UNITED
STATES


SECURITIES AND
EXCHANGE COMMISSION


Washington,
D.C. 20549




Form
10-Q




(Mark
One)




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


OF
1934




For the
quarterly period ended August
31, 2009 or




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




For the
transition period from ________________ to __________________




Commission
File Number 000-53142




CHANCERY RESOURCES,
INC.


(Exact
name of registrant as specified in its charter)





Nevada
                  26-4567259(State
      or other jurisdiction of incorporation or organization)
                  (IRS
      Employer Identification
No.)





4400 Westgrove Drive, Suite 104, Dallas,
      Texas
                  75001(Address
      of principal executive offices)
                  (Zip
      Code)





972-655-9870


(Registrant’s
telephone number, including area code)




N/A


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




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


x YES  ̈ NO




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





Large accelerated filer ̈
            
            Accelerated filer ̈Non-accelerated filer ̈
            (Do not check if a smaller reporting company)
            Smaller reporting companyx




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


 ̈ YES x NO




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




Check
whether the registrant has filed all documents and reports required to be filed
by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.


 ̈ YES  ̈ NO




APPLICABLE
ONLY TO CORPORATE ISSUERS




Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date. 32,250,000 common shares issued and
outstanding as of October 20, 2009









Chancery
Resources, Inc.


(An
Exploration Stage Company)




August
31, 2009





IndexConsolidated
      Balance Sheets
                F–1Consolidated
      Statements of Expenses
                F–2Consolidated
      Statements of Cash Flows
                F–3Notes
      to the Consolidated Financial Statements
                F–4







Chancery
Resources, Inc.


(An
Exploration Stage Company)


Consolidated
Balance Sheets


(Unaudited)





August31,
                                              2009
                                            
                                            
                                            November30,
                                              2008ASSETSCurrent
      AssetsCash
                                            
                                            $
                                            355
                                            
                                            
                                            $
                                            1,638Prepaid
      expenses
                                            
                                            
                                            -
                                            
                                            
                                            
                                            110,471Total
      Assets
                                            
                                            $
                                            355
                                            
                                            
                                            $
                                            112,109LIABILITIES
      AND STOCKHOLDERS’ DEFICITCurrent
      LiabilitiesBank
      indebtedness
                                            
                                            $
                                            225
                                            
                                            
                                            $
                                            8,872Accounts
      payable and accrued liabilities
                                            
                                            
                                            190,275
                                            
                                            
                                            
                                            159,394Loan
      payable, less unamortized discount of $7,670 and $14,077
                                            
                                            
                                            44,917
                                            
                                            
                                            
                                            44,917Due
      to related parties
                                            
                                            
                                            54,310
                                            
                                            
                                            
                                            6,680Total
      Current Liabilities
                                            
                                            
                                            289,727
                                            
                                            
                                            
                                            219,863Loans
      payable
                                            
                                            
                                            82,330
                                            
                                            
                                            
                                            75,923Total
      Liabilities
                                            
                                            
                                            372,057
                                            
                                            
                                            
                                            295,786Commitments
      and ContingenciesStockholders’
      DeficitPreferred
      stock: 2,500,000,000 shares authorized, $0.00001 par value; no shares
      issued and outstanding (November 30, 2008 – None issued)
                                            
                                            
                                            –
                                            
                                            
                                            
                                            –Series
      A convertible preferred stock: 40,000,000 shares authorized, $0.00001 par
      value; 31,000,000 shares issued and outstanding
                                            
                                            
                                            310
                                            
                                            
                                            
                                            310Common
      stock: 2,500,000,000 shares authorized, $0.00001 par value; 32,250,000
      shares issued and outstanding
                                            
                                            
                                            322
                                            
                                            
                                            
                                            322Additional
      paid-in capital
                                            
                                            
                                            1,163,227
                                            
                                            
                                            
                                            1,088,418Donated
      capital
                                            
                                            
                                            18,000
                                            
                                            
                                            
                                            13,500Accumulated
      other comprehensive loss
                                            
                                            
                                            (165
                                            )
                                            
                                            
                                            –Deficit
      accumulated during the exploration stage
                                            
                                            
                                            (1,553,396
                                            )
                                            
                                            
                                            (1,286,227
                                            )Total
      Stockholders’ Deficit
                                            
                                            
                                            (371,702
                                            )
                                            
                                            
                                            (183,677
                                            )Total
      Liabilities and Stockholders’ Deficit
                                            
                                            $
                                            355
                                            
                                            
                                            $
                                            112,109





(The
Accompanying Notes are an Integral Part of These Consolidated Unaudited
Financial Statements)




F-1


Chancery
Resources, Inc.


(An
Exploration Stage Company)


Consolidated
Statements of Operations


(Unaudited)





For the
                                                Three Months
                                                Ended
                                              
                                              
                                              For the
                                                Three Months
                                                Ended
                                              
                                              
                                              For the
                                                Nine Months
                                                Ended
                                              
                                              
                                              For the
                                                Nine Months
                                                Ended
                                              
                                              
                                              Accumulated from
                                                September 12, 2006
                                                (Date of Inception)August 31,
                                              
                                              
                                              August 31,
                                              
                                              
                                              August 31,
                                              
                                              
                                              August 31,
                                              
                                              
                                              to August 31,2009
                                              
                                              
                                              2008
                                              
                                              
                                              2009
                                              
                                              
                                              2008
                                              
                                              
                                              2009ExpensesGeneral
      and administrative
                                              
                                              $
                                              38,727
                                              
                                              
                                              $
                                              28,027
                                              
                                              
                                              $
                                              57,306
                                              
                                              
                                              $
                                              63,480
                                              
                                              
                                              $
                                              187,706Consulting
      fees
                                              
                                              
                                              62,052
                                              
                                              
                                              
                                              –
                                              
                                              
                                              
                                              184,809
                                              
                                              
                                              
                                              –
                                              
                                              
                                              
                                              194,809Management
      services
                                              
                                              
                                              –
                                              
                                              
                                              
                                              1,500
                                              
                                              
                                              
                                              –
                                              
                                              
                                              
                                              4,500
                                              
                                              
                                              
                                              12,750Impairment
      of mineral property costs
                                              
                                              
                                              –
                                              
                                              
                                              
                                              70,000
                                              
                                              
                                              
                                              444
                                              
                                              
                                              
                                              120,000
                                              
                                              
                                              
                                              1,121,074Mineral
      property costs
                                              
                                              
                                              13,703
                                              
                                              
                                              
                                              –
                                              
                                              
                                              
                                              13,703
                                              
                                              
                                              
                                              –
                                              
                                              
                                              
                                              19,778Rent
                                              
                                              
                                              1,500
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              4,500
                                              
                                              
                                              
                                              1,794
                                              
                                              
                                              
                                              10,872Total
      Operating Expenses
                                              
                                              
                                              115,982
                                              
                                              
                                              
                                              99,527
                                              
                                              
                                              
                                              260,762
                                              
                                              
                                              
                                              189,774
                                              
                                              
                                              
                                              1,546,989Interest
      Expense
                                              
                                              
                                              2,151
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              6,407
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              6,407Net
      Loss
                                              
                                              
                                              (118,133
                                              )
                                              
                                              
                                              (99,527
                                              )
                                              
                                              
                                              (267,169
                                              )
                                              
                                              
                                              (189,774
                                              )
                                              
                                              
                                              (1,553,396
                                              )Net
      Loss Per Share – Basic and Diluted
                                              
                                              $
                                              (0.00
                                              )
                                              
                                              $
                                              (0.00
                                              )
                                              
                                              $
                                              (0.01
                                              )
                                              
                                              $
                                              (0.00
                                              )
                                              
                                              
                                              N/AWeighted
      Average Common Shares Outstanding
                                              
                                              
                                              32,250,000
                                              
                                              
                                              
                                              30,250,000
                                              
                                              
                                              
                                              32,250,000
                                              
                                              
                                              
                                              109,557,000
                                              
                                              
                                              
                                              N/AStatement
      of Other Comprehensive Loss:Net
      Loss
                                              
                                              
                                              (118,133
                                              )
                                              
                                              
                                              (99,527
                                              )
                                              
                                              
                                              (267,169
                                              )
                                              
                                              
                                              (189,774
                                              )
                                              
                                              
                                              (1,553,396
                                              )Foreign
      currency translation adjustment
                                              
                                              
                                              (93
                                              )
                                              
                                              
                                              –
                                              
                                              
                                              
                                              (165
                                              )
                                              
                                              
                                              –
                                              
                                              
                                              
                                              (165
                                              )Total
      Comprehensive Loss
                                              
                                              $
                                              (118,226
                                              )
                                              
                                              $
                                              (99,527
                                              )
                                              
                                              $
                                              (267,334
                                              )
                                              
                                              $
                                              (189,774
                                              )
                                              
                                              $
                                              (1,553,561
                                              )





(The
Accompanying Notes are an Integral Part of These Consolidated Unaudited
Financial Statements)


F-2


Chancery
Resources, Inc.


(An
Exploration Stage Company)


Consolidated
Statements of Cash Flows


(Unaudited)





For the
                                      Nine Months
                                      Ended
                                      August 31,
                                      2009
                                    
                                    
                                    For the
                                      Nine Months
                                      Ended
                                      August 31,
                                      2008
                                    
                                    
                                    Accumulated
                                      from
                                      September 12, 2006
                                      (Date of Inception)
      to August 31, 2009Cash
      Flows From Operating ActivitiesNet
      loss for the period
                                    
                                    $
                                    (267,169
                                    )
                                    
                                    $
                                    (189,744
                                    )
                                    
                                    $
                                    (1,553,396
                                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Donated
      services and expenses
                                    
                                    
                                    4,500
                                    
                                    
                                    
                                    4,500
                                    
                                    
                                    
                                    18,000Impairment
      of mineral property costs
                                    
                                    
                                    444
                                    
                                    
                                    
                                    120,000
                                    
                                    
                                    
                                    1,117,374Amortization
      of discount
                                    
                                    
                                    6,407
                                    
                                    
                                    
                                    
                                    
                                    
                                    9,103Share-based
      compensation
                                    
                                    
                                    184,809
                                    
                                    
                                    
                                    –
                                    
                                    
                                    
                                    194,809Changes
      in operating assets and liabilities:Prepaid
      expenses
                                    
                                    
                                    471
                                    
                                    
                                    
                                    488
                                    
                                    
                                    
                                    –Accounts
      payable and accrued liabilities
                                    
                                    
                                    30,881
                                    
                                    
                                    
                                    12,171
                                    
                                    
                                    
                                    40,275Net
      Cash Used In Operating Activities
                                    
                                    
                                    (39,657
                                    )
                                    
                                    
                                    (52,585
                                    )
                                    
                                    
                                    (173,835
                                    )Cash
      Flows From Investing ActivitiesMineral
      property costs
                                    
                                    
                                    (444
                                    )
                                    
                                    
                                    (50,000
                                    )
                                    
                                    
                                    (50,444
                                    )Net
      Cash Used In Investing Activities
                                    
                                    
                                    (444
                                    )
                                    
                                    
                                    (50,000
                                    )
                                    
                                    
                                    (50,444
                                    )Cash
      Flows From Financing ActivitiesAdvances
      from related party
                                    
                                    
                                    47,630
                                    
                                    
                                    
                                    22,088
                                    
                                    
                                    
                                    119,524Bank
      indebtedness
                                    
                                    
                                    (8,647
                                    )
                                    
                                    
                                    –
                                    
                                    
                                    
                                    225Proceeds
      from the sale of common stock
                                    
                                    
                                    –
                                    
                                    
                                    
                                    –
                                    
                                    
                                    
                                    105,050Net
      Cash Provided By Financing Activities
                                    
                                    
                                    38,983
                                    
                                    
                                    
                                    22,088
                                    
                                    
                                    
                                    224,799Effect
      of Exchange Rate Changes on Cash
                                    
                                    
                                    (165
                                    )
                                    
                                    
                                    –
                                    
                                    
                                    
                                    (165
                                    )Net
      increase (decrease) in cash
                                    
                                    
                                    (1,283
                                    )
                                    
                                    
                                    (80,527
                                    )
                                    
                                    
                                    355Cash
      - Beginning of Period
                                    
                                    
                                    1,638
                                    
                                    
                                    
                                    98,531
                                    
                                    
                                    
                                    –Cash
      - End of Period
                                    
                                    $
                                    355
                                    
                                    
                                    $
                                    18,004
                                    
                                    
                                    $
                                    355Supplemental
      DisclosuresInterest
      paid
                                    
                                    $
                                    –
                                    
                                    
                                    $
                                    –
                                    
                                    
                                    –Income
      taxes paid
                                    
                                    $
                                    –
                                    
                                    
                                    $
                                    –
                                    
                                    
                                    
                                    –





(The
Accompanying Notes are an Integral Part of These Consolidated Unaudited
Financial Statements)




F-3


Chancery
Resources, Inc.


(An
Exploration Stage Company)


Notes to
the Consolidated Financial Statements


(Unaudited)





1.
            Basis
      of Presentation





The
accompanying unaudited interim financial statements of Chancery Resources, Inc.,
have been prepared in accordance with accounting principles generally accepted
in the United States of America and the rules of the Securities and Exchange
Commission, and should be read in conjunction with the audited financial
statements and notes thereto contained in Chancery's Annual Report filed with
the SEC on Form 10-K.  In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein.  The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year.  Notes to the financial statements which substantially
duplicate the disclosure contained in the audited financial statements for
fiscal 2008 as reported in the Form 10-K have been omitted.





Effective
this quarter, the Company implemented SFAS No. 165, “Subsequent Events” (“SFAS
165”). This standard establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued. The adoption of SFAS 165 did not impact the
Company’s financial position or results of operations. The Company evaluated all
events or transactions that occurred after August 31, 2009 up through October
20, 2009, the date the Company issued these consolidated financial statements.
During this period, the Company did not have any material recognizable
subsequent events.





We do not
expect the adoption of recently issued accounting pronouncements to have a
significant impact on our results of operations, financial position or cash
flow.




Certain
prior year balances have been reclassed to conform with the current year
presentation.




2.
            Going
      Concern





These
consolidated financial statements have been prepared on a going concern basis,
which implies the Company will continue to realize its assets and discharge its
liabilities in the normal course of business. The Company has not generated any
revenue since inception and has never paid any dividends and is unlikely to pay
dividends or generate earnings in the immediate or foreseeable future. The
continuation of the Company as a going concern is dependent upon the continued
financial support from its shareholders, the ability of the Company to obtain
necessary equity or debt financing to continue operations, and the attainment of
profitable operations. As at August 31, 2009, the Company has a working capital
deficit of $289,372 and has accumulated losses of $1,553,396 since inception.
These factors raise substantial doubt regarding the Company’s ability to
continue as a going concern. These consolidated financial statements do not
include any adjustments to the recoverability and classification of recorded
asset amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.





3.
            Related
      Party Transactions





a)
              For
      the nine months ended August 31, 2009, the Company recognized $Nil (August
      31, 2008 - $4,500) for donated services provided by the former President
      of the Company.





b)
              For
      the nine months ended August 31, 2009, the Company incurred $4,500 (August
      31, 2008 - $1,794) in donated rent to a company controlled by the
      President of the Company, and is indebted to the President for $51,780
      (November 30, 2008 - $4,150) for advances and expenses paid for on behalf
      of the Company, which is non-interest bearing, unsecured and due on
      demand.





c)
              As
      of August 31, 2009, the Company is indebted to the Chief Executive Officer
      of the Company for $2,530 (November 30, 2008 - $2,530) for expenses paid
      for on behalf of the Company, which is non-interest bearing, unsecured and
      due on demand.




F-4





4.
            Loans
      Payable





a)
              As
      of August 31, 2009, the Company is indebted to the former President of the
      Company for $44,917 (November 30, 2008 - $44,917) for cash advances and
      expenses paid for on behalf of the Company, which is non-interest bearing,
      unsecured and due on demand.





b)
              On
      August 8, 2008, the Company received a $20,000 loan which is non-interest
      bearing, unsecured and due on August 8,
2010.





c)
              On
      July 25, 2008, the Company received a $70,000 loan which is non-interest
      bearing, unsecured and due on July 25, 2010. An implicit interest rate of
      15% was recognized resulting in an discount of $14,077 on the date of the
      loan. For the nine-months ended As at August 31,
  2009,





5.
            Mineral
      Properties





a)
              On
      January 19, 2009, the Company acquired through its wholly-owned subsidiary
      Chancery Canada, a 100% interest in certain mineral interests located in
      British Columbia, Canada known as the Fiddler Creek Property by the
      purchase of a Free Miner Certificate for $444 (CDN$500). As at August 31,
      2009, the Company recognized an impairment loss of $444, as it has not yet
      been determined whether there are proven or probable reserves on the
      property.





6.
            Commitments





a)
                On
      February 1, 2009, the Company entered into an agreement with a consultant
      to prepare a technical report of a mining property in consideration for
      the lesser of $700 per day or
$5,000.





7.
            Common
      Stock





a)
              On
      February 9, 2009, the Company approved the adoption of the 2009 Stock
      Option Plan which permits the Company to issue up to 6,450,000 shares of
      common stock to directors, officers, employees and consultants of the
      Company.





b)
              On
      November 6, 2008, the Company entered into a consulting agreement with a
      Director of the Company, for the provision of management and operational
      services for a period of one year. In consideration for these services,
      the Company issued 1,000,000 shares of restricted common stock with a fair
      value of $240,000. For the nine months ended August 31, 2009, $184,809
      (August 31, 2008 - $Nil) was charged to
  operations.


F-5


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




FORWARD-LOOKING
STATEMENTS




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




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




In this
quarterly report, unless otherwise specified, all dollar amounts are expressed
in United States dollars. All references to "US$" refer to United States dollars
and all references to "common shares" refer to the common shares in our capital
stock.




As used
in this quarterly report, the terms "we", "us", "our", "our company" and
“Chancery” mean Chancery Resources, Inc. and our wholly owned subsidiaries
Chancery Mining Canada Ltd. and Minera Chancery Columbia, unless otherwise
indicated.




General
Overview




We were
incorporated in the State of Nevada on September 12, 2006. We are an exploration
stage corporation. An exploration stage corporation is one that is engaged in
the search from mineral deposits or reserves which are not in either the
development or production stage.




We
maintain our statutory registered agent's office at The Corporation Trust
Company of Nevada, 6100 Neil Road, Suite 500, Reno, Nevada 89511 and our
business office and mailing address is 4400 Westgrove Drive, Suite 104, Dallas,
Texas 75001. Our telephone number is (214) 288-9897.




Since
October 2006, we held the rights to nine Mineral Titles Online cells referred to
as the Hunter property, through Geoffrey Gachallan, a former director and
officer of our company, who held the property for us in trust. On September 9,
2008, our rights to the claim expired.




On March
19, 2008, we entered into a mining acquisition agreement with Altos de Amador
S.A., wherein we have agreed to purchase a 100% interest in certain mineral
claims in Valparaiso, Antioquia, Colombia, known as the El Cafetal
Mine.




As
consideration for the purchase, we have agreed to pay to Altos de Amador
$270,000 cash, to be provided as follows:





(a)
            $50,000 to be provided on signing
      of the acquisition agreement
(paid);





(b)
            $70,000 to be provided within 30
      days of signing the acquisition agreement (paid);
    and





(c)
            $150,000 to be provided within 90
      days of signing the acquisition
  agreement.


3


In
addition, we have agreed to split profits from mining operations – 60% to our
company and 40% to the vendor until such time as we have paid $210,000 of the
purchase price, after which, profits shall be split 90% to our company and 10%
to the vendor. We have the right to acquire the vendor’s 10% profit interest at
any time for $370,000.




Effective
April 4, 2008, we entered into an amending agreement with Altos de Amador
wherein the terms of profit split have been amended so that, upon commencement
of mining operations, all profits from the sale of ore shall be split 60% to our
company and 40% to the vendor. Upon our company having paid a further $210,000,
in addition to the funds payable pursuant to the terms of the mining acquisition
agreement, such profits shall then be split 90% to our company and 10% to the
vendor. Our company will have the right to acquire the vendor’s 10% profit
interest at any time upon payment of an additional $370,000. There are currently
some governmental requirements that need to be fulfilled for the El Cafetal
mining title. These requirements include the present title owner amending a PTO
report to comply with certain specifications and paying certain annual
governmental fees, all of which are currently being completed.




To date,
we have not made the final $150,000 payment as required by the mining
acquisition agreement. We plan to hold such payment until the above title
requirements have been complied with and or alternatively to pay the outstanding
governmental fees due on the El Cafetal mine and deduct these amounts from the
final $150,000 payment. As our initial mining
acquisition agreement with Altos de Amador is no longer in good standing due to
certain misrepresentation on warranties and representations made on Altos de
Amador’s side, we have signed a Mining Acquisition Agreement on April 14
th
, 2009
directly with the owners of the property, Inversiones Midas Limitada, to
continue negotiations, which has a final payment of $150,000 minus
payments to the outstanding governmental fees due on the El Cafetal mine with no
timeframe period for payment.




Effective
April 14, 2009, we entered into an agreement with Inversiones Midas wherein the
terms of profit split so that, upon commencement of mining operations, all
profits from the sale of ore shall be split 60% to our company and 40% to the
vendor. Upon our company having paid a further 720 million Colombian pesos
(estimated value of land and equipment), Inversiones Midas agrees to give and
transfer 50% ownership of the Mining title, in addition to the funds payable
pursuant to the terms of the mining acquisition agreement, such profits shall
then be split 90% to our company and 10% to the vendor. Our company will have
the right to acquire the vendor’s 10% profit interest at any time upon payment
of additional 780 million Colombian pesos, and then the remaining 50% of the
Title ownership will be transferred to our company.




On
October 16, 2008, Rafael A. Pinedo and Jeffrey Fanning were appointed as
directors of our company.




Subsequent
to such appointments, on October 16, 2008, Juan Restrepo Gutierrez resigned as
president and a director of our company and Rafael A. Pinedo was appointed
president. Mr. Restrepo remains as chief executive officer, chief financial
officer, secretary and treasurer. In addition, Mr. Fanning was appointed vice
president of exploration. Our board of directors now consists of Rafael A.
Pinedo and Jeffery Fanning.




On
November 4, 2008, our board of directors designated 40,000,000 shares of our
preferred stock as the Series A Preferred Stock. Each share of Series A
Preferred Stock is convertible into shares of our common stock on the basis of
one (1) share of Series A Preferred Stock for one-fifth (1/5) of one share of
our Common Stock;




On
November 6, 2008, we entered into a consulting agreement with Rafael Pinedo, our
President. The term of the agreement is for a period of one year and in
consideration for the services to be provided we have agreed to issue 1,000,000
restricted shares of our common stock to Mr. Pinedo.




On
November 6, 2008, we entered into a mineral property acquisition agreement with
CB Resources Ltd., BNP Resources LLC and Rafael Pinedo to acquire certain
mineral property interests known as the HCL Property (the HCL Property is
comprised in part by our formerly owned Hunter Property). The closing of the
transactions contemplated in the mineral property acquisition agreement occurred
on November 6, 2008. In accordance with the closing of the mineral property
acquisition agreement, we agreed to issue 1,000,000 restricted shares of our
common stock to CB Resources Ltd., 25,000,000 restricted shares of our Series A
Preferred Stock to Rafael Pinedo and 6,000,000 restricted shares of our Series A
Preferred Stock to BNP Resources LLC. Due to land ownership restrictions under
British Columbia laws, we entered into a trust agreement with CB Resources Ltd.,
wherein CB Resources Ltd. agreed to hold the mineral property interests in trust
for our company.


4




On
November 12, 2008, we incorporated a wholly owned subsidiary pursuant to the
laws of the Province of British Columbia under the name Chancery Mining Canada
Ltd.




On
January 19, 2009, we acquired through our wholly owned subsidiary, Chancery
Mining Canada Ltd., an undivided one hundred percent (100%) interest in certain
mineral interests located in British Columbia, Canada known as the Fiddler Creek
Property.




The
Fiddler Creek Property is comprised of 25 mineral claims, totaling 465.74
hectares located within the Omineca Mining Division in northwestern British
Columbia. The acquired block of claims counts with records of a past producer
“Fiddler Creek,” which describes the geology of the Property as an area that is
underlain by argillites of the Jurassic to Cretaceous Bowser Lake Group, in
which auriferous quartz veins are probable sources for placer gold along Fiddler
Creek (BC Minfile 103I206). The deposit types that historically predominate in
the Fiddler-Doreen area are Silver, Gold, Lead and Zinc. Geophysical, soil, rock
and core samples will be analyzed soon; an exploration program recommended by a
qualified geology person will be released when finalized.




On
January 30, 2009, we incorporated a wholly owned subsidiary pursuant to the laws
of Columbia under the name Minera Chancery Colombia.





On July
24, 2009, Chancery Resources, Inc. (the "Company") received a NI 43-101 Canadian
Compliant Geological report on the El Cafetal Property as prepared and submitted
by James R. Reeves, Reg., P.Geo., in his capacity as a geological consultant to
the Company. Technical Report was formatted on Canadian National Instrument
43-101 ("NI 43-101"), which is a mineral resource classification scheme that
provides strict guidelines for the public disclosure of scientific and technical
information relating to mineral properties.





On August 3rd, 2009, Vincent Higgins
was appointed as independent director of our company.


Subsequent
to such appointment, on August 4, 2009, Juan Restrepo Gutierrez resigned as
chief executive officer and remains as chief operations officer, secretary and
director of our company and Rafael A. Pinedo was appointed chief executive and
ratified as president.




Mr.
Higgins, age 43, is recognized international leader in training, leadership
development, and multicultural team building.  Founded the Institute
for Effective Leadership. Served as the Director of the Lumen Institute, Dallas,
Texas and founded the Dallas branch.  Trilingual: English, Spanish,
and Italian. Extensive experience in operations and growth of international
non-profit organizations including institutional fundraising and networking.
Obtained undergraduate degree in Physics, Summa Cum Laude at the University of
Dallas, TX. Doctoral track in High Energy Physics, at Purdue University, West
Lafayette, Indiana and degrees in Philosophy and Theology at the Pontifical
University Regina Apostolorum, in Rome, Italy.




There are
no family relationships with any of our directors and officers.




Other
than as set out herein, we have not been involved in any bankruptcy,
receivership or similar proceedings, nor have we been a party to any material
reclassification, merger, consolidation or purchase or sale of a significant
amount of assets not in the ordinary course of our business.




Our
Current Business




We are an
exploration stage mining company engaged in the exploration of minerals on our
properties.




Our
current operational focus is to conduct exploration activities on our HCL
Property, to complete the terms of the mining acquisition agreement with Altos
de Amador S.A. for the El Cafetal Mine and to conduct exploration activities on
our Fiddler Creek Property.




HCL
Property




General
Information




The HCL
Property is a mining claim located in Merritt, British Columbia, Canada, and
totals 415.04 hectares or 1,026 acres approximately.




The
following is a list of tenure numbers, claim, and expiration date of our
claims:


5





Tenure
      Number
                          
                          Claim
      Name
                          
                          No.
      MTO Cells
                          
                          Expiration
      Date592560
                          
                          HCL
                          
                          20
                          
                          10/04/2009




A cell is
an area, which appears electronically on the British Columbia Internet Minerals
Titles Online Grid and was formerly called a claim. A claim is a grant from the
Crown of the available land within the cells to the holder to remove and sell
minerals. The online grid is the geographical basis for the cell. Formerly, the
claim was established by sticking stakes in the ground to define the area and
then recording the staking information. The staking system is now antiquated in
British Columbia and has been replaced with the online grid. The claim is
registered in the name of the CB Resources Ltd. who has agreed to hold the claim
in trust on behalf of Chancery Resources. As October 06, 2008, it’s not yet been
determined whether there are proven or probable reserves on the
property.




There are
no native land claims that affect title to the property.




Location
and Access




The HCL
mineral claim is comprised of 20 contiguous cells totalling 415.0483 hectares.
The center of the property is located at the latitude 50o 2' 14" N and the
longitude is 120o 47' 1" W. The claim is motor vehicle accessible from the Town
of Merritt, B.C. by traveling 19 miles east along Highway #5 beyond the Village
of Quilchena, B.C. to the Minnie Lake cut-off and then for 18 miles south by
gravel ranch roads to the mineral claim.




Below is
map of the HCL Claim:







6




Physiography




The Town
of Merritt, British Columbia which lies 37 miles by road northwest of the HCL
mineral claim offers much of the necessary infrastructure required to base and
carry-out an exploration program (accommodations, communications, equipment and
supplies). Merritt B.C. is highway accessible from Vancouver, B.C. in a few
hours by traveling over the Coquihalla (toll section) highway, in the time it
takes to travel 200 miles. The overnight Greyhound bus service is a popular way
to send-in samples and to receive additional equipment and supplies. The claim
area ranges in elevation from 2,850 feet to 3,400 feet mean sea level. The
physiographic setting of the property can be described as rounded, open range,
plateau terrain that has been surficially altered both by the erosional and the
depositional (drift cover) effects of glaciation. Thickness of drift cover in
the valleys may vary considerably. Fresh water lakes and streams are abundant in
the area. Below is a map of the HCL Property location:









Location,
History and Land Tenure




The
geology of the HCL mineral claim may be described as being underlain by units of
the Nicola Group. Some or all of these units may be found to host economic
mineralization. The property geological setting offers good underlying
possibilities and all overburden areas should be checked if a field program is
undertaken. The deposit types that historically predominate in the general area
are, as the larger target, as a porphyry-type base metal (copper-gold-palladium
or copper-molybdenum) occurrence with peripheral base and precious metal
occurrences as veins and/or contact zones of mineralization. The most prolific
host in this area is the Nicola Group andesitic tuffs that are often skarned or
altered. Any occurrences of Princeton Group sediments, i.e. shales, sanstone,
etc. should be checked thoroughly for coal occurrences and possibly coal-bed
methane gas possibilities.




Requirements
for Title




Title to
the property has already been granted CB Resources Ltd., who holds the claim in
trust for our company. To obtain a Free Miner's Certificate, which is required
to hold a mining claim in British Columbia, Section 8(1) of the B.C. Mineral
Tenure Act (MTA) stipulates that a corporation must be registered under the
British Columbia Business Corporations Act. Section 8(2) of the MTA stipulates
that an individual applicant must either be a resident of Canada or be
authorized to work in Canada. As the corporation is not registered in British
Columbia the claim is held in trust for the Company by CB Resources Ltd., a
corporation registered under the British Columbia Business Corporations Act. The
mineral title claim has been registered with the Government of British
Columbia.


7




Fiddler Creek
Property




General
Information




The
Fiddler Creek Property is comprised of 25 mineral claims, totaling 465.74
hectares located within the Omineca Mining Division in northwestern British
Columbia. The acquired block of claims counts with records of a past producer
“Fiddler Creek,” which describes the geology of the Property as an area that is
underlain by argillites of the Jurassic to Cretaceous Bowser Lake Group, in
which auriferous quartz veins are probable sources for placer gold along Fiddler
Creek (BC Minfile 103I206). The deposit types that historically predominate in
the Fiddler-Doreen area are Silver, Gold, Lead and Zinc. Geophysical, soil, rock
and core samples will be analyzed soon; an exploration program recommended by a
qualify geology person will be released when finalized.




The
following is a list of tenure number, claim name, and expiration date of our
claims:





Tenure
      Number
                          
                          Claim
      Name
                          
                          No.
      MTO Cells
                          
                          Expiration
      Date597810
                          
                          Fiddler
      Creek
                          
                          25
                          
                          01/19/2010




Below is
a map of the Fiddler Creek Property:









Climate and Local
Resources




The
climate in the area is temperate with significant coastal influence coming from
the west up the Skeena valley as well as from the southwest up the Kitimat
valley. The northern location allows for long hours of daylight during the
summer, while significant snowfall occurs during winter season, which limits
fieldwork. Field season is comprised between June and early
September.




The
closest airport is the Terrace airport, which receives daily flights from
Vancouver and serves as a transportation hub for the area. The Canadian National
Railway and Yellowhead Highway (Highway 16) go through Terrace along the Skeena
River and connect the interior of B.C. to the ocean ports of Prince Rupert and
Kitimat.


8


El Cafetal
Mine




General
Information




The El
Cafetal Mine is located in the River basin of the Honda stream, on the Eastern
flank of the Western Mountain range, in the municipality of Valparaiso,
Antioquia, Colombia.




The
property covers an area of 135 hectares. The geology of the zone includes
sedimentary rocks and basaltic lava and Andesite of Tertiary age with several
veins and veins with different thicknesses and sulfide concentrations up to
80%.




The
mineralization consists of several veins with thicknesses between 0.15 and 1.1
m, composed by quartz, pyrite and partly free gold fitted in andesite lava, the
strips of 0.15 m of thickness with great sulfide concentrations are common
mainly pyrite up to an 80% with intermediate zones of rock with scattered
sulfides, in the endorsements the salband are common to conform a mineralized
zone up to 1.1 m.




We
recently completed preliminary sampling and chemical analyses on the El Cafatel
property. Our management is awaiting the results from the preliminary sampling
program and will update shareholders in the near future.




Results
of Operations




Three Months Ended August
31, 2009 and August 31, 2008




The
following summary of our results of operations should be read in conjunction
with our financial statements for the quarter ended August 31, 2009 which are
included herein.




Our
operating results for the three months ended August 28, 2009, for the three
months ended August 31, 2008 and the changes between those periods for the
respective items are summarized as follows:





Three
      Months
                                            Ended
                                            August
      31,
                                            2009
                                          
                                          
                                          Three
      Months
                                            Ended
                                            August
      31,
                                            2008
                                          
                                          
                                          Change
      Between
                                            Three
      Month
                                            Period
                                            Ended
                                            August
      31, 2009
                                            and
      August 31, 2008Revenue
                                          
                                          $
                                          Nil
                                          
                                          
                                          $
                                          Nil
                                          
                                          
                                          $
                                          NilGeneral
      and administrative
                                          
                                          
                                          38,727
                                          
                                          
                                          
                                          28,027
                                          
                                          
                                          
                                          10,700Consulting
      fees
                                          
                                          
                                          62,052
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          62,052Management
      services
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,500
                                          
                                          
                                          
                                          (1,500
                                          )Impairment
      of mineral property costs
                                          
                                          
                                          -
                                          
                                          
                                          
                                          70,000
                                          
                                          
                                          
                                          (70,00
                                          )Mineral
      property costs
                                          
                                          
                                          13,703
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          13,703Rent
                                          
                                          
                                          1,500
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,500Net
      Loss
                                          
                                          
                                          (115,982
                                          )
                                          
                                          
                                          (99,527
                                          )
                                          
                                          
                                          (16,455
                                          )




Our
accumulated losses increased to $1,553,396 as of August 31, 2009. Our financial
statements report a net loss of $267,169 for the nine month period ended August
31, 2009 compared to a net loss of $189,774 for the nine month period ended
August 31, 2008.




As at
August 31, 2009, we had $289,727 in current liabilities. Our net
cash  at August 31, 2009 was $355 compared to $1,638 at November 30,
2008.


9


Equity
Compensation




We
currently do not have any stock option or equity compensation plans or
arrangements.




Liquidity
and Financial Condition




Working
Capital





At
                
                
                AtAugust
      31,
                
                
                November
      30,2009
                
                
                2008Current
      assets
                
                $
                355
                
                
                $
                112,109Current
      liabilities
                
                
                289,727
                
                
                
                219,863Working
      capital
                
                $
                (289,372
                )
                
                $
                (107,754
                )




Cash
Flows





Nine
      Months EndedAugust
      31,
                
                
                August
      31,2009
                
                
                2008Net
      cash used in operating activities
                
                $
                (39,657
                )
                
                $
                (52,585
                )Net
      cash used in investing activities
                
                
                (444
                )
                
                
                (50,000
                )Net
      cash provided by financing activities
                
                
                38,983
                
                
                
                22,088Net
      increase (decrease) in cash during period
                
                $
                (1,283
                )
                
                $
                (80,527
                )




As of
August 31, 2009, our company had working capital deficiency of $289,372. We
estimate our operating expenses and working capital requirements for the next
twelve month period to be as follows:




Estimated Funding Required
During the Twelve Month Period Ending August 31, 2010





General
      and administrative
                  
                  $
                  60,000Exploration
      Expenses
                  
                  $
                  449,135Professional
      fees
                  
                  $
                  35,000Total
                  
                  
                  544,135




We plan
to raise additional capital required to meet immediate short-term needs and to
meet the balance of our estimated funding requirements for the twelve months,
primarily through the private placement of our securities.




We are
not aware of any known trends, demands, commitments, events or uncertainties
that will result in or that are reasonably likely to result in our liquidity
increasing or decreasing in any material way.




Future
Financings




We will
require additional financing in order to enable us to proceed with the continued
exploration of our current properties, including approximately $95,000 over the
next 12 months to pay for our ongoing operating expenses. These expenses include
audit, legal and office expenses. These cash requirements are in excess of our
current cash and working capital resources. Accordingly, we will require
additional financing in order to continue operations and to repay our
liabilities. There is no assurance that any party will advance additional funds
to us in order to enable us to sustain our plan of operations or to repay our
liabilities.




We
anticipate continuing to rely on equity sales of our common stock in order to
continue to fund our business operations. Issuances of additional shares will
result in dilution to our existing stockholders. There is no assurance that we
will achieve any additional sales of our equity securities or arrange for debt
or other financing to fund our planned business activities.


10


We
presently do not have any arrangements for additional financing for the
expansion of our exploration operations, and no potential lines of credit or
sources of financing are currently available for the purpose of proceeding with
our plan of operations.




Contractual
Obligations




As a
“smaller reporting company”, we are not required to provide tabular disclosure
obligations.




Going
Concern




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




Due to
the uncertainty of our ability to meet our current operating expenses and the
capital expenses noted above, in their report on the annual financial statements
for the year ended November 30, 2008, our independent auditors included an
explanatory paragraph regarding the substantial doubt about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure by our
independent auditors.




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




Off-Balance
Sheet Arrangements




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




Application
of Critical Accounting Policies




Our
financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles used in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. We believe that understanding the basis and nature of the estimates
and assumptions involved with the following aspects of our consolidated
financial statements is critical to an understanding of our
financials.




The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with the accounting principles generally accepted in the United
States of America. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management’s application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements is critical to an
understanding of our financial statements.




11




Mineral
Property Costs




The
Company has been in the exploration stage since its inception and has not yet
realized any revenues from its planned operations. It is primarily engaged in
the acquisition and exploration of mining properties. Mineral property
exploration costs are expensed as incurred. Mineral property acquisition costs
are initially capitalized when incurred using the
guidance in EITF 04-02, “Whether Mineral Rights Are Tangible or Intangible
Assets”. The Company assesses the carrying costs for impairment under SFAS No.
144, “Accounting for Impairment or Disposal of Long Lived Assets” at each fiscal
quarter end. When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs then incurred to develop such property, are capitalized. Such costs
will be amortized using the units-of-production method over the estimated life
of the probable reserve. If mineral properties are subsequently abandoned or
impaired, any capitalized costs will be charged to operations.




Long-lived
Assets




In
accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets”, the Company tests long-lived assets or asset groups for
recoverability when events or changes in circumstances indicate that their
carrying amount may not be recoverable. Circumstances which could trigger a
review include, but are not limited to: significant decreases in the market
price of the asset; significant adverse changes in the business climate or legal
factors; accumulation of costs significantly in excess of the amount originally
expected for the acquisition or construction of the asset; current period cash
flow or operating losses combined with a history of losses or a forecast of
continuing losses associated with the use of the asset; and current expectation
that the asset will more likely than not be sold or disposed significantly
before the end of its estimated useful life. Recoverability is assessed based on
the carrying amount of the asset and its fair value which is generally
determined based on the sum of the undiscounted cash flows expected to result
from the use and the eventual disposal of the asset, as well as specific
appraisal in certain instances. An impairment loss is recognized when the
carrying amount is not recoverable and exceeds fair value.




Financial
Instruments




The fair
values of financial instruments, which include cash, accounts payable and
accrued liabilities, amounts due to a related party and loans payable, were
estimated to approximate their carrying values due to the immediate or
short-term maturity of these financial instruments. The Company’s operations are
in Canada, which results in exposure to market risks from changes in foreign
currency rates. The financial risk is the risk to the Company’s operations that
arise from fluctuations in foreign exchange rates and the degree of volatility
of these rates. Currently, the Company does not use derivative instruments to
reduce its exposure to foreign currency risk.




Income
Taxes




The
Company accounts for income taxes using the asset and liability method in
accordance with SFAS No. 109, “Accounting for Income Taxes”. The asset and
liability method provides that deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between the financial reporting and tax bases of assets and liabilities, and for
operating loss and tax credit carry-forwards. Deferred tax assets and
liabilities are measured using the currently enacted tax rates and laws that
will be in effect when the differences are expected to reverse. The Company
records a valuation allowance to reduce deferred tax assets to the amount that
is believed more likely than not to be realized.




Stock-based
Compensation




The
Company records stock-based compensation in accordance with SFAS No. 123R,
“Share Based Payments”, using the fair value method. All transactions in which
goods or services are the consideration received for the issuance of equity
instruments are accounted for based on the fair value of the consideration
received or the fair value of the equity instrument issued, whichever is more
reliably measurable.




Recent
Accounting Pronouncements




In June
2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating
Securities”. FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two- class
method as described in FASB Statement of Financial Accounting Standards No. 128,
“Earnings per Share.”
FSP EITF 03-6-1 is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008 and earlier adoption is prohibited. The
adoption of this statement is not expected to have a material effect on our
company’s consolidated financial statements.


12




In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”. SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States. It is effective 60 days following the SEC’s approval of the
Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles”. The adoption
of this statement is not expected to have a material effect on our company’s
consolidated financial statements.




In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment to FASB Statement No.
133”. SFAS No. 161 is intended to improve financial standards for
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity's financial
position, financial performance, and cash flows. Entities are required to
provide enhanced disclosures about: (a) how and why an entity uses derivative
instruments; (b) how derivative instruments and related hedged items are
accounted for under SFAS No. 133 and its related interpretations; and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS No. 161 is effective for
financial statements issued for fiscal years beginning after November 15, 2008,
with early adoption encouraged. The adoption of this statement did not have a
material effect on our company's consolidated financial statements.




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations”. SFAS
No. 141 (revised 2007) establishes principles and requirements for how the
acquirer of a business recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree. The statement also provides guidance for recognizing
and measuring the goodwill acquired in the business combination and determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No.
141 (revised 2007) applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. The adoption of this statement
is not expected to have a material effect on our company's consolidated
financial statements.




In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements Liabilities – an Amendment of ARB No.
51”. This statement amends ARB 51 to establish accounting and reporting
standards for the Non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. This statement is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008, and earlier adoption is prohibited. The adoption of this statement is
not expected to have a material effect on our company’s consolidated financial
statements.




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement No.
115”. This statement permits entities to choose to measure many financial
instruments and certain other items at fair value. Most of the provisions of
SFAS No. 159 apply only to entities that elect the fair value option. However,
the amendment to SFAS No. 115 “Accounting for Certain Investments
in Debt and Equity Securities” applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity’s first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, “Fair Value Measurements”.
The adoption of this statement did not have a material effect on our company's
consolidated financial statements.




In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”.
The objective of SFAS No. 157 is to increase consistency and comparability in
fair value measurements and to expand disclosures about fair value measurements.
SFAS No. 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles, and expands disclosures about
fair value measurements. SFAS No. 157 applies under other accounting
pronouncements that require or permit fair value measurements and does not
require any new fair
value measurements. The provisions of SFAS No. 157 are effective for fair value
measurements made in fiscal years beginning after November 15, 2007. The
adoption of this statement did not have a material effect on our company's
consolidated financial statements.


13




Item
3. Quantitative Disclosures About Market Risks




As a
“smaller reporting company”, we are not required to provide the information
required by this Item.




Item
4T. Controls and Procedures.




We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Securities Exchange Act of
1934 , as amended, is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and
forms, and that such information is accumulated and communicated to our
management, including our president (our principal executive officer) our chief
financial officer (our principal financial officer and principal accounting
officer) to allow for timely decisions regarding required disclosure. In
designing and evaluating our disclosure controls and procedures, our management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and our management is required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures.




Under the
supervision and with the participation of our management, including our
president (our principal executive officer) our chief financial officer (our
principal financial officer and principal accounting officer), we have conducted
an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities and Exchange Act of 1934, as of the end of the period covered by this
report. Based on this evaluation, our president (our principal executive
officer) our chief financial officer (our principal financial officer and
principal accounting officer) concluded as of the evaluation date that our
disclosure controls and procedures were not effective such that the material
information required to be included in our Securities and Exchange Commission
reports is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms relating to our company, particularly during
the period when this report was being prepared.  Management’s
conclusion was based on the fact that the auditors identified several
adjustments to our financial statements for the period ended August 31,
2009.




Additionally,
there were no changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the evaluation date. We have
not identified any significant deficiencies or material weaknesses in our
internal controls, and therefore there were no corrective actions
taken.




PART
II - OTHER INFORMATION




Item
1. Legal Proceedings.




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




Item
1A. Risk Factors




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


14


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




Our
common shares are considered speculative during the development of our new
business operations. Prospective investors should consider carefully the risk
factors set out below.




RISKS
RELATED TO OUR BUSINESS




All
of our properties are in the exploration stage. There is no assurance that we
can establish the existence of any mineral resource on any of our properties in
commercially exploitable quantities. Until we can do so, we cannot earn any
revenues from operations and if we do not do so we will lose all of the funds
that we expend on exploration. If we do not discover any mineral resource in a
commercially exploitable quantity, our business could fail.




Despite
exploration work on our mineral properties, we have not established that any of
them contain any mineral reserve, nor can there be any assurance that we will be
able to do so. If we do not, our business could fail.




A mineral
reserve is defined by the Securities and Exchange Commission in its Industry
Guide 7 (which can be viewed over the Internet at http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7
) as that part of a mineral deposit which could be economically and legally
extracted or produced at the time of the reserve determination. The probability
of an individual prospect ever having a "reserve" that meets the requirements of
the Securities and Exchange Commission's Industry Guide 7 is extremely remote;
in all probability our mineral resource property does not contain any 'reserve'
and any funds that we spend on exploration will probably be lost.




Even if
we do eventually discover a mineral reserve on one or more of our properties,
there can be no assurance that we will be able to develop our properties into
producing mines and extract those resources. Both mineral exploration and
development involve a high degree of risk and few properties which are explored
are ultimately developed into producing mines.




The
commercial viability of an established mineral deposit will depend on a number
of factors including, by way of example, the size, grade and other attributes of
the mineral deposit, the proximity of the resource to infrastructure such as a
smelter, roads and a point for shipping, government regulation and market
prices. Most of these factors will be beyond our control, and any of them could
increase costs and make extraction of any identified mineral resource
unprofitable.




Mineral
operations are subject to applicable law and government regulation. Even if we
discover a mineral resource in a commercially exploitable quantity, these laws
and regulations could restrict or prohibit the exploitation of that mineral
resource. If we cannot exploit any mineral resource that we might discover on
our properties, our business may fail.




Both
mineral exploration and extraction require permits from various foreign,
federal, state, provincial and local governmental authorities and are governed
by laws and regulations, including those with respect to prospecting, mine
development, mineral production, transport, export, taxation, labour standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. There can be no assurance that we
will be able to obtain or maintain any of the permits required for the continued
exploration of our mineral properties or for the construction and operation of a
mine on our properties at economically viable costs. If we cannot accomplish
these objectives, our business could fail.




We
believe that we are in compliance with all material laws and regulations that
currently apply to our activities but there can be no assurance that we can
continue to remain in compliance. Current laws and regulations could be amended
and we might not be able to comply with them, as amended. Further, there can be
no assurance that we will be able to obtain or maintain all permits necessary
for our future operations, or that we will be able to obtain them on reasonable
terms. To the extent such approvals are required and are not obtained, we may be
delayed or prohibited from proceeding with planned exploration or development of
our mineral properties.


15




If
we establish the existence of a mineral resource on any of our properties in a
commercially exploitable quantity, we will require additional capital in order
to develop the property into a producing mine. If we cannot raise this
additional capital, we will not be able to exploit the resource, and our
business could fail.




If we do
discover mineral resources in commercially exploitable quantities on any of our
properties, we will be required to expend substantial sums of money to establish
the extent of the resource, develop processes to extract it and develop
extraction and processing facilities and infrastructure. Although we may derive
substantial benefits from the discovery of a major deposit, there can be no
assurance that such a resource will be large enough to justify commercial
operations, nor can there be any assurance that we will be able to raise the
funds required for development on a timely basis. If we cannot raise the
necessary capital or complete the necessary facilities and infrastructure, our
business may fail.




Mineral
exploration and development is subject to extraordinary operating risks. We do
not currently insure against these risks. In the event of a cave-in or similar
occurrence, our liability may exceed our resources, which would have an adverse
impact on our company.




Mineral
exploration, development and production involves many risks which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Our operations will be subject to all the hazards and risks inherent
in the exploration for mineral resources and, if we discover a mineral resource
in commercially exploitable quantity, our operations could be subject to all of
the hazards and risks inherent in the development and production of resources,
including liability for pollution, cave-ins or similar hazards against which we
cannot insure or against which we may elect not to insure. Any such event could
result in work stoppages and damage to property, including damage to the
environment. We do not currently maintain any insurance coverage against these
operating hazards. The payment of any liabilities that arise from any such
occurrence would have a material adverse impact on our company.




Mineral
prices are subject to dramatic and unpredictable fluctuations.




We expect
to derive revenues, if any, either from the sale of our mineral resource
properties or from the extraction and sale of precious and base metals such as
gold, silver and copper. The price of those commodities has fluctuated widely in
recent years, and is affected by numerous factors beyond our control, including
international, economic and political trends, expectations of inflation,
currency exchange fluctuations, interest rates, global or regional consumptive
patterns, speculative activities and increased production due to new extraction
developments and improved extraction and production methods. The effect of these
factors on the price of base and precious metals, and therefore the economic
viability of any of our exploration properties and projects, cannot accurately
be predicted.




The
mining industry is highly competitive and there is no assurance that we will
continue to be successful in acquiring mineral claims. If we cannot continue to
acquire properties to explore for mineral resources, we may be required to
reduce or cease operations.




The
mineral exploration, development, and production industry is largely
un-integrated. We compete with other exploration companies looking for mineral
resource properties. While we compete with other exploration companies in the
effort to locate and acquire mineral resource properties, we will not compete
with them for the removal or sales of mineral products from our properties if we
should eventually discover the presence of them in quantities sufficient to make
production economically feasible. Readily available markets exist worldwide for
the sale of mineral products. Therefore, we will likely be able to sell any
mineral products that we identify and produce.




In
identifying and acquiring mineral resource properties, we compete with many
companies possessing greater financial resources and technical facilities. This
competition could adversely affect our ability to acquire suitable prospects for
exploration in the future. Accordingly, there can be no assurance that we will
acquire any interest in additional mineral resource properties that might yield
reserves or result in commercial mining operations.


16


Risks
Related To Our Company




We
have a limited operating history on which to base an evaluation of our business
and prospects.




We have
been in the business of exploring mineral resource properties since September
2006 and we have not yet located any mineral reserve. As a result, we have never
had any revenues from our operations. In addition, our operating history has
been restricted to the acquisition and exploration of our mineral properties and
this does not provide a meaningful basis for an evaluation of our prospects if
we ever determine that we have a mineral reserve and commence the construction
and operation of a mine. We have no way to evaluate the likelihood of whether
our mineral properties contain any mineral reserve or, if they do that we will
be able to build or operate a mine successfully. We anticipate that we will
continue to incur operating costs without realizing any revenues during the
period when we are exploring our properties. We therefore expect to continue to
incur significant losses into the foreseeable future. We recognize that if we
are unable to generate significant revenues from mining operations and any
dispositions of our properties, we will not be able to earn profits or continue
operations. At this early stage of our operation, we also expect to face the
risks, uncertainties, expenses and difficulties frequently encountered by
companies at the start up stage of their business development. We cannot be sure
that we will be successful in addressing these risks and uncertainties and our
failure to do so could have a materially adverse effect on our financial
condition. There is no history upon which to base any assumption as to the
likelihood that we will prove successful and we can provide investors with no
assurance that we will generate any operating revenues or ever achieve
profitable operations.




The
fact that we have not earned any operating revenues since our incorporation
raises substantial doubt about our ability to continue to explore our mineral
properties as a going concern.




We have
not generated any revenue from operations since our incorporation and we
anticipate that we will continue to incur operating expenses without revenues
unless and until we are able to identify a mineral resource in a commercially
exploitable quantity on one or more of our mineral properties and we build and
operate a mine. We had cash in the amount of $355 as of August 31, 2009. At
August 31, 2009, we had working capital deficit of $289,972. We incurred a net
loss of $267,169 for the nine months ended August 31, 2009 and $1,553,396 since
inception on September 12, 2006. We estimate our average monthly operating
expenses to be approximately $7,800 to $9,500, including mineral property costs,
management services and administrative costs. Should the results of our planned
exploration require us to increase our current operating budget, we may have to
raise additional funds to meet our currently budgeted operating requirements for
the next 12 months. As we cannot assure a lender that we will be able to
successfully explore and develop our mineral properties, we will probably find
it difficult to raise debt financing from traditional lending sources. We have
traditionally raised our operating capital from sales of equity and debt
securities, but there can be no assurance that we will continue to be able to do
so. If we cannot raise the money that we need to continue exploration of our
mineral properties, we may be forced to delay, scale back, or eliminate our
exploration activities. If any of these were to occur, there is a substantial
risk that our business would fail.




These
circumstances lead our independent registered public accounting firm, in their
report dated August 31, 2009, to comment about our company’s ability to continue
as a going concern. Management has plans to seek additional capital through a
private placement and public offering of its capital stock. These conditions
raise substantial doubt about our company’s ability to continue as a going
concern. Although there are no assurances that management’s plans will be
realized, management believes that our company will be able to continue
operations in the future. The consolidated financial statements do not include
any adjustments relating to the recoverability and classification of recorded
assets, or the amounts of and classification of liabilities that might be
necessary in the event our company cannot continue in existence.” We continue to
experience net operating losses.




Risks
Associated with Our Common Stock




Trading
on the OTC Bulletin Board may be volatile and sporadic, which could depress the
market price of our common stock and make it difficult for our stockholders to
resell their shares.




Our
common stock is quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board
is often thin and characterized by wide fluctuations in trading prices,
due to many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board
is not a stock exchange, and trading of securities on the OTC Bulletin Board is
often more sporadic than the trading of securities listed on a quotation system
like NASDAQ or a stock exchange like Amex. Accordingly, shareholders may have
difficulty reselling any of their shares.


17




Our
stock is a penny stock. Trading of our stock may be restricted by the SEC’s
penny stock regulations and FINRA’s sales practice requirements, which may limit
a stockholder’s ability to buy and sell our stock.




Our stock
is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9
which generally defines “penny stock” to be any equity security that has a
market price (as defined) less than $5.00 per share or an exercise price of less
than $5.00 per share, subject to certain exceptions. Our securities are covered
by the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
“accredited investors”. The term “accredited investor” refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer’s
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer’s confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.




In
addition to the “penny stock” rules promulgated by the Securities and Exchange
Commission, the Financial Industry Regulatory Authority has adopted rules that
require that in recommending an investment to a customer, a broker-dealer must
have reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer’s financial status, tax status, investment
objectives and other information. Under interpretations of these rules, the
Financial Industry Regulatory Authority believes that there is a high
probability that speculative low-priced securities will not be suitable for at
least some customers. The Financial Industry Regulatory Authority’ requirements
make it more difficult for broker-dealers to recommend that their customers buy
our common stock, which may limit your ability to buy and sell our
stock.




Other
Risks




Trends,
Risks and Uncertainties




We have
sought to identify what we believe to be the most significant risks to our
business, but we cannot predict whether, or to what extent, any of such risks
may be realized nor can we guarantee that we have identified all possible risks
that might arise. Investors should carefully consider all of such risk factors
before making an investment decision with respect to our common
stock.




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




None.


18


Item
3. Defaults Upon Senior Securities.




None.




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




None.




Item
5. Other Information




None.




Item
6. Exhibits.




Exhibits
required by Item 601 of Regulation S-K


ExhibitNumber
                                            
                                            Description(31)
                                            
                                            Rule
      13a-14(a)/15d-14(a) certifications31.1*
                                            
                                            Section 302 certification under sarbanes-oxley act
      of 2002 of rafael pinedo31.2*
                                            
                                            Section 302 certification under sarbanes-oxley act
      of 2002 of juan restrepo gutierrez(32)
                                            
                                            Section
      1350 certifications32.1*
                                            
                                            Section 906 certification under sarbanes-oxley act
      of 2002 of rafael pinedo32.2*
                                            
                                            Section 906 certification under sarbanes-oxley act
      of 2002 of juan restrepo
gutierrez
  19




SIGNATURES




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





CHANCERY RESOURCES, INC.(Registrant)Dated:
      October 20, 2009
              /s/ Rafael PinedoRafael
      PinedoPresident
      and Director(Principal
      Executive Officer)Dated:
      October 20, 2009
              /s/ Juan Restrepo
  GutierrezJuan
      Restrepo GutierrezSecretary,
      Treasurer and Chief Financial Officer(Principal
      Financial Officer and PrincipalAccounting
      Officer)


20