
until May 2006. He was Vice President and Chief Engineer for Greenstone Resources Ltd. from December 1993 to July 1996 and was responsible for technical analysis, project design, and engineering for a Central American gold project. He was Vice
President and Manager of Mining of Minas Santa Rosa, S.A. (Panama) from May 1994 to October 1996 and was a member of the Board of Minera Nicaraguense, S. A. (Nicaragua) from May 1995 to December 2006. He worked as an Associate at Behre Dolbear &
Co. from September 1989 to May 1994, an international minerals industry consultant based in New York, New York.

Mr. Bikerman holds three degrees in mining engineering. In August 1981, he earned his Bachelor of Science in Mining Engineering from the University of Pittsburgh. In May 1985, he earned his Master of Science in mining engineering from the Henry
Krumb School of Mines at Columbia University in New York. In February 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 has been the non-executive Chairman of Northgate Minerals Corporation since January 2007, Executive Chairman of Northgate
from September 2003 to January 2007 and President and CEO of Northgate from September 1993 to September 2003. He has served as Lead Director and Chairman of the Audit Committee of Canaccord Capital Inc. since June 2004, as a Director and member of
the Audit Committee of Diamonds North Resources Ltd. since October 2004, as a Director and Chairman of the Audit Committee of TTM Resources Inc. since February
2004, as a Director and member of the Audit Committee of Polaris Minerals Corporation since December 2005, as a Director and Chairman of the Governance Committee of Farallon Resources Ltd. since April 2007, as a Director and Member of the Audit
Committee of Sprott Resources Corp. since June 2005, and as a Director of B.C. Pavilion Corporation since January 2004. From September 1986 to March 2007 he served as President and Director of BC Pacific Capital Corporation (an affiliate of
Brookfield Asset Management) and a Managing Partner of Brookfield. From July 1999 to January 2002 he served as a Director of Battle Mountain Gold Company, from August 1994 to January 1998 he served as Chairman of Westmin Resources Limited,
from May 2006 to August 2006 he served as Director and member of the Audit
Committee of Skye Resources Inc. and from
March 2004 to March 2006 he served as Chairman of the Mining Association of British Columbia. After completing a Bachelor of Applied Science in Civil Engineering from the University of British Columbia, Mr. Lyons attended the University of Western
Ontario, graduating with an MBA in 1974. In 2007 he was awarded the INCO Medal for service to the mining industry from the Canadian Institute of Mining and Metallurgy.

James Verraster. On March 14, 2007, our Board of Directors appointed Mr. Verraster to serve as a member of the Board. Mr. Verraster co-founded Auramet Trading LLC, a global physical precious metals trading, merchant banking and advisory firm,
in June 2004, and has served as its CEO since its inception. Mr. Verraster has been successful in the Metals Trading and Finance Industry for 30 years. Mr. Verraster served as First Vice President with Rhode Island Hospital Trust National Bank from
December 1987 to May 1989, where he was a significant contributor to the growth and development of the 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
February 1996, Standard Bank hired Mr. Verraster to create and head up a comprehensive physical precious metals financing and physical precious metals trading business in New York. He successfully attracted talented and experienced individuals who
assisted in making Standard one of the leading banks dealing in physical precious metals and mining project finance. Mr. Verraster holds a B.Sc Degree in Accounting from Bryant University in Rhode Island. On January 31, 2009 Mr. Verraster tendered
his resignation from the Companys Board of Directors.

Edward Flood. On March 14, 2007, our Board of Directors appointed Mr. Flood to serve as a member of the Board. Mr. Flood has served as Managing Director, Investment Banking, Haywood Securities, UK, Limited since March, 2007. For the five
years prior to that, Mr. Flood served on the board of directors of a
number of companies. He served as a director of South Gabi Energy since 2003, Alexco Resource Corp. since 2006 and Diamond Fields International Ltd. since 2007. He resigned from the boards of Alexco Resource Corp. and Diamond Fields International
Ltd. in July of 2008. Mr. Flood was also the President of Ivanhoe Mines Ltd. from its inception in 1994 until 1999, and has been a member of its board of directors since its inception. 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, California, from 1992 to 1994. 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. Mr. Flood holds a
bachelor's degree and a master's degree in Geology.

76

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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.

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.

Audit and Governance Committee

The members of the Audit and Governance Committee are James Verraster, Jonathan Berg, and Terry Lyons. Mr. Lyons is independent and Mr. Berg and Mr. Verraster are non-independent as independence is defined in connection with audit committee
membership in the listing standards applicable to companies listed on the American Stock Exchange. The Board of Directors determined that Mr. Berg is non-independent because during fiscal 2007 and fiscal 2008, the Company retained Jackson Strategic
Inc., a company of which Mr. Berg is a shareholder and principal, to provide financial advising services to the Company. The Company's agreement with Jackson Strategic Inc. is effective October 1, 2007 and provides for a monthly fee of $5,000.
The Board of Directors determined that Mr. Verraster is non-independent as
Mr. Verraster is the Chief Executive Officer of Auramet Trading LLC, a participant in the Companys bridge-loan with Global Resource Fund.

77

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The Audit and Governance 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 and Governance 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.

In connection with this Annual Report, our Audit and Governance Committee:

- Met with our independent registered public accounting firm, with and without management present, to discuss the overall scope and plans for their respective audits and the results of their examinations;
- 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 with Audit Committee), as modified and supplemented, and
discussed with them matters relating to their independence.

Based on the review and discussions referred to above, the Audit and Governance Committee recommended to the Board of Directors, and the Board of Directors so resolved, that the audited financial statements be included in our Annual Report on Form
10-K for the fiscal year ended December 31, 2008 for filing with the SEC.

Audit and Governance Committee Financial Expert

Our Board of Directors determined that it has at least one audit committee financial expert serving on the Audit and Governance Committee. The Chair of the Company's Audit and Governance Committee, Mr. Terry Lyons, has been determined to be such an
audit committee financial expert and is independent as that term is defined by the listing standards applicable to companies listed on the American Stock Exchange.

The SEC has indicated that the designation of Mr. Lyons as an audit committee financial expert does not make Mr. Lyons an expert for any purpose, impose any duties, obligations or liability on Mr. Lyons that are greater than those
imposed on members of the Audit and Governance Committee and Board of Directors who do not carry this designation or affect the duties, obligations or liability of any other members of the Audit and Governance Committee or Board of Directors.

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, 2008, the
following persons have failed to file, on a timely basis, the identified reports
required by Section 16(a) of the Exchange Act during the fiscal year ended
December 31, 2008:

78

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|                      |                                                           |                              |                                        |                                                
|--------------------- | --------------------------------------------------------- | ---------------------------- | -------------------------------------- | -----------------------------------------------
|Name                  | Principal position                                        | Number of late
      reports | Transactions not
      timely reported | Known failures to
      file a required form(1)
|J. Randall Martin     | Chief Executive Officer, Vice
      Chairman and Director | 0                            | 0                                      | 0                                              
|Thomas W. Lough       | President                                                 | 0                            | 0                                      | 0                                              
|James Kopperson       | Former Chief Financial Officer                            | 0                            | 0                                      | 0                                              
|Dr. Stewart Redwood   | Vice President of Exploration                             | 0                            | 0                                      | 0                                              
|Thomas McGrail        | Director                                                  | 0                            | 0                                      | 0                                              
|David Bikerman        | Director                                                  | 0                            | 0                                      | 0                                              
|Investcol Ltd.        | 10% Owner (previous)                                      | 0                            | 0                                      | 0                                              
|Jonathan Berg         | Chairman and Director                                     | 0                            | 0                                      | 0                                              
|Terry Lyons           | Director                                                  | 0                            | 0                                      | 0                                              
|Edward Flood          | Director                                                  | 0                            | 0                                      | 0                                              
|James Verraster       | Former Director                                           | 0                            | 0                                      | 0                                              
|RNC (Management) Ltd. | 10% Owner (current)                                       | 1                            | 1                                      | 0                                              

(1)         Management has not been informed of any failures by the
persons listed to file a required form.

Code of Ethics Disclosure

We adopted a Code of Ethics for Financial Executives, which
include our principal executive 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. Our website
address is www.colombiagf.com and we will provide, upon request, a copy
of the code.

79

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Item 11.        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 2008 and 2007.

|SUMMARY
      COMPENSATION TABLE 
|---------------------------------
|Name and principal
      position
|J. Randall Martin(1)             
|CEO and Vice Chairman            
|Thomas W. Lough(2)               
|President                        
|James Kopperson                  
|(3)Former CFO                    
|Stewart Redwood (4)              
|VP of Exploration                

|(1) | Due to the Companys financial situation, the Company has
      been unable to pay Mr. Martin beyond October 15, 2008. Not included in the
      salary column of the Summary Compensation Table is $40,000 owing to Mr.
      Martin for the period October 16, 2008 to December 31, 2008.                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                              
|(2) | Due to the Companys financial situation, the Company has
      been unable to pay Mr. Lough beyond October 15, 2008. Not included in the
      salary column of the Summary Compensation Table is $33,005 owing to Mr.
      Lough for the period October 16, 2008 to December 31, 2008.                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                              
|(3) | Due to the Companys financial situation, the Company has
      been unable to pay Mr. Kopperson beyond October 15, 2008. Not included in
      the salary column is $39,743 owing to Mr. Kopperson for the period October
      16, 2008 to December 31, 2008. Mr. Kopperson tendered his resignation as
      Chief Financial Officer on November 30, 2008, effective December 31,
      2008.             
|    |                                                                                                                                                                                                                                                                                                                                                                                                              
|(4) | Not included the salary column of the Summary
      Compensation Table for fiscal 2008 is $37,500 owing to Dr. Redwood at
      December 31, 2008. In 2007 Dr. Redwood was granted 500,000 common shares
      as a stock award with a fair value of $1.83 per share at the time. Dr.
      Redwood continues to hold these shares with a fair value of $10,000 ($0.02
      per share) at December 31, 2008.

80

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|(5)                                                     | The amount of compensation for Stock Awards and Option
      Awards reflects the fair value of share- based payments under FAS
    123R
|------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------
|                                                        |                                                                                                                                        
|SUMMARY OF OUTSTANDING OPTIONS AT FISCAL
      YEAR END

|                  |  | Total     |  |  |           |  |  | Options    |   |  |             |  |   | Intrinsic Value |   |   | Fair Value of |  
|----------------- |  | --------- |  |  | --------- |  |  | ---------- | - |  | ----------- |  | - | --------------- | - | - | ------------- | -
|                  |  | Options   |  |  | Options   |  |  | Fortified/ |   |  | Options     |  |   | of Outstanding  |   |   | Outstanding   |  
|                  |  | Awarded   |  |  | Exercised |  |  | Expired    |   |  | Outstanding |  |   | Options(1       | ) |   | Options(2     | )
|J. Randall Martin |  | 800,000   |  |  | -         |  |  | -          |   |  | 800,000     |  | $ | -               |   | $ | 1,100         |  
|Thomas W. Lough   |  | 350,000   |  |  | -         |  |  | -          |   |  | 350,000     |  | $ | -               |   | $ | 700           |  
|James Kopperson   |  | 550,000   |  |  | -         |  |  | (550,000   | ) |  | -           |  | $ | -               |   | $ | -             |  
|Stewart Redwood   |  | 200,000   |  |  | -         |  |  | -          |   |  | 200,000     |  | $ | -               |   | $ | 300           |  
|                  |  | 1,900,000 |  |  | -         |  |  | (550,000   | ) |  | 1,350,000   |  | $ | -               |   | $ | 2,100         |  

|(1) | Based on the difference between the exercise price of the
      options and closing price of the Companys common shares at December 31,
      2008.              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                   
|(2) | Based on fair value as calculated under FAS 123R using
      the assumptions disclosed in the Companys December 31, 2008 consolidated
      financial statements.

Narrative Disclosure Related to the Summary Compensation
Table

We compensate our executive employees by the payment of
salaries and stock-based compensation. Where executives have served in a
consulting capacity prior to their appointment as executive employees, any cash
or stock based compensation received for serviced rendered has also been
included in the Summary Compensation Table.

(i)     Executive Agreements

We have a two year employment contract with Mr. J. Randall
Martin, our Chief Executive Officer and Vice Chairman, effective October 1,
2007. Under the contract, Mr. Martin is entitled to receive monthly compensation
of $20,000 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 to receive a
lump sum equal to 12 months monthly compensation and accelerated vesting of his
options. 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 is subject to a one
year non-competition covenant.

We have a two year consulting contract with Dr. Stewart
Redwood, our VP of Exploration, effective October 1, 2006. Under the contract,
Dr. Redwood is entitled to receive compensation at the rate of $1,000 per day
and is eligible to participate in our share compensation arrangements. In
addition, Dr. Redwood is entitled to reimbursement of all reasonable
out-of-pocket expenses incurred in the performance of his duties. We also
granted Dr. Redwood 500,000 restricted shares in fiscal 2007 pursuant to his
consulting agreement with us.

81

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We have a two year contract with Mr. Thomas Lough, our
President, effective October 15, 2007,, Mr. Lough is also the past-President and
director of Investcol Limited. We previously purchased our 100% interest in RNC
from Investcol. Under the contract, Mr. Lough is entitled to receive monthly
compensation of CDN $15,000. In addition Mr. Lough is entitled to reimbursements
of all reasonable out-of-pocket expenses incurred in the performance of his
duties. If Mr. Lough's contract is terminated without cause, he is entitled to
recover a lump sum equal to 12 months monthly compensation and accelerated
vesting of his options. Under the contract, Mr. Lough 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. Lough is subject to
a one year non-competition covenant.

(ii) Stock Option Grants and Direct Share Awards

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 our December 31, 2008 audited financial statements.

Fiscal 2008 Grants

- None

Fiscal 2007 Grants

- On March 22, 2007, we issued 500,000 shares of our common stock
to Stewart Redwood as a stock award.
- On November 8, 2007, we granted J. Randall Martin options to purchase
  300,000 shares of our common stock at the exercise price of $1.40 per share
  with an expiration date of November 8, 2017.
- On November 8, 2007, we granted Thomas Lough options to purchase 150,000
  shares of our common stock at the exercise price of $1.40 per share with an
  expiration date of November 8, 2017.
- On November 8, 2007, we granted James Kopperson options to purchase
  150,000 shares of our common stock at the exercise price of $1.40 per share
  with an expiration date of November 8, 2017.
- On November 8, 2007, we granted Stewart Redwood options to purchase
  100,000 shares of our common stock at the exercise price of $1.40 per share
  with an expiration date of November 8, 2017.

At no time during the last two fiscal years were any
outstanding options 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.

82

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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, 2008. As at December 31, 2008, the closing price of
the Company's common shares on the OTC: BB was $0.02.

|OUTSTANDING EQUITY AWARDS AT FISCAL
      YEAR-END | 
|-------------------------------------------------- | 
|OPTION AWARDS                                      | 
|Name                                               | 
|J. Randall Martin                                  | 
|                                                   | 
|Thomas Lough                                       | 
|                                                   | 
|James Kopperson(4)                                 | 
|                                                   | 
|                                                   | 
|Stewart Redwood                                    | 
|                                                   | 

|(1) | 75,000 vest and are exercisable on each of May 8, 2009
      and November 8, 2009.                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                 
|(2) | 37,500 vest and are exercisable on each of May 8, 2009,
      and November 8, 2009.                                                             
|    |                                                                                                                                                 
|(3) | 25,000 vest and are exercisable on each of May 8, 2009
      and November 8, 2009.                                                              
|    |                                                                                                                                                 
|(4) | On November 30, 2008 Mr. Kopperson tendered his
      resignation as CFO. All outstanding option awards have expired at December
      31, 2008.

83

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Compensation of Directors

The table below summarizes all compensation of our directors as
of December 31, 2008 and 2007.

DIRECTOR COMPENSATION

|Name               |  |      |  |  | Fees Earned or Paid in
      Cash($) |  |  | Stock Option Awards
      ($) |  |  | OptionAwards ($) |  |  | Non-Equity Incentive Plan
      Compensation($) |  |  | Non- Qualified Deferred
      Compensation Earnings ($) |  |  | All Other Compensation
      ($) |  |  | Total ($) | 
|------------------ |  | ---- |  |  | ------------------------------------ |  |  | ----------------------------- |  |  | ---------------- |  |  | ----------------------------------------------- |  |  | ------------------------------------------------------- |  |  | -------------------------------- |  |  | --------- | 
|Jonathan Berg(1)   |  | 2008 |  |  | 35,000                               |  |  | -                             |  |  | 31,208           |  |  | -                                               |  |  | -                                                       |  |  | 35,000                           |  |  | 101,208   | 
|                   |  | 2007 |  |  | 6,500                                |  |  | 12,100                        |  |  | 465,627          |  |  | -                                               |  |  | -                                                       |  |  | 15,000                           |  |  | 499,227   | 
|Terry Lyons(2)     |  | 2008 |  |  | 24,000                               |  |  | -                             |  |  | -                |  |  | -                                               |  |  | -                                                       |  |  | -                                |  |  | 24,000    | 
|                   |  | 2007 |  |  | 5,000                                |  |  | 12,100                        |  |  | 465,627          |  |  | -                                               |  |  | -                                                       |  |  | -                                |  |  | 482,727   | 
|James Verraster(3) |  | 2008 |  |  | 19,000                               |  |  | -                             |  |  | -                |  |  | -                                               |  |  | -                                                       |  |  | -                                |  |  | 19,000    | 
|                   |  | 2007 |  |  | 5,000                                |  |  | 12,100                        |  |  | 465,627          |  |  | -                                               |  |  | -                                                       |  |  | -                                |  |  | 482,727   | 
|Edward Flood(4)    |  | 2008 |  |  | 17,000                               |  |  | -                             |  |  | -                |  |  | -                                               |  |  | -                                                       |  |  | -                                |  |  | 17,000    | 
|                   |  | 2007 |  |  | 2,500                                |  |  | 12,100                        |  |  | 465,627          |  |  | -                                               |  |  | -                                                       |  |  | -                                |  |  | 480,227   | 
|Thomas McGrail(5)  |  | 2008 |  |  | 17,000                               |  |  | -                             |  |  | -                |  |  | -                                               |  |  | -                                                       |  |  | 66,125                           |  |  | 83,125    | 
|                   |  | 2007 |  |  | 2,000                                |  |  | 12,100                        |  |  | 267,137          |  |  | -                                               |  |  | -                                                       |  |  | 74,375                           |  |  | 355,612   | 
|David Bikerman(6)  |  | 2008 |  |  | 20,000                               |  |  | -                             |  |  | -                |  |  | -                                               |  |  | -                                                       |  |  | 23,000                           |  |  | 43,000    | 
|                   |  | 2007 |  |  | 2,500                                |  |  | 12,100                        |  |  | 267,137          |  |  | -                                               |  |  | -                                                       |  |  | -                                |  |  | 281,737   | 

|(1) | Not included in the Director Compensation Table is
      $73,000 owing to Mr. Berg at December 31, 2008 unpaid due to the Companys
      financial circumstances.                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                               
|(2) | Not included in the Director Compensation Table is
      $12,000 owing to Mr. Lyons at December 31, 2008 unpaid due to the
      Companys financial circumstances.                                                                                                           
|    |                                                                                                                                                                                                                                                                               
|(3) | Not included in the Director Compensation Table is $9,000
      owing to Mr. Verraster at December 31, 2008 unpaid due to the Companys
      financial circumstances. On January 31, 2009 Mr. Verraster tendered his
      resignation from the Companys Board of Directors.
|    |                                                                                                                                                                                                                                                                               
|(4) | Not included in the Director Compensation Table is $6,000
      owing to Mr. Flood at December 31, 2008 unpaid due to the Companys
      financial circumstances.                                                                                                            
|    |                                                                                                                                                                                                                                                                               
|(5) | Not included in the Director Compensation Table is
      $79,375 owing to Mr. McGrail at December 31, 2008 unpaid due to the
      Companys financial circumstances.                                                                                                         
|    |                                                                                                                                                                                                                                                                               
|(6) | Not included in the Director Compensation Table is $9,000
      owing to Mr. Bikerman at December 31, 2008 unpaid due to the Companys
      financial circumstances.                                                                                                         

84

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|SUMMARY OF OUTSTANDING OPTIONS
      AT FISCAL YEAR END | 
|------------------------------------------------------- | 
|                                                        | 
|Jonathan Berg                                           | 
|Terry Lyons                                             | 
|James Verraster                                         | 
|Ed Flood                                                | 
|Thomas McGrail                                          | 
|David Bikerman                                          | 
|                                                        | 

|(1) | Based on the difference between the exercise price of the
      options and closing price of the Companys common shares at December 31,
      2008. 
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                      
|(2) | Based on fair value as calculated under FAS 123R using
      the assumptions disclosed in the Companys December 31, 2008 financial
      statements.

Narrative Disclosure Related to the Director Compensation
Table

On March 19, 2008 upon the recommendation of the Compensation
Committee, the Board of Directors approved the Companys Fiscal 2008 Directors
Compensation Plan which provided for the following compensation to the Companys
non-executive Board Members:

|a) | Annual cash retainer of $15,000 for each non-executive
director, excluding the Chairman of the Board, such compensation to replace the
Companys historical 10,000 per annum direct share award policy.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                        
|b) | Per meeting fee of $1,000 for each board or committee
meeting attended.                                                                                                                                
|   |                                                                                                                                                                                                        
|c) | Annual cash retainer of $5,000 for each of the chairs of the
Audit and Governance Committee, Environmental Health and Safety Committee, and
Compensation and Nominating Committee.                     
|   |                                                                                                                                                                                                        
|d) | Monthly fee of $5,000 to the Chairman of the Board of
Directors plus an additional onetime grant of 50,000 options.                                                                                    

(i)     Consulting Fees

The amounts disclosed as All Other Compensation in the
Director Compensation table above relate to consulting fees earned by directors
for services performed during the fiscal years ended December 31, 2008 and 2007.

During the fiscal years ended December 31, 2008 and 2007, we
retained Jackson Strategic Inc. to provide financial advising services to us.
The agreement provides for a monthly fee of $5,000. Our Chairman,
Jonathan Berg, is a shareholder and principal of Jackson Strategic Inc. and, as a result, all amounts earned are included in the column titled All other Compensation, for Mr. Berg in the director compensation table above.

85

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During the fiscal years ended December 31, 2008 and 2007, we retained Thomas Ernst McGrail to provide consulting services to us on an as-needed basis at the rate of $620 per day. Consulting fees earned by Mr. McGrail are included in the column
titled All Other Compensation in the director compensation table above.

During the fiscal year ended December 31, 2008 we retained David Bikerman to provide consulting services to us on an as-needed basis. Consulting fees earned by Mr. McGrail are included in the column titled All Other Compensation in the
director compensation table above.

(ii)     Stock Awards

No stock awards were issued to members of our board of directors during the fiscal year ended December 31, 2008. On May 6, 2007 each non-executive director was granted 10,000 shares in consideration for services rendered as a member of the board for
fiscal 2007. The fair value of these awards, based on the Black-Scholes option pricing model at the grant date, has been included in the column entitled All Other Compensation in the director compensation table above.

(iii)     Stock Option Grants

Non-management directors of the Company have historically been granted between 450,000 and 500,000 options each pursuant to their appointment as directors.

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 our December 31, 2008 audited consolidated financial statements.

During the fiscal year ended December 31, 2008, we granted our directors stock options as follows:

- On March 19, 2008 we granted Jonathan Berg options to purchase 50,000 shares of our common stock at an exercise price of $0.82 with an expiration date of March 19, 2018. 12,500 vest and are exercisable on each of September 19, 2008, March 19,
2009, September 19, 2009, and March 19, 2010.

During the fiscal year ended December 31, 2007, we granted our directors stock options as follows:

- On March 14, 2007, we granted Jonathan Berg options to purchase 300,000 shares of our common stock at an exercise price of $1.18 with an expiration date of March 14, 2017. 75,000 vest and are exercisable on each of September 14, 2007, March 14,
2008, September 14, 2008, and March 14, 2009.
- On March 14, 2007, we granted Edward Flood options to purchase 300,000 shares of our common stock at an exercise price of $1.18 with an expiration date of March 14, 2017. 75,000 vest and are exercisable on each of September 14, 2007, March 14,
2008, September 14, 2008, and March 14, 2009.

86

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- On March 14, 2007, we granted Terry Lyons options to purchase 300,000 shares of our common stock at an exercise price of $1.18 with an expiration date of March 14, 2017. 75,000 vest and are exercisable on each of September 14, 2007, March 14,
2008, September 14, 2008, and March 14, 2009.
- On March 14, 2007, we granted James Verraster options to purchase 300,000 shares of our common stock at an exercise price of $1.18 with an expiration date of March 14, 2017. 75,000 vest and are exercisable on each of September 14, 2007, March
14, 2008, September 14, 2008, and March 14, 2009.
- On March 16, 2007, we granted David Bikerman options to purchase 100,000 shares of our common stock at an exercise price of $1.17 with an expiration date of March 16, 2017. 25,000 vest and are exercisable on each of September 16, 2007, March 16,
2007, September 16 2008, and March 16, 2009.
- On March 16, 2007, we granted Thomas McGrail options to purchase 100,000 shares of our common stock at an exercise price of $1.17 with an expiration date of March 16, 2017. 25,000 vest and are exercisable on each of September 16, 2007, March 16,
2008, September 16, 2008 and March 16, 2009.
- On November 8, 2007, we granted Edward Flood options to purchase 150,000 shares of our common stock at an exercise price of $1.40 with an expiration date of November 8, 2017. 37,500 vest and are exercisable on each of May 8, 2008, November 8,
2008, May 8, 2009, and November 8, 2009.
- On November 8, 2007, we granted Jonathan Berg options to purchase 150,000 shares of our common stock at an exercise price of $1.40 with an expiration date of November 8, 2017. 37,500 vest and are exercisable on each of May 8, 2008, November 8,
2008, May 8, 2009, and November 8, 2009.
- On November 8, 2007, we granted James Verraster options to purchase 150,000 shares of our common stock at an exercise price of $1.40 with an expiration date of November 8, 2017. 37,500 vest and are exercisable on each of May 8, 2008, November 8,
2008, May 8, 2009, and November 8, 2009.
- On November 8, 2007, we granted Thomas McGrail options to purchase 150,000 shares of our common stock at an exercise price of $1.40 with an expiration date of November 8, 2017. 37,500 vest and are exercisable on each of May 8, 2008, November 8,
2008, May 8, 2009, and November 8, 2009.
- On November 8, 2007, we granted David Bikerman options to purchase 150,000 shares of our common stock at an exercise price of $1.40 with an expiration date of November 8, 2017. 37,500 vest and are exercisable on each of May 8, 2008, November 8,
2008, May 8, 2009, and November 8, 2009.
- On November 8, 2007, we granted Terry Lyons options to purchase 150,000 shares of our common stock at an exercise price of $1.40 with an expiration date of November 8, 2017. 37,500 vest and are exercisable on each of May 8, 2008, November 8,
2008, May 8, 2009, and November 8, 2009.
- On November 8, 2007, we granted J. Randall Martin options to purchase 300,000 shares of our common stock at an exercise price of $1.40 with an expiration date of November 8, 2017. 75,000 vest and are exercisable on each of May 8, 2008, November 8,
2008, May 8, 2009, and November 8, 2009.

87

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**Item 12.** **Securities Authorized for
Issuance Under Equity Compensation Plans**

|Plan Category                                                |  | # Of securities to be issued upon
      exercise of outstanding options, warrants and rights |  |   | Weighted average exercise price
      of outstanding options, warrants, and rights |  |  | 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 |  | 5,170,000                                                                                    |  | $ | 1.29                                                                               |  |  | 5,077,449                                                                                                                                                | 
|Equity compensations not approved by security holders        |  | -                                                                                            |  |   | -                                                                                  |  |  | -                                                                                                                                                        | 
|Total                                                        |  | 5,170,000                                                                                    |  | $ | 1.29                                                                               |  |  | 5,077,449                                                                                                                                                | 

Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters

The following table sets forth, as of December 31, 2008, 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 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
104,524,486 shares of common stock issued and outstanding on December 31, 2008.
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.

|                                |  | Name and address of       |  |  | Amount of beneficial |  |  |                  | 
|------------------------------- |  | ------------------------- |  |  | -------------------- |  |  | ---------------- | 
|Title of class                  |  | beneficial owner (1)      |  |  | ownership (2)        |  |  | Percent of class | 
|                                |  |                           |  |  |                      |  |  |                  | 
|Executive Officers & Directors: |  |                           |  |  |                      |  | 
|                                |  |                           |  |  |                      |  |  |                  | 
|Common                          |  | J. Randall Martin
    (3) |  |  | 1,000,000 shares     |  |  | 0.96%            | 
|Common                          |  | Stewart Redwood           |  |  | 500,000 shares       |  |  | 0.48%            | 
|Common                          |  | Thomas Lough (3)          |  |  | 500,000 shares       |  |  | 0.48%            | 
|Common                          |  | Thomas McGrail            |  |  | 210,000 shares       |  |  | 0.2%             | 
|Common                          |  | David Bikerman            |  |  | 10,000 shares        |  |  | 0%               | 
|Common                          |  | Terry Lyons               |  |  | 10,000 shares        |  |  | 0%               | 
|Common                          |  | James Verraster           |  |  | 10,000 shares        |  |  | 0%               | 
|Common                          |  | Edward Flood              |  |  | 10,000 shares        |  |  | 0%               | 
|Common                          |  | Jonathan Berg             |  |  | 10,000 shares        |  |  | 0%               | 

|Total of All Directors and Executive
      Officers: |  |                          |  |  | 2,260,000 shares  |  |  | 2.1%   | 
|---------------------------------------------------- |  | ------------------------ |  |  | ----------------- |  |  | ------ | 
|                                                     |  |                          |  |  |                   |  |  |        | 
|More Than 5%
      Beneficial Owners:                |  |                          |  |  |                   |  |  |        | 
|Common                                               |  | RNC (Management) Ltd (3) |  |  | 11,565,000 shares |  |  | 11.1 % | 

88

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|(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) | For information on the options to purchase common stock
      granted to the persons listed above, please see Item 10 of this Annual
      Report on Form 10-K.                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(3) | Mr. Martin and Mr. Lough are both officers, directors and
      shareholders of RNC (Management) Ltd. Pursuant to Rule 13d-4 of the
      Securities and Exchange Act of 1934, Mr. Martin, Mr. Lough and Mr. Martin
      disclaim beneficial ownership over the shares held by RNC (Management)
      Ltd. The shares held by RNC (Management) Ltd have not been included in the
      calculation of beneficial ownership above for Mr. Martin or Mr.
    Lough.                                                     

Item 13.        Certain Relationships and Related
Transactions, and Director Independence

On February 27, 2007, we entered into a $3,700,000 promissory
note with J. Randall Martin, Thomas W. Lough and RNC (Management) Limited (a
company controlled by Mr. Martin and Mr. Lough) 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. 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. 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, a $185,000 loan
origination fee was payable to the note holders. The note bore interest at 10%
per annum, with monthly interest payments commencing February 28, 2007. In
connection with the Company's March 21, 2007 private placement, a total of
$3,931,000 (representing the principal amount of the promissory note of
$3,700,000, the loan origination fee of $185,000, and accrued interest of
$46,000) was paid to the holders in full satisfaction of all amounts owing.

On June 6, 2007, we entered into an additional promissory note
in the amount of $3,500,000 with J. Randall Martin, Thomas W. Lough and RNC
(Management) Limited 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. 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 $500,000. The
loan, collaterized by the Company's investment in RNC, was due and payable upon
the closing of a planned equity financing, but in no case later than August 15,
2007. Upon repayment, a $52,000 fee was payable to the note holders. The note
bore interest at 10% per annum, with monthly interest payments commencing June
30, 2007. In connection with the Company's August 14, 2007 private placement, a
total of $3,634,000 (representing the principal amount of the promissory note of
$3,500,000, the loan origination fee of $52,000, and accrued interest of
$82,000) was paid to the holders in full satisfaction of all amounts owing.

On November 12, 2007, the Company entered into a $2,500,000
promissory note between J. Randall Martin, Thomas W. Lough and RNC (Management)
Limited. The loan, collateralized by the Company's investment in RNC, was due and payable upon closing an equity
financing, but in no case later than December 31, 2007. Upon repayment, a
$37,000 fee was payable to the note holders. The note bore interest at 10% per
annum with monthly interest payments commencing November 30, 2007. In connection
with the Company's December 28, 2007 private placement, a total of $2,559,000
(representing the principal amount of the promissory notes of $2,500,000, the
loan origination fee of $37,000 and accrued interest of $22,000) was paid to the
holders in full satisfaction of all amounts owing.

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On February 8, 2008, we borrowed $2,500,000 from Global
Resource Fund pursuant to a promissory note. Auramet Trading, LLC (Auramet) is
a participant in the loan and one of our former directors, James Verraster,
serves as Chief Executive Officer of Auramet. The promissory note provided for a
$2,500,000 secured loan maturing on July 31, 2008. The borrowing under the
promissory note is secured by a joint and several guaranty by the Company's
subsidiaries. The guaranty is, in turn, secured by first priority pledges of the
shares of such subsidiaries held directly and indirectly by the Company. The
promissory note bore interest at a rate of 12.5% per annum, and interest
payments were due monthly on the last day of the month, commencing on February
29, 2008. In connection with this loan, the Company issued 350,000 common share
purchase warrants to the lender and paid an up-front fee to the lender equal to
3.0% of the borrowing under the promissory note. Each warrant entitles the
holder thereof to purchase one common share at an exercise price of CDN$1.10 for
a period of 24 months from the date of closing. If the warrants were not
exercised by the expiration date, the lender may require the Company to
repurchase the warrants for $50,000.

The loan was extended on two occasions to December 28, 2008
with the Company issuing a total of 425,000 common shares for these extensions
and both the interest rate was increased to 15% and the purchase obligation was
increased to $100,000. Subsequent to December 31, 2008 we agreed to grant Global
additional security in the form of a pledge of the mineral rights held by Caldas
and Gavilan.

At December 31, 2008 we have outstanding unsecured working
capital advances totaling $2,875,000 from RNC (Management) Limited. The advances
are non-interest bearing and have no specified repayment terms.

Director Independence

Each of David Bikerman and Terry Lyons are independent
directors as such term is defined in the listing standards applicable to
companies listed on the American Stock Exchange and Thomas McGrail, Jonathan
Berg, and James Verraster are non-independent. In addition, one of the members
of our Audit and Governance Committee, Terry Lyons, is independent, and two
members, Jonathan Berg, and Jim Verraster are non-independent, as independence
is defined in connection with audit committee membership in the listing
standards applicable to companies listed on the American Stock Exchange.

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-Q, the audit of our annual
consolidated financial statements for the fiscal years ended December 31, 2008
and December 31, 2007, and various consents related to registration statement
filings during fiscal 2008 were $258,423 and $249,604, respectively.

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Audit-Related Fees

Our auditor billed $ 0 for the fiscal years ended December 31,
2008 and $0 for the fiscal year ended December 31, 2007 in 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, 2008 and 2007.

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, 2008 and 2007 were $0 and
$10,000 respectively.

Audit and Governance Committee Policies

The Audit and Governance Committee reviews and approves audit
and permissible non-audit services performed by our independent auditors, as
well as the fees charged for such services. In its review of any non-audit
service fees and the appointment of its independent auditors, the Audit and
Governance Committee considers whether the provision of such services is
compatible with maintaining the auditors' independence.

Item 15.         Exhibits and Financial Statement Schedules

Exhibits

The exhibits listed in the accompanying Exhibit Index are filed
as part of this Annual Report on Form 10-K.

Financial Statements and
Supplementary Data

The financial statements and schedules in Item 8 are filed as
part of this Annual Report on Form 10-K.

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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
       J. Randall
Martin        Chief Executive Officer and
Vice Chairman       March 27, 2009

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/ T.W. Lough                                   
|--- | ------------------------------------------ | --- | -------------------------------------------------
|    | J. Randall Martin                          |     | Thomas Lough                                     
|    | Chief Executive Officer, Vice Chairman and |     | President                                        
|    | Director                                   |     | (President and Principal Financial
      Officer)
|    | (Principal Executive Officer)              |     | March 27, 2009                                   
|    | March 27, 2009                             |     |                                                  
|    |                                            |     |                                                  
|By: | /s/ Jonathan Berg                          | By: | /s/ David Bikerman                               
|    | Jonathan Berg                              |     | David Bikerman                                   
|    | Director                                   |     | Director                                         
|    | March 27, 2009                             |     | March 27, 2009                                   
|    |                                            |     |                                                  
|By: | /s/ Edward Flood                           | By: | /s/ Terry Lyons                                  
|    | Edward Flood                               |     | Terry Lyons                                      
|    | Director                                   |     | Director                                         
|    | March 27, 2009                             |     | March 27, 2009                                   
|    |                                            |     |                                                  

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EXHIBIT INDEX

|Exhibit No. | Document Description                                                                                                                                                                                     
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         | RNC Stock Purchase Agreement
      (incorporated by reference to Exhibit 2.1 to our Current Report on Form
      8-K filed on January 13, 2006)                                                          
|3.1         | Articles of Incorporation, as amended
      (incorporated by reference to Exhibit 3.1 to our Registration Statement on
      Form SB-2 filed on July 28, 2006)                                           
|3.2         | By-laws, as amended
      (incorporated by reference to Exhibit 3.2 to our Registration Statement on
      Form SB-2 filed on July 28, 2006)                                                             
|4.1         | Form of Indenture relating to Senior Debt
      Securities of the Company (incorporated by reference to Exhibit 4.5 to our
      Registration Statement on Form S-3 filed on January 8, 2008)            
|4.2         | Form of Indenture relating to
      Subordinated Debt Securities of the Company (incorporated by reference to
      Exhibit 4.6 to our Registration Statement on Form S-3 filed on January 8,
      2008)
|10.1        | Consulting Agreement with Stewart Redwood
      (incorporated by reference to Exhibit 10.1 to our Annual Report on Form
      10-KSB filed on March 30, 2007)                                            
|10.2        | Assignment Agreement with
      Investcol Limited (incorporated by reference to Exhibit 10.1 to our
      Current Report on Form 8-K filed on September 28, 2005)                                        
|10.3        | Agreement with Investcol Limited (incorporated
      by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on
      September 28, 2005)                                                   
|10.4        | Employment Contract with J.
      Randall Martin (incorporated by reference to Exhibit 10.1 to our Current
      Report on Form 8-K filed on October 5, 2007)                                            
|10.5        | Master Agreement for Acquisition of properties
      in Caramanta (incorporated by reference to Exhibit 10.1 to our Current
      Report on Form 8-K filed on September 28, 2006)                        
|10.6        | First Amendment to RNC Stock
      Purchase Agreement (incorporated by reference to Exhibit 10.1 to our
      Current Report on Form 8-K filed on August 25, 2006)                                       
|10.7        | Second Amendment to RNC Stock Purchase
      Agreement (incorporated by reference to Exhibit 10.1 to our Current Report
      on Form 8-K filed on December 15, 2006)                                    
|10.8        | Third Amendment to RNC Stock
      Purchase Agreement (incorporated by reference to Exhibit 10.1 to our
      Current Report on Form 8-K filed on August 24, 2007)                                       
|10.9        | Promissory Note to Global Resource Fund
      (incorporated by reference to Exhibits 10.1, 10.1(a), 10.1(b) and 10.1(c)
      to our Current Report on Form 8-K filed on February 13, 2008)              
|10.10       | Amendment to Promissory Note to
      Global Resource Fund (incorporated by reference to Exhibits 10.1 to our
      Current Report on Form 8-K filed on August 8, 2008)                                  
|10.11       | Amendment to Promissory Note to Global Resource
      Fund (incorporated by reference to Exhibits 10.1 to our Current Report on
      Form 8-K filed on October 8, 2008)                                 
|14.1        | Code of Ethics (incorporated by
      reference to Exhibit 14.1 to our Annual Report on Form 10-KSB filed on
      April 16, 2005)                                                                       
|16.1        | Letter from Vellmer & Chang to the SEC
      (incorporated by reference to Exhibit 16.1 to our Current Report on Form
      8-K filed on August 11, 2006)                                                
|21.1        | List of Companys subsidiaries
      (incorporated by reference to Exhibit 21.1 to our Annual Report on Form
      10-KSB filed on March 20, 2008).                                                      
|23.1 *      | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                                   
|31.1 *      | Certification of Chief
      Executive Officer and Vice Chairman pursuant to Rule 13a-15(e) or 15d-
      15(e), as enacted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.             

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|31.2 * | Certification of President and
      Principal Financial Officer pursuant to Rule 13a-15(e) or 15d-15(e), as
      enacted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|32.1 * | Certification of Chief Executive Officer and
      Vice Chairman pursuant to 18 U.S.C. Section 1350, as enacted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.     
|32.2 * | Certification of President and
      Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as enacted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     
|       |                                                                                                                                                                                      
|*      | Filed herewith.                                                                                                                                                                      

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