**UNITED
          STATES**
 **SECURITIES
          AND EXCHANGE COMMISSION**
 **Washington,
          D.C. 20549**
  **Form
          10-QSB/A**
 
 
 X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
          OF
          1934
 **For
          the quarter ended November 30, 2006**
 
 _
          TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF
          1934
 For
          the
          transition period from ____ to _____
  **MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 (Name
          of
          small business in its charter)


Colorado
              0-23561
              84-1431797(State
                  or other jurisdiction of incorporation)
              (Commission
                  File Number)
              (IRS
                  Employer Identification Number)609
                  Granville Street, Suite 880
                Vancouver,
                  British Columbia
                Canada
              V7Y
                  1G5(Address
                  of principal executive offices)
              (Zip
                  Code)





Registrant’s
          telephone number, including area code: (800) 661-7830
 
 Check
          whether the issuer (1) filed all reports required to be filed by Section
          13 or
          15(d) of the Securities Exchange Act during the past 12 months (or for
          such
          shorter period that the registrant was required to file such reports),
          and (2)
          has been subject to such filing requirements for the past 90 days. Yes X No
          ____
 
 Applicable
          only to issuers involved in bankruptcy proceedings during the past five
          years:
 
 Check
          whether the issuer has filed all documents and reports required to be filed
          by
          Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
          under a plan confirmed by a court. Yes ____ No ____
 
 Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act). Yes ____ No X
 
 Applicable
          only to corporate issuers:
 State
          the
          number of shares outstanding of each of the issuer's classes of common
          equity,
          as of the latest practicable date: 21,036,102 at January 15, 2007.
 
 Transitional
          Small Business Disclosure Format (Check one): Yes __ No X


-1-





EXPLANATORY
          NOTE
 
 We
          are
          filing this Form 10-QSB/A for the period ended November 30, 2006, to reflect
          changes in our management’s discussion and analysis.
 
 Any
          items
          included in the original report on Form 10-QSB for the period ended November
          30,
          2006, that are not included herein, are not amended and remain in effect
          as of
          the date of the original filing thereof. Additionally, this Form 10-QSB/A
          does
          not purport to provide a general update or discussion of any other developments
          subsequent to the original filing.
 
 The
          filing of this Form 10-QSB/A shall not be deemed to be an admission that
          the
          original filing, when made, included any untrue statement of material fact
          or
          omitted to state a material fact necessary to make a statement contained
          therein
          not misleading.
 
 
 **MEX** **ORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
  **Consolidated
          Financial Statements**
 **November
          30, 2006**
 **(Unaudited)
          (U.S. Dollars)**







**INDEX**
              **Page****Consolidated
                  Financial Statements**Consolidated
                  Balance Sheets
              3Consolidated
                  Statements of Operations and Retained
                  Deficit
              4Consolidated
                  Statements of Cash Flows
              5Notes
                  to Consolidated Financial Statements
              6
                  -
                  20




-2-




**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Consolidated
          Balance Sheets
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**November
                    30,**2006
              **February
                  28,**
                **2006****Assets****Current**Cash
                  and cash equivalents
              
              
              $
              842,742
              
              
              $
              479,530Amounts
                  receivable
              
              
              
              164,201
              
              
              
              10,069Prepaid
                  expenses
              
              
              
              27,490
              
              
              
              48,2691,034,433
              
              
              
              537,868**Equipment
                  (note 5)**
              
              
              
              135,345
              
              
              
              880**Total
                  assets**
              
              
              $
              1,169,778
              
              
              $
              538,748**Liabilities****Current**Accounts
                  payable and accrued liabilities
              
              
              $
              118,958
              
              
              $
              79,124Promissory
                  notes (note 7)
              
              
              
              -
              
              
              
              412,800118,958
              
              
              
              491,924**Convertible
                  debentures (note 8)**
              
              
              
              -
              
              
              
              652,000**Total
                  liabilities**
              
              
              
              118,958
              
              
              
              1,143,924**Stockholders’
                  equity (deficiency)****Capital
                  stock**Preferred
                  stockAuthorized:
                  20,000,000 shares without par value (note 9)Issued:
                  nil
              
              
              
              **-**
              
              
              
              **-**Common
                  stockAuthorized:
                  200,000,000 shares without par valueIssued:
                  21,036,102 (2006 - 12,799,902) (note 10)
              
              
              
              19,304,277
              
              
              
              15,573,977Additional
                  paid-in capital
              
              
              
              7,966,846
              
              
              
              3,991,596Stock
                  subscriptions
              
              
              
              -
              
              
              
              170,000Accumulated
                  deficit from prior operations
              
              
              
              (2,003,427
              )
              
              
              (2,003,427
              )Accumulated
                  deficit during the exploration stage
              
              
              
              (24,221,128
              )
              
              
              (18,338,373
              )Other
                  comprehensive income
              
              
              
              4,252
              
              
              
              1,051**Total
                  stockholders’ equity (deficiency)**
              
              
              
              1,050,820
              
              
              
              (605,176
              )**Total
                  liabilities and stockholders’ equity (deficiency)**
              
              
              $
              1,169,778
              
              
              $
              538,748


Going
        concern (note 4)


Commitments
        (note 6)


Contingent
        liability (note 14)


Subsequent
        events (note 15)


The
        Accompanying Notes are an Integral Part of These Financial
        Statements.




-3-
 Table
          of Contents


**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Consolidated
          Statements of Operations and Accumulated Deficit
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**Three
                  Months Ended**
              **Nine
                  Months Ended****November
                  30,**
                2006
              
              
              **November
                    30,**2005
              
              
              **November
                    30,**2006
              
              
              **November
                    30,**2005
              
              
              **Period
                          from**
                      **Exploration**
                      **Stage**
                    **March
                      1, 2004 to**
                  **November
                    30,**2006ExpensesGeneral
                  and administrative
              $
              160,496
              
              $
              148,594
              
              $
              958,256
              
              $
              232,458
              
              $
              1,655,003Stock-based
                  compensation
              
              487,250
              
              
              -
              
              
              1,709,750
              
              
              -
              
              
              2,531,955Mineral
                  exploration
              
              333,050
              
              
              -
              
              
              937,548
              
              
              -
              
              
              937,548Impairment
                  of mineral property costs
              
              -
              
              
              -
              
              
              -
              
              
              150,000
              
              
              15,306,422Operating
                  loss
              
              (980,796
              )
              
              (148,594
              )
              
              (3,605,554
              )
              
              (382,458
              )
              
              (20,430,928
              )Other
                  income (expenses)Interest
                  expense
              
              -
              
              
              (1,323
              )
              
              (2,320,973
              )
              
              (3,013
              )
              
              (3,967,157
              )Interest
                  income
              
              12,395
              
              
              -
              
              
              36,513
              
              
              -
              
              
              36,513Gain
                  on settlement of debt (notes 7 and 8)
              
              -
              
              
              133,185
              
              
              7,259
              
              
              133,185
              
              
              140,444Net
                  loss
              
              (968,401
              )
              
              (16,732
              )
              
              (5,882,755
              )
              
              (252,286
              )
              
              (24,221,128
              )Accumulated
                  deficit during theexploration
                  stage, beginning (note 2)
              
              (23,252,727
              )
              
              (3,856,769
              )
              
              (18,338,373
              )
              
              (3,621,215
              )
              
              -**Accumulated
                  deficit during the****exploration
                  stage, ending**
              $
              (24,221,128
              )
              $
              (3,873,501
              )
              $
              (24,221,128
              )
              $
              (3,873,501
              )
              $
              (24,221,128
              )**Other
                  comprehensive income**Foreign
                  exchange gain (loss) on translation
              
              26,653
              
              
              (1,618
              )
              
              (4,252
              )
              
              4,554
              
              
              (4,252
              )Total
                  comprehensive loss
              $
              (941,748
              )
              $
              (15,114
              )
              $
              (5,887,007
              )
              $
              (247,732
              )
              $
              (24,218,450
              )**Total
                  loss per share**-
                  basic and diluted
              $
              (0.05
              )
              $
              (0.01
              )
              $
              (0.33
              )
              $
              (0.14
              )Weighted
                  average number of shares of**common
                  stock**-
                  basic and diluted
              
              21,036,102
              
              
              1,782,028
              
              
              18,015,181
              
              
              1,763,738





The
        Accompanying Notes are an Integral Part of These Financial
        Statements.




-4-
 Table
          of Contents


**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Consolidated
          Statements of Cash Flows
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**Nine
                  Months Ended****November
                  30,**
                **2006**
              
              
              **November
                    30,**2005
              
              
              **Period
                            from**
                        **Inception
                          of**
                      **Exploration
                        Stage**
                    **March
                      1, 2004 to**
                  **November
                    30,**2006**Operating
                  activities**Net
                  loss
              $
              (5,882,755
              )
              $
              (252,286
              )
              $
              (24,221,128
              )Adjustments
                  to reconcile net income (loss) to
                net
                  cash flowsWrite
                  off of note receivable
              
              -
              
              
              -
              
              
              57,500Impairment
                  of mineral property costs for stock
              
              -
              
              
              150,000
              
              
              13,065,000Issuance
                  of shares for Consulting Services
              
              -
              
              
              100,000
              
              
              -Amortization
              
              15,192
              
              
              -
              
              
              15,192Discount
                  on convertible debenture
              
              -
              
              
              -
              
              
              175,000Non-cash
                  component of gain on settlement of debt
              
              -
              
              
              (133,185
              )
              
              (175,000
              )Stock-based
                  compensation
              
              1,709,750
              
              
              -
              
              
              4,144,955Beneficial
                  conversion feature
              
              2,265,500
              
              
              -
              
              
              3,717,500Prepaid
                  expense
              
              20,779
              
              
              -
              
              
              (21,010
              )Amounts
                  receivable
              
              (154,132
              )
              
              (13,094
              )
              
              (155,995
              )Customer
                  deposits
              
              -
              
              
              -
              
              
              (44,809
              )Accounts
                  payable and accrued liabilities
              
              39,834
              
              
              80,863
              
              
              96,765**Cash
                  used in operating activities**
              
              (1,985,832
              )
              
              (67,702
              )
              
              (3,346,030
              )**Investing
                  activity**Purchase
                  of property and equipment
              
              (149,657
              )
              
              -
              
              
              (150,537
              )**Cash
                  used in investing activity**
              
              (149,657
              )
              
              -
              
              
              (150,537
              )**Financing
                  activities**Proceeds
                  from notes payable
              
              -
              
              
              455,300
              
              
              562,800Proceeds
                  from convertible debentures
              
              2,240,500
              
              
              -
              
              
              3,692,500Proceeds
                  from exercise of options
              
              -
              
              
              43,000
              
              
              78,000Proceeds
                  from exercise of warrants
              
              50,000
              
              
              -
              
              
              50,000Repayment
                  of notes payable
              
              -
              
              
              (28,500
              )
              
              (178,500
              )Repayment
                  of convertible debentures
              
              -
              
              
              (541,815
              )
              
              (530,000
              )Stock
                  subscriptions
              
              (170,000
              )
              
              107,500
              
              
              -Issuance
                  of common stock
              
              375,000
              
              
              -
              
              
              647,109**Cash
                  provided by (used in) financing activities**
              
              2,495,500
              
              
              35,485
              
              
              4,321,909**Inflow
                  of cash and cash equivalents**
              
              360,011
              
              
              (32,217
              )
              
              825,342Effect
                  of foreign currency translation on cash
              
              3,201
              
              
              (1,325
              )
              
              17,400**Cash
                  and cash equivalents, beginning**
              
              479,530
              
              
              35,122
              
              
              -**Cash
                  and cash equivalents, ending**
              $
              842,742
              
              $
              1,580
              
              $
              842,742**Supplemental
                  cash flow information**Interest
                  paid
              $
              55,473
              
              $
              -
              
              $
              162,157Income
                  taxes paid
              
              -
              
              
              -
              
              
              -Common
                  stock issued on conversion of debt
              
              2,917,500
              
              
              -
              
              
              3,217,500Common
                  stock issued on settlement of notes payable
              
              412,800
              
              
              -
              
              
              412,800Shares
                  issued for services
              
              -
              
              
              -
              
              
              90,000





The
          Accompanying Notes are an Integral Part of These Financial
          Statements.


-5-
 Table
          of Contents


**MEXOROMINERALS
          LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**1. BASIS
          OF
          PRESENTATION**




Mexoro
        Minerals Ltd. (formerly Sunburst Acquisitions IV, Inc.) ("Mexoro" or the
        “Company”) was incorporated in the state of Colorado on August 27, 1997 and on
        February 15, 2006 its name was changed to Mexoro Minerals Ltd.  The Company
        was formed to seek out and acquire business opportunities.  Between 1997
        and 2003, the Company engaged in two business acquisitions and one business
        opportunity, none of which generated a significant profit or created a
        sustainable business. All were sold or discontinued. Currently the main focus
        of
        the Company’s operations is in Mexico.





The
        Company had previously been pursuing various business opportunities and,
        effective March 1, 2004, the Company changed its principal operation to
        mineral exploration. Accordingly, as of March 1, 2004 the Company is
        considered an exploration stage company.





On
        May
        25, 2004, the Company completed a share exchange transaction with Sierra
        Minerals and Mining, Inc. (“Sierra Minerals”), a Nevada corporation, which
        caused Sierra Minerals to become a wholly-owned subsidiary.  Sierra
        Minerals held certain rights to properties in Mexico that the Company now
        owns
        or has an option to acquire.  Through Sierra Minerals, the Company entered
        into an arm’s length joint venture agreement with Minera Rio Tinto, S.A. De C.V.
        (“MRT”), a company duly incorporated pursuant to the laws of the United Mexican
        States, which is controlled by an officer and director of the Company. In
        August
        2005, the Company cancelled the joint venture agreement in order to pursue
        directly the mineral exploration opportunities through a wholly-owned Mexican
        subsidiary, Sunburst de Mexico, S.A. de C.V. (“Sunburst de Mexico”).  On
        August 25, 2005, Sunburst de Mexico, Mexoro and MRT entered into agreements
        providing Sunburst de Mexico the right to explore and exploit certain properties
        in Mexico. In December 2005, the Company and Sunburst de Mexico entered into
        a
        new agreement with MRT (the “New Agreement”) (note 6). On January 20, 2006,
        Sierra Minerals was dissolved.





These
        interim consolidated financial statements include all adjustments, which
        in the
        opinion of management, are necessary in order to make the financial statements
        not misleading.





**2. RESTATEMENT**




After
        further review, management has determined that, in the year ended February
        28,
        2006, shares issued for services and recorded as stock-based compensation
        expense totalling $3,898,000 should be amortized over the 24-month term of
        the
        contract. Accordingly, this amount has been corrected and is now recorded
        as
        $487,250 per quarter starting at December 1, 2005 and ending November 30,
        2007.
        Therefore, these November 30, 2006 quarterly financial statements have been
        restated.




The
        effect of this adjustment on the Company’s consolidated financial condition is
        as follows :





November
                  30, 2006
              February
                  28, 2006Restated
              Originally
                  reported
              Restated
              Originally
                  reportedAdditional
                  paid-in capital
              7,966,846
              9,915,846
              3,991,596
              7,402,346Accumulated
                  deficit
              (24,221,128)
              (26,170,128)
              (18,338,373)
              (21,749,123)




-6-
 Table
          of Contents




**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2
 **2.**  **RESTATEMENT
        (continued)**





The
        effect of this adjustment on the Company’s consolidated results of operations is
        as follows:







Period
                  ended
              November
                  30, 2006
                Three
                  months ended
              November
                  30, 2006
                Nine
                  months endedRestated
              Originally
                  reported
              Restated
              Originally
                  reportedStock-based
                  compensation
              487,250
              -
              1,709,750
              248,000Net
                  loss for the period
              (968,401)
              (481,151)
              (5,882,755)
              (4,421,005)Loss
                  per share
              $
                  (0.05)
              $
                  (0.02)
              $
                  (0.33)
              $
                  (0.25)







In
        addition, in the nine months ending November 30, 2006, management revised
        the disclosure in the consolidated statement of cash flows reflecting the
        restated stock-based compensation and errors in the classification of financing
        activities.





The
        effect of these adjustments on the Company’s consolidated statement of cash
        flows is as follows:





Period
                    ended
                November
                    30, 2006Restated
                Originally
                    Reported**Operating
                    activities**Net
                    loss
                $
                    (5,882,755)
                $
                    (4,421,005)Stock-based
                    compensation
                1,709,750
                248,000**Financing
                    activities**Proceeds
                    of convertible debentures
                $
                    2,240,500
                $
                    (652,000)Proceeds
                    from exercise of warrants
                50,000
                -Issuance
                    of common stock
                375,000
                3,317,500




-7-
 Table
          of Contents


**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**3. SIGNIFICANT
          ACCOUNTING POLICIES**




(a)Principles
          of
          consolidation




The
        accompanying financial statements include the accounts and activities of
        Mexoro
        Minerals Ltd. and its wholly-owned subsidiary, Sunburst
        de Mexico. All
        intercompany transactions have been eliminated in
        consolidation.





(b)Financial
          instruments
  (i)Fair value


The
        carrying values of cash and cash equivalents, accounts receivable, and accounts
        payable and accrued liabilities approximate their fair values because of
        the
        short-term maturity of these financial instruments. The carrying value of
        convertible debentures approximates their fair value because these instruments
        earn interest at the market rate.




(ii)Interest
          rate
          risk




The
        Company is not exposed to significant interest rate risk due to the short-term
        maturity of its monetary current assets and current liabilities. The convertible
        debentures are not exposed to interest rate risk because the interest rate
        is
        fixed to maturity.





(iii)Credit
          risk


The
        Company's financial assets that are exposed to credit risk consist primarily
        of
        cash that is placed with major financial institutions.





(iv)Translation
          risk


The
        Company translates the results of non-U.S. operations into U.S. currency
        using
        rates approximating the average exchange rate for the year. The exchange
        rate
        may vary from time to time. Accordingly, there is a risk, does not incur
        significant transactions in-non-U.S. currency.




-8-
 Table
          of Contents


**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)


**3.**  **SIGNIFICANT
        ACCOUNTING POLICIES (Continued)**





(c)Equipment


Equipment
        is recorded at cost. Depreciation is
        provided on a declining-balance basis at 30%
        on
        computer equipment, 25% on vehicles and 10% on office
        equipment.





(d)Cash
          and cash
          equivalents




The
        Company considers all highly liquid debt instruments purchased with an original
        maturity of three months or less to be cash equivalents.





(e)
          Mineral property
          costs


The
        Company has been in the exploration stage since its inception on March 1,
        2004,
        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.




(f)
          Basic and diluted
          income (loss) per share


The
        Company computes income (loss) per share in accordance with SFAS No. 128,
        " *Earnings
        per Share* ",
        which
        requires presentation of both basic and diluted earnings per share (EPS)
        on the
        face of the statement of operations and deficit. Basic EPS is computed by
        dividing income (loss) available to common shareholders (numerator) by the
        weighted average number of shares outstanding (denominator) during the period.
        Diluted EPS gives effect to all dilutive potential shares of common stock
        outstanding during the period using the treasury stock method and convertible
        preferred stock using the if-converted method. In computing diluted EPS,
        the
        average stock price for the period is used in determining the number of shares
        assumed to be purchased from the exercise of stock options or warrants. Diluted
        EPS excludes all dilutive potential shares if their effect is anti-dilutive.
        All
        previously stated share and per share balances have been restated to give
        retroactive effect to the 1:50 share consolidation that occurred on
        February 15, 2006.




(g)
          Impairment or disposal of
          long-lived assets


In
        August
        2001, the FASB issued Statement No. 144, *“Accounting
        for the Impairment or Disposal of Long-Lived Assets”* (“FAS
        144”). FAS 144 clarifies the accounting for the impairment of long-lived assets
        and for long-lived assets to be disposed of, including the disposal of business
        segments and major lines of business. The Company has implemented FAS 144.
        Long-lived assets are reviewed when facts and circumstances indicate that
        the
        carrying value of the asset may not be recoverable. When necessary, impaired
        assets are written down to estimate fair value based on the best information
        available. Estimated fair value is generally based on either appraised value
        or
        measured by discounting estimated future cash flows. Considerable management
        judgment is necessary to estimate discounted future cash flows. Accordingly,
        actual results could vary significantly from such estimates.




-9-
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          of Contents




**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**3.**  **SIGNIGICANT
        ACCOUNTING POLICIES (Continued)**




(h) 
          Use of estimates


The
        preparation of financial statements in conformity with US generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosures of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenues and expenses during the reporting period.
        Actual results could differ from those estimates and would impact future
        results
        of operations and cash flows




(i) Consideration
          of other
          comprehensive income items




SFAS
        No.
        130 - *“Reporting
        Comprehensive Income”* ,
        requires companies to present comprehensive income (consisting primarily
        of net
        loss plus other direct equity changes and credits) and its components as
        part of
        the basic financial statements.





(j) 
          Stock-based compensation


Effective
        March 1, 2004, the Company adopted the fair value based method of accounting
        for
        stock-based employee compensation in accordance with the provisions of SFAS
        No.
        123 “Accounting for Stock-Based Compensation”, using the prospective transition
        method. Accordingly the Company recognized the fair value of stock-based
        employee compensation for all awards made after March 1, 2004. The Company
        is in
        accordance with Emerging Issues Task Force No. 96-18 "Accounting for Equity
        Instruments That are Issued to Other than Employees for Acquiring, or in
        Conjunction with Selling, Goods or Services" ("EITF 96-18"), with respect
        to
        options and warrants issued to non-employees.




Effective
        March 1, 2005, the Company adopted the fair value recognition provisions
        of SFAS
        No. 123R “Share Based Payments”, using the modified prospective transition
        method. Under that transition method, compensation cost is recognized for
        all
        share-based payments granted prior to, but not yet vested as of March 1,
        2005,
        based on the grant date fair value estimated in accordance with the original
        provisions of SFAS No. 123, and compensation cost for all share-based payments
        granted subsequent to March 1, 2004, based on the grant-date fair value
        estimated in accordance with the provisions of SFAS 123R. Results for prior
        periods have not been restated. As of March 1, 2004, there were no unvested
        options; and therefore, there was no effect on the Company’s reported loss from
        operations, cash flows or loss per share as a result of adopting SFAS No.
        123R.





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. Equity instruments issued to employees
        and the cost of the services received as consideration are measured and
        recognized based on the fair value of the equity instruments issued (see
        note
        11).





(k)
          Income taxes




The
        Company accounts for income taxes in accordance with SFAS No. 109 - *“Accounting
        for Income Taxes”* .
        Deferred tax assets and liabilities are recognized with respect to the tax
        consequences attributable to differences between the financial statement
        carrying values and tax basis of existing assets and liabilities. Deferred
        tax
        assets and liabilities are measured using enacted tax rates expected to apply
        to
        taxable income in the years in which these temporary differences are expected
        to
        be recovered or settled. Further, the effect on deferred tax assets and
        liabilities of changes in tax rates is recognized in income in the period
        that
        includes the enactment.




-10-
 Table
          of Contents


**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**3.**  **SIGNIFICANT
        ACCOUNTING POLICIES (Continued)**





(l) 
          Foreign currency translation


Mexoro
        and its subsidiary, Sunburst de Mexico, maintain accounting records in their
        functional currencies, U.S. dollars and Mexican pesos, respectively.





Mexoro
        and Sunburst de Mexico translate foreign currency transactions into the
        respective functional currencies in the following manners: at the transaction
        date, each asset, liability, revenue and expense is translated into the
        functional currency by the use of the exchange rate in effect at that date;
        at
        the period end, foreign currency monetary assets and liabilities are
        re-evaluated into the functional currency by using the exchange rate in effect
        at the balance sheet date. The resulting foreign exchange gains and losses
        are
        included in operations.





In
        preparing consolidated financial statements, the Company translates the assets
        and liabilities of its subsidiary into U.S. dollars at the exchange rate
        in
        effect at the balance sheet date. Revenue and expenses are translated into
        U.S.
        dollars at the average exchange rate for the applicable period. Any gain
        or loss
        from such translations are included in stockholders’ equity as a component of
        other comprehensive income.





(m) 
          Recent accounting pronouncements


(i)   
          In December 2004, FASB issued a revision of Statement No. 123(R), *“Accounting
          for Stock-Based Compensation”* .
          This
          statement supersedes APB 25 and its related implementation guidance. The
          revised
          pronouncement requires that all stock options and warrants be accounted
          for
          using the fair value method. This pronouncement does not impact the Company,
          as
          the Company has no employees and currently accounts for all options and
          warrants
          using the fair value method.




(ii)  
          In December 2004, the FASB issued SFAS Statement No. 153, “Exchanges of
          Non-Monetary Assets.” The statement is an amendment of APB Opinion No. 29 to
          eliminate the exception for non-monetary exchanges of similar productive
          assets
          and replaces it with a general exception for exchanges of non-monetary
          assets
          that do not have commercial substance. The Company believes that the adoption
          of
          this standard will have no material impact on its financial statements. The
          Company accounts for income taxes in accordance with SFAS No. 109 - *“Accounting
          for Income Taxes”* .
          Deferred tax assets and liabilities are recognized with respect to the
          tax
          consequences attributable to differences between the financial statement
          carrying values and tax basis of existing assets and
          liabilities.
  (iii)  
          In March 2005, FASB issued Interpretation No. 47 (“FIN 47”), *“Accounting
          for Conditional Asset Retirement Obligations”* .
          FIN 47
          clarifies that the term “conditional asset retirement obligation” as used in
          FASB Statement No. 143, *“Accounting
          for Asset Retirement Obligation”* ,
          refers
          to a legal obligation to perform an asset retirement activity in which
          the
          timing and/or method of settlement are conditional on a future event that
          may or
          may not be within the control of the entity. Accordingly, an entity is
          required
          to recognize a liability for the fair value of a conditional asset retirement
          obligation if the fair value of the liability can be reasonably estimated.
          FIN
          47 is effective no later than the end of fiscal years ending after
          December 15, 2005. This pronouncement does not impact the Company for the
          current year.


-11-
 
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            of Contents




**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**3.**  **SIGNIFICANT
        ACCOUNTING POLICIES (Continued)**




(iv)  
          In May 2005, FASB issued SFAS No. 154 “ *Accounting
          Changes and Error Corrections - a replacement of APB Opinion No. 20 and
          FASB
          Statement No. 3”* .
          This
          Statement replaces APB Opinion No. 20, “ *Accounting
          Changes”* ,
          and
          FASB Statement No. 3, “ *Reporting
          Accounting Changes in Interim Financial Statements”* ,
          and
          changes the requirements for the accounting for and reporting of a change
          in
          accounting principles. This statement applies to all voluntary changes
          in
          accounting principles. It also applies to changes required by an accounting
          pronouncement in the unusual instance that the pronouncement does not include
          specific transition provisions. When a pronouncement includes specific
          transition provisions, those provisions should be followed. This statement
          is
          effective for accounting changes and corrections of errors made in fiscal
          years
          beginning after December 15, 2005.




(v)  
          In February 2006, the FASB issued SFAS No. 155, “ *Accounting
          for Certain Hybrid Financial Instruments, an amendment of FASB Statements
          No.
          133 and 140”.* This
          statement permits fair value re-measurement for any hybrid financial instrument
          that contains an embedded derivative that otherwise would require bifurcation.
          It establishes a requirement to evaluate interests in securitized financial
          assets to identify interests that are freestanding derivatives or that
          are
          hybrid financial instruments that contain an embedded derivative requiring
          bifurcation. In addition, SFAS No. 155 clarifies which interest-only strips
          and
          principal-only strips are not subject to the requirements of Statement
          133.It
          also clarifies that concentrations of credit risk in the form of subordination
          are not embedded derivatives. SFAS 155 amends Statement 140 to eliminate
          the
          prohibition on a qualifying special purpose entity from holding a derivative
          financial instrument that pertains to a beneficial interest other than
          another
          derivative financial instrument. This statement is effective for all financial
          instruments acquired or issued after the beginning of an entity’s first fiscal
          year that begins after September 15, 2006. The adoption of this standard
          is not
          expected to have a material effect on the Company’s results of operations or
          financial position.




(vi)  
          FIN 48, Accounting for Uncertainty in Income Taxes (Interpretation of FASB
          statement 109). This Interpretation clarifies the accounting for uncertainty
          in
          income taxes recognized in an enterprise's financial statements in accordance
          with FASB Statement No. 109, Accounting for Income Taxes. This Interpretation
          prescribes a recognition threshold and measurement attribute for the financial
          statement recognition and measurement of a tax position taken or expected
          to be
          taken in a tax return. This Interpretation also provides guidance on
          derecognition, classification, interest and penalties, accounting in interim
          periods, disclosure, and transition. The Company will adopt this interpretation
          effective March 1, 2007.


-12-
 
 Table
          of Contents
 **MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**4.GOING
        CONCERN**




The
        accompanying financial statements have been prepared on a going-concern basis.
        The Company has a history of operating losses and will need to raise additional
        capital to fund its planned operations. As at November 30, 2006, the Company
        had
        working capital of $915,475 (February 28, 2006 - $45,944) and a cumulative
        loss
        during the exploration stage of $24,221,128 (February 28, 2006 - $18,338,373).
        These conditions raise substantial doubt about the Company’s ability to continue
        as a going concern.




**5.EQUIPMENT**




**November
                  30, 2006**
              
              **February
                  28, 2006**Cost
              
              Accumulated
                Depreciation
              
              Net
              
              NetOffice
                  equipment
              $
              16,573
              $
              (288)
              $
              16,285
              $
              880Vehicles
              
              103,115
              
              (9,963)
              
              93,152
              
              -Software
              
              16,205
              
              (4,051)
              
              12,153
              
              -Computers
              
              14,557
              
              (803)
              
              13,755
              
              -$
              150,450
              $
              15,105
              $
              135,345
              $
              880




**6.MINERAL
          PROPERTIES**




On
        May 3,
        2004, the Company entered into a share exchange agreement with the shareholders
        of Sierra Minerals. Pursuant to the terms of the share exchange agreement,
        the
        Company issued 860,000 shares of its common stock (43,000,000 pre-split)
        in
        exchange for all of the outstanding shares of Sierra Minerals. As a result,
        Sierra Minerals became a wholly-owned subsidiary of the Company.  After
        re-statements (see note 2), the issued common stock was valued at $12.75
        per
        share ($0.255 pre-split) or $10,965,000; which represents the fair value
        based
        on the date of the share exchange agreement (May 3, 2004).  Finders’ fees
        of 120,000 options (6,000,000 pre-split) to purchase the same number of shares
        of the Company’s common stock at $0.50 per share ($0.01 pre-split) were issued
        to non-related parties in connection with this share exchange. After
        re-statements (see note 2), the fair value of these options was $1,523,000;
        this
        amount was determined using the Black-Scholes formula with a 5-year expected
        life, a volatility factor of 191%, a risk-free rate of 5% and no assumed
        dividend rate. Due to the uncertainty of the future revenue to be generated
        from
        this property, the cost of the acquisition of $10,965.000, compensation expense
        of $1,523,000, and advances totalling $507,500 were charged to operations
        in the
        year ended February 28, 2005.





Sierra
        Minerals was a party to a joint venture agreement, dated April 26, 2004 and
        amended on June 1, 2004, by and between Sierra Minerals and MRT, which had
        interests in exploration properties.





-13-
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          of Contents


**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**6.**  **MINERAL
        PROPERTIES (Continued)**





On
        August
        25, 2005, the joint venture agreement was cancelled and the Company entered
        into
        a new arrangement with MRT.  Instead of a joint venture, the Company
        incorporated a Mexican wholly-owned subsidiary, Sunburst de Mexico, which
        took
        title to the properties.  The Company entered into additional agreements
        with MRT, which provided Sunburst de Mexico options on the concessions for
        the
        Guazapares properties and additional concessions for the Cienequita properties,
        and the right of first refusal on two additional Encino Gordo properties
        (collectively, the “Property Agreements”). The parties also entered into an
        operating agreement, which gave MRT the sole and exclusive right and authority
        to manage the Cieneguita Property.





On
        December 8, 2005, the Company and Sunburst de Mexico entered into the New
        Agreement with MRT to exercise their option under the August 18, 2005 sale
        and
        purchase of mining concessions agreement to obtain two mining concessions
        in the
        Encino Gordo region.





The
        New
        Agreement also provided the Company the option to obtain three additional
        concessions in the Encino Gordo region.  These properties are located in
        the state of Chihuahua, Mexico.





The
        following are additional material terms of the New Agreement:





(a) 
          The operator’s agreement with MRT was cancelled;


(b) 
          The Company granted MRT the option to buy all of the outstanding shares
          of
          Sunburst de Mexico for $100 if the Company failed to transfer $1,500,000
          to
          Sunburst de Mexico by April 30, 2006. However, in April 2006, the parties
          amended the New Agreement to delete both the required transfer of $1,500,000
          to
          Sunburst de Mexico and MRT’s option to purchase shares of Sunburst de
          Mexico;
  (c) 
            The Property Agreements were modified to change the net smelter rate
            to a
            maximum of 2.5% for all properties covered by the agreements;
  (d) 
              The Company agreed to issue 2,000,000 shares of the Company’s common stock to
              MRT within four months of the date of the signing of the New Agreement.
               These shares were issued to MRT and its assignee at the market value
              of
              $1.05 per share on February 23, 2006. This issuance fulfilled the Company’s
              payment obligations under the previous Property Agreements; and
  (e) 
                The Company agreed to issue 1,000,000 additional shares of the Company’s common
                stock to MRT if and when the Cieneguita Property is put into production
                and
                reaches 85% of production capacity over a 90-day period, as defined
                in the New
                Agreement.




-14-
 Table
          of Contents




**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**7. PROMISSORY
          NOTES**




As
        at
        November 30, 2006 the Company had $nil (February 28, 2006 - $412,800) of
        promissory notes outstanding and $nil (February 28, 2006 - $7,259) of accrued
        interest outstanding on the promissory notes.





On
        March
        4, 2006, the Company agreed to issue 1,651,200 shares of common stock at
        a price
        of $0.25 per share to settle $412,800 in promissory notes payable. As a
        condition, to this arrangement the promissory note holders waived all accrued
        interest payable on the notes. On April 6, 2006, these shares were issued
        (note
        10) and the Company recorded a $7,259 gain on settlement of
        debt.





**8. CONVERTIBLE
          DEBENTURES**




On
        August
        25, 2004, the Company entered into a securities purchase agreement (the
“Agreement”), with Bristol Investment Fund, Ltd., Alpha Capital AG and
        Stonestreet LP (the “Purchasers”). Pursuant to the Agreement, the Purchasers
        agreed to purchase up to $1,350,000 in face amount of secured convertible
        debentures (the “Debentures”) from the Company.  The Debentures did not
        bear interest but were to be issued at a 26% discount to the face amount.
        Accordingly, the cash purchase price for the full $1,350,000 face amount
        of the
        Debentures was $1,000,000.   The Debentures were due and payable in
        full one year from the date of issuance.





The
        Purchasers also had the right to convert the full-face amount of the Debentures
        to common stock of the Company at a price of $5.00 per share ($0.10 pre-split).
         Under the Agreement, the Purchasers were also to receive warrants and
        additional investment rights to purchase shares of the Company’s common stock,
        where the warrants were exercisable at a price of $6.00 per share ($0.12
        pre-split) for a period of five years and additional investment rights were
        exercisable at a price of $5.00 per share ($0.10 pre-split).





The
        Purchasers purchased a total of $675,000 in face amount for cash proceeds
        of
        $500,000 and the $175,000 discount was charged as interest over the term
        of the
        debenture; $87,500 in the year ending February 28, 2005 and the $87,500 in
        the
        year ending February 28, 2006. The Company paid $20,000 in legal fees and
        $50,000 administration fees.





A
        beneficial conversion feature expense of $500,000 resulting from the anticipated
        conversion of the debentures, and the exercise of the associated warrants
        and
        additional investment rights of the above debentures was recorded as interest
        expense for the year ending February 28, 2005.





On
        August
        10, 2005, the Company and the Purchasers agreed to retire the Debentures
        including all associated principal, terms, warrants and rights for the amount
        of
        $500,000 plus 8% interest. On September 21, 2005, the Company repaid in full
        $500,000 plus interest charges of $41,815 to the Purchasers. As a result
        of this
        payment, the Debentures were terminated and the associated warrants and
        additional investment rights were cancelled. A gain of $133,185 was recorded
        for
        settlement of this debt.





Another
        convertible debenture in the amount of $30,000 was issued on January 15,
        2004.
        The conversion of principal and accrued interest (8% per year) was at the
        rate
        of $1.00 ($0.02 pre-split) per share of common stock. On December 21, 2005,
        the
        Company repaid the $30,000 convertible debenture plus accrued interest of
        $4,645.




-15-
 Table
          of Contents




**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**8.**  **CONVERTIBLE
        DEBENTURES (Continued)**





In
        December 2005, the Company issued $300,000 in convertible debentures to three
        lenders with a maturity date of December 8, 2006, accrued interest at 7%
        per
        year, and convertible at the option of the holder into shares of common stock
        at
        $0.15 per share. On January 6, 2006, these debentures were converted and
        the
        Company issued 2,000,000 shares of common stock (100,000,000 pre-split).
        A
        beneficial conversion feature of $300,000 was recorded in interest expense
        as to
        the anticipated conversion of these debentures, with a corresponding increase
        in
        additional paid in capital.





In
        January and February 2006, the Company issued convertible debentures, with
        principal and accrued interest at 7% per year, convertible into units at
        the
        option of the holder.  Each unit consists of a warrant to purchase 25,000
        shares of common stock at $1.00 per share and $25,000 of debt, which at the
        option of the holder, may be converted to shares of common stock at $0.50
        per
        share until April 30, 2008.  As at February 28, 2006, the Company had
        issued convertible debentures in the amount of $652,000





A
        beneficial conversion feature of $489,000 was recorded in interest expense
        as to
        the anticipated conversion of these debentures. Also included in interest
        expense was $163,000 representing the relative fair value of the warrants
        (immediately exercisable) in relation to the convertible debt.





During
        the quarter ended May 31, 2006, the Company issued an additional $2,265,500
        of
        convertible debentures, with principal and accrued interest at 7% per year,
        convertible into units at the option of the holder. Each unit consisted of
        a warrant to purchase 25,000 shares of common stock at $1.00 per share and
        $25,000 of debt, which at the option of the holder, may be converted to shares
        of common stock at $0.50 per share until April 30, 2008. A beneficial conversion
        feature of $1,359,300 was recorded in interest expense as to the anticipated
        conversion of these debentures, and interest expense of $906,200 was recorded
        representing the relative fair value of the warrants (immediately exercisable)
        in relation to the convertible debt, and as a result, the aggregate sum of
        $2,265,500 was offset as additional paid in capital. As at May 31, 2006 there
        was $2,917,500 of convertible debentures outstanding.





During
        the quarter ended August 31, 2006, all of the $2,917,500 convertible debentures
        were converted into 5,835,000 shares of the Company’s common stock at $0.50 per
        share. As at August 31, 2006 there were no convertible debentures
        outstanding.





The
        fair
        value of the warrants attached to the convertible debentures as discussed
        above
        was estimated at the date of grant using the Black-Scholes option pricing
        model
        using the following weighted average assumptions:





112,500
                  Warrants - attached to $675,000 Convertible Debenture
              135,000
                  Additional Rights Warrants - attached to $675,000 Convertible
                  Debenture
              2,917,500
                  WarrantsExpected
                  life
              5
                  years
              5
                  years
              2
                  yearsExpected
                  volatility
              107%
              107%
              107%Risk
                  free interest rate
              5%
              5%
              5%Expected
                  dividends
              -
              -
              -Exercise
                  price
              $6.00
              $5.00
              $1.00Weighted
                  average fair value of warrant
              $6.00
              $5.00
              $1.10Stock
                  price at date of grant
              $6.50
              $6.50
              $1.45





-16-
 Table
          of Contents


**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**9. PREFERRED
          STOCK**




The
        Company is authorized to issue 20,000,000 shares of preferred stock. The
        Company’s board of directors is authorized to divide the preferred stock into
        series, and with respect to each series, to determine the preferences and
        rights
        and qualifications, limitations or restrictions thereof, including the dividend
        rights, conversion rights, voting rights, redemption rights and terms,
        liquidation preferences, sinking fund provisions, and the number of shares
        constituting the series and the designations of such series. The board of
        directors could, without stockholder approval, issue preferred stock with
        voting
        and other rights that could adversely affect the voting rights of the holders
        of
        common stock, which issuance could have certain anti-takeover
        effects.




**10. COMMON
          STOCK**




**Number**
                **of
                  Shares**
              **Amount**Balance,
                  February 28, 2006
              12,799,902
              $15,583,977Issued
                  pursuant to private placement
              550,000
              275,000Issued
                  pursuant to settlement of promissory notes
              1,651,200
              412,800Issued
                  pursuant to private placement
              200,000
              100,000Issued
                  pursuant to exercise of convertible debt
              5,835,000
              2,917,500Issued
                  pursuant to exercise of warrants
              50,000
              50,000Shares
                  returned to treasury
              (50,000)
              (25,000)Balance,
                  November 30, 2006
              21,036,102
              $19,314,277





On
        April
        3, 2006 and May 31, 2006 the Company issued 550,000 and 200,000 shares of
        common
        stock respectively pursuant to a private placement unit
        offering. Units consisted of one share of common stock and one-half of one
        warrant. Each full warrant entitles the investor to purchase an additional
        share
        of the Company’s common stock at a price of $1.00 per share and is exercisable
        until April 30, 2008.





On
        March
        4, 2006, the Company agreed to issue 1,651,200 shares of common stock at
        a price
        of $0.25 per share to settle $412,800 in promissory notes payable (note 7).
        On
        April 6, 2006, these shares were issued.





On
        July
        5, 2006, the Company issued 5,835,000 shares of common stock on the exercise
        of
        $2,917,500 of convertible debt at a price of $0.50 per share.





On
        August
        10, 2006, the Company issued 50,000 shares of common stock on the exercise
        of
        50,000 warrants where each warrants was exercisable into shares of common
        stock
        at a price of $1.00 per share.





On
        August
        15, 2006, the Company returned to treasury 50,000 shares of common stock
        that
        were issued but not delivered pending payment with respect to the convertible
        debt converted into shares of common stock on July 5, 2006.




-17-
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**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**11. STOCK
          COMPENSATION PROGRAM**




On
          December 9, 2005, the Company’s board of directors approved a stock compensation
          program, which was subsequently ratified at an extraordinary meeting of
          shareholders held on February 13, 2006. In order to maintain flexibility
          in the
          award of stock benefits, the program constitutes a single “omnibus” plan, but is
          composed of three parts. The first part is the qualified incentive stock
          option
          plan (the “ISO Plan”), which provides grants of qualified incentive stock
          options (“ISOs”).  The second part is the non-qualified stock option plan
          (“NQSO Plan”), which provides grants of nonqualified stock options (“NQSOs”).
 The third part is the restricted shares plan (“Restricted Shares Plan”),
          which provides grants of restricted shares of the Company’s common stock
          (“Restricted Shares”). The maximum number of shares of common stock that may be
          purchased under the plan is 6,000,000. Options granted under the plan include
          incentive and non-qualified stock options as well as actual shares of common
          stock, with vesting determined on the grant date, not to exceed 10 years,
          and
          are exercisable over a 10-year maximum period at a price to approximate
          the fair
          market value of the common stock at the date of grant.
 
 Pursuant
          to a Consulting Agreement (the “Agreement”) between the Company and GM Capital
          Partners Inc. (“GM Capital”), signed January 31, 2006, the Company granted
          5,000,000 warrants (see note 12). The Agreement provides for the provisions
          of
          financial public relations services from December 1, 2005 to November 30,
          2007.
          The fair value of the 5,000,000 warrants was determined using the Black-Scholes
          option pricing model using a ten-year expected life of the option, a volatility
          factor of 152%, a risk-free rate of 5% and an assumed dividend rate of
          0% and
          totals $3,898,000. This amount will be amortized over the 24-month term
          of the
          contract and the Company will record $487,250 as a stock-based compensation
          expense and an offsetting credit to additional paid-in capital every quarter
          until November 30, 2007.
 
 On
          February 27, 2006, the Company granted 800,000 ISOs under the ISO Plan
          to
          directors and officers (600,000 stock options) and consultants (200,000
          stock
          options) at a price of $0.50 per common stock for a period of ten years.
          The
          ISOs vest in four equal instalments, at the time of the grant and then
          every six
          months thereafter. Compensation cost, being the fair value of the options,
          is
          calculated to be $992,000 of which $248,000 is expensed on the date of
          issue and
          as the remainder vest.
 
 The
          fair
          value of the 800,000 options was determined using the Black-Scholes option
          pricing model using a ten-year expected life of the option, a volatility
          factor
          of 152%, a risk-free rate of 5% and no assumed dividend rate.
 
 On
          August
          15, 2006, the Company granted 150,000 stock options to an employee at $1.04
          (a
          10% discount to market price on the day of acceptance), which vest over
          a three
          year period at a rate of 25,000 stock options every six months. Compensation
          cost, being the fair value of the options, is calculated to be $171,000
          of which
          $28,500 is expensed every six months as they vest.
 
 The
          fair
          value of the 150,000 options was determined using the Black-Scholes option
          pricing model using a ten-year expected life of the option, a volatility
          factor
          of 143%, a risk-free rate of 4% and no assumed dividend rate.
 
 The
          options are summarized as follows:


Options
              Weighted
                    Average
                Exercise
                  PriceOutstanding
                  at February 28, 2006
              930,000
              $
                  0.54Granted
              150,000
              1.04Outstanding
                  at November 30, 2006
              1,080,000
              $0.54




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**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**11.**  **STOCK
        COMPENSATION PROGRAM** **(Continued)**





The
        following table summarizes options outstanding at November 30,
        2006:





Exercise
                  Price
              
              Number
                  of Options Issued
              Number
                  of Options Exercisable
              
              Remaining
                  Contractual Life (Years)$0.50
              
              890,000
              490,000
              
              8.81$1.04
              
              150,000
              0
              
              9.45$1.50
              
              40,000
              40,000
              
              3.501,080,000
              530,000





The
          Company has reserved 1,080,000 shares of common stock in the event that
          these
          options are exercised.
 
 For
          the
          quarter ended November 30, 2006, there was no stock-based compensation
          expense
          related to stock options issued or vested.


**12.WARRANTS**
  As
          at
          November 30, 2006, the Company had a total of 8,217,500 (February 28, 2006
          -
          5,652,000) warrants outstanding to purchase common stock. Each warrant
          entitles
          the holder to purchase one share of the Company’s common stock. The Company has
          reserved 8,217,500 shares of common stock in the event that these warrants
          are
          exercised.
 
 The
          warrants include 1,000,000 Series A Warrants exercisable at $0.50 per share,
          1,000,000 Series B Warrants exercisable at $0.75 per share, 1,000,000 Series
          C
          Warrants exercisable at $1.00 per share, 1,000,000 Series D Warrants exercisable
          at $1.25 per share, and 1,000,000 Series E Warrants exercisable at $1.50
          per
          share; of which all are exercisable at the option of the holder, have no
          redemption features, and are settled on a physical basis. The Series A
          Warrants
          were fully vested upon issuance. They are exercisable at any time following
          their issuance but will expire on June 30, 2007 to the extent they are
          not
          exercised. The remaining series of Warrants will become exercisable only
          at the
          time that the immediately preceding series has been fully exercised.
 
 Unless
          terminated earlier as a result of failure to vest, the Series B and Series
          C
          Warrants will each expire on December 31, 2007, and the Series D and Series
          E
          Warrants will each expire on December 31, 2008. The fair value of the 5,000,000
          warrants was determined using the Black-Scholes option pricing model using
          a
          ten-year expected life of the option, a volatility factor of 152%, a risk-free
          rate of 5% and no assumed dividend rate and totals $3,898,000 of s tock-based
          compensation expense which is amortized over the twenty four month term
          of the
          GM Capital contract at $487,250
          every quarter until November 30, 2007.
 
 The
          Company has also issued 2,917,500 warrants exercisable at $1.00 each pursuant
          to
          the issuance of convertible debentures (note 8). These warrants expire
          on April
          30, 2008, are redeemable by the Company, at $.01 per share, in the event
          the
          Company’s Common Stock closes with a bid price, on average, over $3.00 per share
          for a consecutive 20 day period and are settled on a physical basis. On
          August
          10, 2006, 50,000 warrants were exercised into 50,000 shares of common stock
          at a
          price of $1.00 per share. On August 15, 2006, 25,000 warrants were cancelled
          due
          to non-payment of funds with respect to a convertible debt subscription
          in the
          amount of $25,000 (note 10).


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          of Contents


**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**12.**  WARRANTS **(Continued)**





The
        fair
        value of the warrants discussed above was estimated at the date of grant
        using
        the Black-Scholes option pricing model using the following weighted average
        assumptions:





2,917,500
                  Warrants
              1,000,000
                  Warrants issued to GM Capital - Series A
              1,000,000
                  Warrants issued to GM Capital - Series B
              1,000,000
                  Warrants issued to GM Capital - Series C
              1,000,000
                  Warrants issued to GM Capital - Series D
              1,000,000
                  Warrants issued to GM Capital - Series EExpected
                  life (years)
              2
              1.58
              2.08
              2.08
              3.08
              3.08Expected
                  volatility
              107%
              152%
              152%
              152%
              152%
              152%Risk
                  free interest rate
              5%
              5%
              5%
              5%
              5%
              5%Expected
                  dividends
              -
              -
              -
              -
              -
              -Exercise
                  Price
              $1.00
              $0.50
              $0.75
              $1.00
              $1.25
              $1.50Weighted
                  average fair value of warrant
              $1.10
              $0.78
              $0.78
              $0.74
              $0.81
              $0.79Stock
                  price at date of grant
              $1.45
              $1.00
              $1.00
              $1.00
              $1.00
              $1.00





The
        Company has also issued 375,000 warrants exercisable at $1.00 each pursuant
        to a
        private placement unit offering from shares issued on April 3, 2006 and May
        31,
        2006. Each warrant entitles the investor at their option to purchase an
        additional share of the Company’s common stock at a price of $1.00 per share, is
        exercisable until April 30, 2008, has no redemption features and is settled
        on a
        physical basis.




**13. RELATED
          PARTY
          TRANSACTIONS**




For
          the
          nine months ended November 30, 2006, the Company paid management fees of
          $158,900 (2005 - $15,000) to certain officers and directors and to companies
          controlled by directors. The Company also paid $38,499 (2005 - $nil) to
          certain
          officers and directors and to companies controlled by directors for travel,
          office and other related expenses.
 
 As
          at
          November 30, 2006, accounts payable of $nil (2005 - $8,364) were owing
          to
          certain officers and directors of the Company and to companies controlled
          by
          directors.
 
 All
          related party transactions are in the normal course of business at the
          exchange
          amount agreed to by each party.


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 Table
          of Contents


**MEXORO
          MINERALS LTD.**
 (Formerly
          Sunburst Acquisitions IV, Inc.)
 (An
          Exploration Stage Company)
 Notes
          to
          Consolidated Financial Statements
 Nine
          Months Ended November 30, 2006
 (Unaudited)
          (U.S. Dollars)
 RESTATED
          - Note 2


**14. CONTINGENT
        LIABILITY**




On
        August
        31, 2006, the Company entered into an Amended Consulting Agreement with G.M.
        Capital.  This agreement replaces the agreement signed with G.M. Capital in
        January 2006, which contained registration rights which requires the Company
        to
        use best efforts to file a registration statement registering the warrant
        shares
        within 45 days upon demand of 50% of the warrant holders and thereafter to
        use
        best efforts to cause such registration statement to be declared effective
        as
        soon as reasonably possible. Otherwise, the Company is obligated to sell
        to GM
        Capital as liquidated damages payment comprising of 1,000 shares per day
        at
        $0.001 per share until the default is cured. As at August 31, 2006, GM Capital
        had not demanded the Company to file a registration statement, and, in the
        Company’s opinion, best efforts have been made to effect the registration of the
        warrant shares. Accordingly, the Company believes a liability did not and
        does
        not exist and accordingly no provision was made in the financial statements
        in
        this regard.





The
        Amended Consulting Agreement dated August 31, 2006, in part, removed the
        provision for the liquidated damages provision relating to the registration
        rights of the holders of the Warrants.








**15. SUBSEQUENT
          EVENT**




Promissory
          Notes




Subsequent
        to November 30, 2006, the Company shall offer Notes, up to $2,000,000 in
        principal amount together with warrants, where every $5.00 of principal amount
        can be converted into one warrant. The Notes shall require quarterly payments
        of
        interest at 7% and shall be due and payable in full in one year. In addition,
        the Company shall be required to apply all net operating income from the
        Cieneguita Property to repayment of the Notes until they are paid in full.
        The
        Company also must apply the net proceeds of any funds received from the issuance
        of new equity or debt instruments until the Notes are repaid in full. The
        Warrants will be exercisable for a period of one year beginning one year
        after
        the date of the offering and will give the holder the right to buy one share
        of
        common stock for $1.00 for a period of one year. The Company will pay a finders
        fee of 7%.




-21-
 
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**ITEM
        2.**  **MANAGEMENT'S
        DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS**





**CAUTIONARY
        STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**





Certain
        statements contained in this Form 10-QSB constitute "forward-looking
        statements". These statements, identified by words such as “plan”, "anticipate",
        "believe", "estimate", "should", "expect" and similar expressions include
        our
        expectations and objectives regarding our future financial position, operating
        results and business strategy. These statements reflect the current views
        of
        management with respect to future events and are subject to risks, uncertainties
        and other factors that may cause our actual results, performance or
        achievements, or industry results, to be materially different from those
        described in the forward-looking statements. Such risks and uncertainties
        include those set forth under this Item 2. "Management's Discussion and Analysis
        or Plan of Operation" and elsewhere in this Form 10-QSB. We do not intend
        to
        update the forward-looking information to reflect actual results or changes
        in
        the factors affecting such forward-looking information. We advise you to
        carefully review the reports and documents we file from time to time with
        the
        Securities and Exchange Commission (the “SEC”), particularly our annual reports
        on Form 10-KSB, our quarterly reports on Form 10-QSB and our current reports
        on
        Form 8-K.





**OVERVIEW**





We
        are a
        start-up, exploration stage company and have not yet generated or realized
        any
        revenues from our exploration projects, which we commenced in March 2004.
        We
        have sufficient cash to maintain our operations until April 2007, unless
        our
        exploration is successful, of which there is no guarantee. If our exploration
        is
        successful, we will need to raise additional funds to meet our needs for
        additional exploration and/or production.





Our
        continued existence and plans for future growth depend on our ability to
        obtain
        the additional capital necessary to operate either through the generation
        of
        revenue or the issuance of additional debt or equity. While we believe that
        we
        raised sufficient funds in our recent private placement offerings to allow
        us to
        continue in business until April 2007, we may not be able to continue in
        business beyond that date unless we obtain additional capital. We have not
        generated any revenues, and no revenues are anticipated unless and until
        mineralized material is discovered on the properties in which we have an
        interest.





For
        the
        twelve month period from May 2007 to April 2008, we will need to raise
        additional capital to maintain operations. To maintain basic operations,
        pay our
        taxes and property obligations, and to continue with our basic exploration
        plans, we will need to raise a minimum of $1,000,000 in additional capital.
        If
        our exploration during that time period is successful, we may need to raise
        additional capital to fund those exploration programs. At this time, we cannot
        assess with any accuracy our total capital needs to fund an expanded exploration
        program beyond our basic program. We also anticipate that we will need to
        raise
        an additional $2,200,000 for the purchase of milling equipment and to build
        the
        plant site for our Cieneguita property. We would anticipate raising the
        additional capital to maintain operations and to put the Cieneguita property
        into production through the sale of our common stock or through debt financing.
        At this time, we do not have any sources of additional capital to fund our
        operations beyond April 2007. We also believe that we will not generate any
        revenues that would allow us to continue operations. If we are unable to
        raise
        additional capital through debt or equity beyond April 2007, it is most likely
        that we would need to cease operations and forfeit our properties as we would
        be
        unable to make the necessary property payments.





We
        are
        planning to buy a plant or significant equipment in the next six months.
        We
        anticipate spending approximately $2,200,000 on equipment and building a
        plant
        to put the Cieneguita property into production. The ability for us to buy
        such
        equipment is dependent upon our cash position at that time and our ability
        to
        raise additional capital. We currently do not have sufficient working capital
        to
        purchase all of the needed equipment. If we should fail to raise additional
        capital through the sale of equity or debt, we will not be able to purchase
        the
        desired equipment and we will not be able to construct a production facility
        to
        process the ore. Currently we do not have any sources for such capital to
        purchase the mining equipment. Furthermore, the Cieneguita Property has no
        known
        ore reserves.





**Plan
        of Operation**




***Cieneguita
        Property***





Because
        we already have data from the previous exploration programs and mining records
        from Glamis Gold, our exploration program, planned until the end of April
        2007,
        on the Cieneguita Property will focus mainly on identifying




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mineralized
        zones of economic grade to allow for the property to be put into production
        as
        an open pit heap leach mine. The following steps summarize the exploration
        we
        have done to date on the Cieneguita Property, as well as our plans.





1.  Phase
        1
        Exploration.





Budget:   We
        expected the Phase 1 exploration program to cost approximately $200,000.
        From
        January 2006 to November 2006, we spent approximately $400,000, double the
        budgeted amount, on the phase 1 exploration of this project. Of this, $300,000
        was spent on the trenching, sampling and assaying on the property. We also
        spent
        approximately $50,000 on column testing to determine the leachability of
        the
        ore. The balance of the funds was spent in wages, camp costs and general
        administrative costs. The funds that were expended came from our general
        working
        capital. We plan to do some additional column testing to determine the
        leachablity of the ore. The estimated cost for these additional tests will
        be
        approximately $50,000. The funds required for these additional tests will
        come
        from general working capital.





Milestones:  The
          milestones for the phase 1 exploration program included the review of available
          data to create a structural mineralization framework, detailed soil and
          rock
          sampling, resampling existing trenches, the extension of existing trenches,
          and
          the creation of new trenches. We also conducted cyanide testing on the
          rock to
          determine the best method of leaching the precious metals from the rock.
          We plan
          to complete phase 1 by the end of December 2006.
 
 In
          April
          2006, we completed a sampling of the property that included more than 500
          meters
          of deep trenches from which we took comprehensive channel sampling. The
          trenches
          comprised 8 trenches approximately 200 meters long and 2 to 10 meters deep
          spaced equally along the 1,000 meters strike length of the property. From
          the
          walls of these trenches, we
          took
          approximately 550 rock samples. One half of these samples were sent to
          ALS
          Chemex’s laboratory in Chihuahua for assaying. The sampling protocol followed
          the best mining practices. The purpose of the sampling was to further define
          the
          ore grade and potential of the property. We also completed detailed soil
          sampling and rock sampling outside of the trenches.
 
 By
          December 2006, we plan to complete a detailed mapping of the property using
          existing information and drill results from previous operators, as well
          as
          incorporating our own data. To this end, we will create a structural
          mineralization framework for the property. We do not have any proven reserves
          on
          this property.
 
 The
          other
          half of the sample was used to complete column tests to determine the
          leachability of the precious metals from the rock. In this test, the ore
          was
          placed in PVC tubes, and different mixtures of a cyanide solution were
          dripped
          over the top of the columns at different flow rates. The results from these
          tests will help determine the most effective solution to be used on the
          heap
          leach pads on the property. These tests were done by qualified geologists
          employed by MRT as part of our office package costs. The tests were
          scientifically conducted and monitored for quality control and efficacy.
          These
          tests were done to ensure that the metallurgy of the minerals allows for
          economic recovery of the precious metals using a cyanide heap leach process.
          The
          results of the column test indicate that up to 98% of the gold contained
          in the
          ore samples we took could be recovered from the ore if the ore is leached
          for a
          long enough period. Under actual mining production conditions in the field,
          though, we would anticipate that the economic recovery levels of the ore
          would
          be approximately 70% to 75% recovery of gold from the ore. The cost of
          the
          cyanide needed to produce the additional gold above the 85% level outweighs
          the
          value of the gold recovered. We cannot guarantee that we would be able
          to
          achieve this level of recovery. This is not an estimate of reserves on
          the
          property. Additional tests will be needed to determine the most effective
          crush
          size of the ore, the most cost effective flow rates of the cyanide and
          most
          economical leaching time to be undertaken if we should ever put the property
          into production. We anticipate these additional tests will begin in March
          2007
          and the tests should be completed approximately 90 days thereafter. We
          hope that
          these tests will help us optimize the potential for extracting precious
          metals
          from the ore for the mining operation.
 
 2.  Phase
          2
          Exploration.
 
 Budget:  We
          plan to
          commence phase 2 of our exploration program in March 2007 under the direction
          of
          our VP of Exploration after he has had sufficient time to review all of
          our
          data. We have budgeted $200,000 for the Phase 2 Exploration; consisting
          of
          $50,000 for an additional trenching program, $50,000 for general administrative
          expenses and $100,000 for the cost of a drilling program, assaying and
          supervision included.
 
 Milestones:  The
          objectives for phase 2 of the exploration plan are to initiate a drill
          program
          and to continue the trenching program from phase 1 of exploration in order
          to
          further delineate the oxide ore mineralization to define where we plan
          to
          attempt to mine the ore. We plan to complete this second phase of exploration
          by
          the end of March 2007.


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Subject
          to the recommendation of our VP of Exploration, we may initiate a drill
          program
          consisting of 1,000 meters of reverse circulation drilling. At this time,
          there
          is a high demand for drill rigs, and we cannot predict with any accuracy
          the
          timing to start the drilling program. Once we do receive a rig, we anticipate
          the drilling program will take approximately one month, with assay results
          available one month later. The funds for this drilling program will come
          from
          general working capital on hand. We hope that the results from this drilling
          will help us to better delineate the mineralization of the oxide zone and
          provide an ore reserve calculation. We do not intend to implement a feasibility
          study for the property in this phase of exploration. Six of the drill holes
          will
          be drilled to a depth of 200 meters to test the sulphide potential of the
          mineral system. The use of these deep holes will help us determine if there
          is
          an extension to the oxide mineralization in the underlying sulphides. Our
          onsite
          geologist will determine where the holes will be drilled based on our earlier
          exploration and mapping of the property. We are currently negotiating with
          several contractors to secure the use of a drill to undertake our drill
          program.
          To date, we have not found a contractor able to supply drills to meet our
          time
          schedule. We cannot, with any certainty, predict when a drill rig may become
          available to us. The unavailability of such drill rigs could hamper our
          exploration plans, but management believes that we can generate sufficient
          information from the trenching program, to mine the oxide mineralization
          on the
          property. We have not determined any known reserves on this property to
          date.
 
 Because
          management determined that the results of our phase 1 exploration completed
          in
          November 2006 warranted further exploration, we plan to begin the next
          phase of
          exploration in March or April of 2007.
 
 The
          trenching program will entail using a bulldozer to dig trenches. Our on-site
          geologist will direct the bulldozer operator as where to dig the trenches. ** T he
          geologist will base his decision on where to dig on the results of our
          previous
          exploration work. Once the trenches are dug, the geologist will take samples
          of
          rock from all levels of the walls of the trench as if it were rock from
          a drill
          core. The rock will be gathered up and marked from which part of the trench
          it
          came from. The ore is pulverized and shipped out for assays. The results
          from
          these assays are expected to be completed and mapped by May 2007, with
          the goal
          of further delineating the prospects of the property.
 
 Even
          though the rock is fractured, the objective of the drill program will be
          to
          provide us with accurate information to make an ore calculation of the
          grade of
          the ore and the size of the mineralized zones.
 
 One
          of
          the main purposes of this phase of exploration is to delineate the mineralized
          ore body and map the grade of the mineralization that will allow us to
          refine
          our plan to put the property into production. If the exploration program
          does
          not provide us with the results we deem necessary to continue exploration,
          then,
          on a recommendation from our senior geologist or our VP of Exploration
          and
          managements’ concurrence on his findings, we will cease exploration on the
          property and any plans to put the property into production. If no further
          exploration is warranted, then we will discontinue any payments to the
          concession holders and allow our option to lapse. We will also then try
          to sell
          the mining equipment we have recently purchased. If we allow the option
          to
          lapse, we will be obligated, by the Mexican Government, to complete some
          reclamation work on the property of approximately $50,000. These funds
          would
          come from the bond we have already paid to the government in the amount
          of
          $67,000. Any funds not expended on reclamation would be returned to us
          by the
          Government. All of the
          money that we had invested in the exploration of the Cieneguita Property
          would
          be lost.
 
 We
          have
          one geologist on the Cieneguita Property working full time, and he will
          continue
          to do so through April 2007 if the exploration results warrant the expenditure.
          If the results do not warrant further work, we plan to move this geologist
          to
          one of our other properties to continue exploration on those properties.
 
 3.  Cieneguita
          Mine Design.
 
 Budget:  We
          budgeted $50,000 from general working capital to be used to create the
          mine
          design for the Cieneguita property.
 
 Milestones:  Concurrently
          with the second phase of exploration we will implement our plan to put
          the
          Cieneguita Property into production. The mine design will help determine
          where
          and how we will mine the Cieneguita Property. We plan to put the mine into
          production by the end of May 2007 if we are able to find available
          funding.
 
 Coinciding
          with phase 2 of our exploration program, we have commissioned a mine design
          to
          determine how to put the Cieneguita Property into production. At this time,
          we
          do not plan to implement a feasibility study for this property but feel
          we have
          sufficient information to put the property into production. The mine design
          has
          been commissioned to a third party contractor with expertise in heap leach
          mining. This contractor, an engineering firm, is reviewing all of the data


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that
          we
          have accumulated from Glamis Gold’s previous exploration and from the trenching
          and sampling we have completed on the property. All of this information
          will be
          put on a map laying out the structure of the mineralized zone on our property
          to
          assist in mining the ore. The key purpose of this map is to help enable
          our
          on-site geologist to monitor grade control during mining. Additionally,
          from the
          information accumulated so far on the Cieneguita Property, the mining engineer
          has designed a heap leach mining operation best suited to the tonnage,
          grade of
          the ore and availability of land to build leaching pads.
 
 The
          mine
          design calls for the mining operation to be run by a third party contractor,
          who
          will charge the company a flat fee per tonne of rock that is moved. It
          is
          estimated by the engineer designing the mine that the cost per tonne of
          rock
          moved from the property to the mill site will be approximately $1.30 per
          tonne
          of rock. This fee is only an estimate, as no contractor at this time has
          been
          engaged to mine the mineralized ore nor provided us with a firm quote on
          the
          cost of mining. The actual cost of mining the ore may be much higher, and
          no
          assurance can be given as to the actual cost at this time. The engineering
          firm
          designing the mine has stated that one of the key objectives at this stage
          of
          the mining operation will be grade control. Because our sampling has shown
          that
          the gold mineralization is not consistent through out the ore, it will
          be
          imperative that our geologist on site directs the contractors on where
          to mine
          the ore. The geologist will need to work daily using the interpretation
          from the
          results of our drilling program and will need to take samples of the rock
          and
          assay them on site to determine where the contractor should extract ore
          for the
          next day. The proper grade of ore shipped to the milling site is imperative
          to
          ensure a profitable operation. If the head grade is too low, we will not
          recover
          enough gold from the rock to maintain a profitable operation. Conversely,
          a head
          grade of ore that is too high will shorten the life of the mine. We are
          estimating that the total cost of mining and milling the ore will be
          approximately $13 per tonne. If the price of gold fluctuates up or down,
          we may
          have to adjust our cut off grade, which is currently 1.5 grams per tonne,
          which
          will affect the over all life of the mine.
 
 The
          milling of the ore at the mine site will also be contracted out to a third
          party. The following is a brief description of the mining process pursuant
          to
          our mine design. First, the ore is crushed by a crusher into a smaller
          size.
          Second, the rock is deposited on a conveyor belt and moved to the agglomorator.
          Third, the agglomorator mixes the rock with lime, and then the rock is
          moved to
          a stacker. A stacker is a moveable conveyor belt that oscillates back and
          forth,
          distributing the rock equally onto a heap leach pad. At that point, the
          rock is
          sprinkled with a cyanide mixture for approximately 30 days. The fluid from
          the
          percolation through the rock is then pumped through carbon filters. Waste
          rock
          is dumped into a ravine, per our permits, while the carbon filters are
          shipped
          to a third party for extraction of the precious metals. The waste rock
          is
          completely free of any harmful chemicals and is restored to the original
          ph it
          had prior to mining.
 
 We
          have
          identified and negotiated the purchase of a second hand crusher suitable
          for our
          type of operation and for the size of rock we will be mining. We are in
          the
          process of negotiating the construction of the conveyor belts we will need
          for
          all the phases of the milling operation. The conveyor belts will be manufactured
          in Chihuahua and assembled at the mine site of Cieneguita. We have also
          identified and negotiated the purchase of a second hand agglomorator. We
          have
          identified and negotiated the purchase of a used stacker suitable for this
          type
          of operation. We have negotiated a purchase price for used carbon filters
          and
          pumps to be used for this stage of the milling process.
 
 At
          this
          time, we do not know the cost associated with the process of having the
          precious
          metals extracted and minted into ore bars. If our head grade is not accurate
          or
          the heap leach process is not effective, we may not extract enough gold
          from the
          carbon filters to pay for this complete operation and we would lose money
          from
          the mining operation. If we lost money on the mining and milling operation,
          we
          may not be able to stay in business as we would expect the cash flow from
          operations to cover, at the minimum, the mining and milling operation.
          Furthermore, we do not have any proven reserves on our property and the
          ability
          to find enough ore could severely hinder any mining operations.
 
 We
          engaged an independent third part consultant to review the work of the
          engineering firm to verify and agree with the results of the mine design.
          The
          independent third party engineers worked with the mining engineering firm
          to
          agree on a final design. The mine design has been completed and cost
          approximately $50,000. We paid for the work from our general working capital.
          The milling equipment and cost of building the plant will be approximately
          $2,200,000. We estimate that we will need approximately $1,100,000 for
          working
          capital during the first four months of operation of the mine. There can
          be no
          assurance given that if the property is put into production that, after
          four
          months of operation, we will have recovered any precious metals from the
          milling
          process. We will need to continue to fund working capital if the precious
          metals
          are not in the ore as predicted. We will need to raise additional capital
          to put
          the property into production and to fund at least the first four months
          of
          working capital. The funds would be raised through the sale of debt or
          equity.
          We have not identified any additional sources of capital at this time.
          Furthermore, once we have commenced production, we can give no assurance
          that we
          will be profitable or recover any gold.


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***Guazapares
          Property***
 
 1.  Phase
          1
          Exploration.
 
 Budget:  Concurrently
          with the exploration of the Cieneguita Property, we have budgeted approximately
          $450,000 of our general working capital for exploration on our Guazapares
          Property until April 2007. Of this amount, we have spent approxi mately
          $100,000 from
          March 2006 through the end of November 2006 in our first phase of exploration.
          These funds came from our general working capital.
 
 Milestones:  The
          goals
          of the first phase of exploration on the Guazapares Property are to collect
          rock
          sample and complete the mapping of the property. This phase has been completed.
          Management has determined that further exploration is warranted, so we
          have
          begun phase 2 of exploration, as described below.
 
 We
          believe that most of the mining concessions being explored in the Guazapares
          area are epithermal silver deposits similar to the Cieneguita Property.
          However,
          because we do not have the same amount of detailed information on Guazapares
          as
          we do on Cieneguita, the exploration program will cost more than the exploration
          program on Cieneguita.
 
 We
          have
          one full time geologist working on the Guazapares Property collecting rock
          samples and mapping the property. The goal for this phase was the completion
          of
          mapping on the property at a scale of 1:5,000 with individual veins being
          mapped
          at a scale of 1:1,000. Rock samples were taken from the property. The rock
          samples from this phase were sent to Chemex ALS in Chihuahua for chemical
          analysis and assaying. The sampling protocol followed the best mining practices.
          The results from this first phase of the exploration program had the goal
          of
          determining whether subsequent exploration was warranted and if a drill
          program
          should be commenced. This phase 1 of work included reviewing available
          data to
          create a structural mineralization framework. We also mapped the topography
          and
          sampled the entire underground workings along the main level of the San
          Antonio
          mine. The distribution of the veins, lithology and alteration was also
          mapped.
          We have received the results from this first phase of exploration. Management
          reviewed the results of this phase and determined, based on a recommendation
          from our lead geologist on the property, to continue to phase 2 of exploration.
 
 2.  Phase
          2
          Exploration.
 
 Budget:  We
          have
          budgeted $100,000 of the total of $450,000 for Phase 2 of exploration.
          Of this,
          $50,000 is budgeted for a ground based geophysical exploration that will
          concentrate mainly on the area around the San Antonio mine and $50,000
          for
          specific sampling and trenching on the San Francisco property. These funds
          will
          come from general working capital of the company.
 
 Milestones:  The
          goals
          of phase 2 of exploration are to conduct more detailed soil and rock sampling,
          perform ground-based geophysical measurements, map the topography, and
          sample
          trenches in order to define the structural framework of the mineralized
          zone to
          facilitate a drilling program, if warranted. This phase commenced in February
          2007 and is expected to be completed by the end of May 2007.
 
 The
          second phase of the exploration program, using two geologists, will include
          more
          detailed soil and rock sampling, ground-based geophysics measurements and
          mapping on all of the concessions at Guazaparez. At this time, though,
          we do not
          have enough information to implement a drill program. One of the objectives
          of
          this stage of exploration will be to conduct a ground based geophysical
          exploration that will concentrate mainly on the area around the San Antonio
          mine. Another target will be to map the topography and sampled the surface
          trenches in the San Francisco area.
 
 The
          purpose of this phase of exploration will be to define the structural mainframe
          of the mineralized zone to facilitate the placing of drill holes. Once
          this
          information is obtained from phase two of the exploration project, our
          senior
          geologist and our VP of Exploration will review all of the data collected
          and
          make a recommendation to management. Management, at that time, will review
          the
          exploration data collected and the recommendations and make a determination
          whether additional work is advisable. If the management determines that
          additional exploration is not warranted, then we will likely discontinue
          exploration and make no further property payments, abandoning the concessions. If
          we
          abandon the Guazapares Property, we will not have to make any further property
          payments as per our property purchase agreements. We will, however, lose
          all the
          funds we have expended on the property to date including property payments
          made
          to date. If management determines that further exploration is warranted,
          we will
          conduct phase 3 of our exploration program.
 
 3.  Phase
          3
          Drill Program.


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Budget:  If
          a
          drill program is warranted and implemented, we estimate that the initial
          expenditure will be $250,000 (the balance of the $450,000 budgeted for
          the
          property). We will need to raise additional capital through the sale of
          equity
          or debt to fund a complete drilling program as only a small portion of
          the funds
          budgeted will be left in our general working capital to initiate the program.
 
 Milestones:  The
          goal
          of the third phase of exploration would be to gather information to determine
          if
          we should put the property into production.
 
 We
          do not
          have enough information at this time to determine any specifics on how
          the
          drilling phase of the exploration program would be implemented. We will
          be able
          to make this determination once we have all of the information back from
          the
          second phase of exploration. Management and our VP of Exploration will
          review
          the information from phase 2 and decide whether or not to continue exploration.
          If the decision is to continue, we will begin the third phase of exploration.
          In
          this phase, if sufficient funds can be generated to pay for the drilling,
          and
          assuming drill rigs are available in the area, our plan would be to commence
          this program in June 2007, and it would last approximately 60 days. The
          results
          of this drill program would take approximately 90 days to be assayed and
          interpreted. Once those results are known, we would consult with our lead
          exploration geologists and our VP of Exploration to determine whether to
          abandon
          the Guazapares Property or continue with further drilling exploration.
 
 If
          management decides to continue with further drilling, we would need to
          raise
          additional funding through the sale of debt or equity because we do not
          have
          sufficient capital to continue an exploration program. Additional drilling
          would
          cost a significant amount of money, and there is no assurance that we would
          be
          able to raise such additional amounts of money. We have not identified
          any
          sources of funds to implement such a program. If we could not obtain additional
          financing, we
          could
          seek a joint venture partner if the results warranted it. We do not have
          any
          joint venture partners at this time and can give no assurance that we would
          be
          able to find one if the Guazapares Property warranted such a joint venture.
 
 The
          Guazapares Property is without known reserves. Our proposed programs are
          exploratory in nature.
  ***Encino
          Gordo***
 
 The
          Encino Gordo Property comprises four mining concessions that total 1,042
          hectares (approximately 2,575 acres). We have limited information available
          to
          us about this property from previous exploration that was done by other
          companies. The previous geochemical sampling that was done suggests a presence
          of mineralized structures. These structures are being investigated by
          geochemical sampling to determine if further exploration is warranted and
          to
          help refine the best exploration plan for the concessions.
 
 1.  Phase
          1
          Exploration.
 
 Budget:  We
          have
          planned for an exploration program, budgeted at approximately $200,000
          from
          general working capital through April 2007, on our Encino Gordo Property.
          Of
          this, $50,000 will be used for mapping and sampling, which we anticipate
          completing by February 2007. We have spent $40,000 through the end of November
          2006. The balance of the funds will be spent as directed by our VP Exploration.
          The funds will come from general working capital.
 
 Milestones:  The
          goals
          of the first phase of exploration are to complete mapping of the property
          and to
          take geochemical samples from the property. We currently have one geologist
          taking geochemical sampling and mapping this property. The purpose of this
          initial program is to get a better understanding of the geology of the
          property.
          We expect to complete this phase of the exploration program by the end
          of
          February 2007.
 
 We
          intend
          to map the property at a scale of 1:5,000 with individual veins being mapped
          at
          a scale of 1:1,000. We met part of our mapping goal during the month of
          October,
          when mapping was completed along the extension of the structures hosting
          the
          Elyca vein located along the eastern edge of the Encino Gordo claims.
 
 A
          total
          of 43 stream sediment samples were collected from the various arroyos cutting
          the property. Samples of greater than 1 kilogram were collected with material
          crushed to less than 1 mm size. Samples of this rock will be analyzed by
          Chemex
          ALS for gold content plus 27 other mineral elements associated with the
          rock. ****** The
          sampling protocol followed the best mining practices. The purpose of the
          sampling was to further define the ore grade and potential of the property.
          To
          date, three samples returned anomalous results of gold which require follow-up
          to verify source areas. We would expect the balance of the samples to be
          returned by the end of February 2007.


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In
          October, we prepared a list of preliminary drill hole locations to accompany
          the
          SAMARNAT work permit application. We intend to file the application for
          the
          permit by the end of February 2007, with approval from SAMARNAT expected
          by the
          end of April 2007. Once the work permit is approved, our goal will be to
          drill
          the targets as recommended by our VP of Exploration. The VP of Exploration
          has
          not recommended any drilling program at this time. We cannot predict with
          any
          accuracy when, if ever, we will commence drilling on this property and
          the cost
          of such drilling. We are applying for drill permits before determining
          whether
          or not a drill program will be commenced in order to save time in the event
          a
          drill program is recommended. Much additional exploration work must be
          completed
          and a definitive exploration plan needs to be prepared by our VP of Exploration
          before management can determine whether or not to continue to the next
          phase of
          exploration. The actual drill hole locations are likely to change from
          those
          submitted with the working plan permit as drill targets are reviewed. This
          change of targets will not affect the working permit as such a movement
          of
          locations is anticipated in the issuing of the permits.
  Our
          goal
          is to have this further exploration completed by the end of February 2007,
          and a
          geological report prepared by our senior geologist on the Encino Gordo
          Property
          should be available 60 days thereafter. Depending on the results of the
          report,
          as determined by management, we intend to either abandon the Encino Gordo
          Property, in which case no further payments would be made or would be due
          under
          our agreements to acquire these concessions, or to make additional expenditures
          to determine potential drill targets.
 
 2.  Phase
          2
          Drill Program.
 
 Budget:   If
          management decides to continue exploration by initiating a drill program,
          a
          budget will be prepared at that time, and the amount and source of the
          capital
          needed for additional expenditures will be determined. If a drill program
          of any
          size is recommended, we do not have sufficient capital on hand to complete
          such
          a program because it would most likely require the expenditure of significant
          amounts of money. We would need to raise additional capital through the
          sale of
          debt or equity. We can give no assurance that we would be able to raise
          such
          capital, as we have not identified any source of capital for such a program
          at
          this time. If we could not raise additional funds ,
          we
          would consider seeking a joint venture partner if the results warranted
          it. We
          do not have any joint venture partners at this time and can give no assurance
          that we would be able to find one if the Encino Gordo Property warranted
          such a
          joint venture.
 
 Milestones:  The
          second phase of exploration would be a drill program to gather more information.
          Such information would be used to determine if we should put the property
          into
          production. We do not know when this phase of exploration could be completed,
          as
          discussed above. We estimate that the program would take approximately
          60 days
          to complete, with results from the program being returned about 90 days
          after
          completion. These are estimates, as the number of drill targets will determine
          the length of the drill program. Once the results from the drill program
          are
          known, we would consult with our lead exploration geologists and our VP
          of
          Exploration to determine whether to abandon the Encino Gordo Property or
          continue with further drilling exploration.
 
 Management
          and the VP of Exploration will review the information provided by the first
          phase of exploration and determine whether a drill program is recommended.
          If a
          drill program is recommended and we have received our permits that have
          been
          applied for in advance, we do not have sufficient information at this time
          to
          estimate what that program would entail. We need extensive information
          to
          determine the number of drill holes to drill, where they would be located
          and to
          what depth they would be drilled. This information will be provided by
          the first
          phase of exploration.
 
 The
          Encino Gordo Property is without known reserves. Our proposed programs
          are
          exploratory in nature.
 
 ***Sahauyacan***
 
 The
          Sahauyacan Property is located near the Chihuahua-Sonora state boarder
          approximately 275 kilometers east-southeast of the city of Chihuahua and
          50
          kilometers south-southwest of the town of Mycoba in the state of Chihuahua,
          Mexico. The Sahauyacan Property comprises fourteen mineral concessions
          that
          total 649 hectares (approximately 2,575 acres). We have limited information
          available to us about this property from previous exploration.
 
 The
          main
          vein in the area, the “Santo Nino Vein”, was the focus of a small scale
          underground gold mining operation in the late 1800’s and early 1900’s, with at
          least 3 main underground mine access drifts supplying feed to a centrally
          located mill, which is still present. The mine was closed at the time of
          the
          Mexican revolution and the Santo Nino vein system has never been evaluated
          using
          modern techniques and has not been explored by drilling. This area will
          most
          likely be the main focus of our exploration program once we have a definitive
          plan in place. We expect to have our exploration plan in place by April
          2007.


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1.  Phase
          1
          Exploration:
 
 Budget:  Because
          we have recently acquired this property, we have no definitive budget plan
          in
          place at the moment for the exploration of the property. However, we expect
          to
          budget approximately $150,000 from general working capital, through June
          2007,
          to work on the Sahauyacan Property. We have spent approximately $90,000
          of this
          budget doing initial due diligence on the property and gathering initial
          information. The funds spent to date have come from general working capital.
          The
          estimated expenditures for future work will need to be raised through the
          sale
          of debt or equity. We can give no assurance that we would be able to raise
          such
          capital, as we have not identified any source of capital for such a program
          at
          this time. If we could not raise additional funds ,
          we
          would consider seeking a joint venture partner if the results warranted
          it. We
          do not have any joint venture partners at this time and can give no assurance
          that we would be able to find one if the Sahauyacan Property warranted
          such a
          joint venture.
 
 Milestones:  We
          have
          completed our initial mapping of the property and intend to map the underground
          workings of the property by the end of February 2007. At that point, our
          VP of
          Exploration will review the available information and create a complete
          exploration program.
 
 As
          part
          of our due diligence on acquiring the properties, we had a surface geological
          mapping and sampling crew evaluate the property from September 2006 and
          through
          December 2006. Mapping on the property was completed at a scale of 1:5,000
          with
          individual veins being mapped at a scale of 1:1,000. To date, a total of
          309
          samples have been taken from taken the property including 101 rock chip
          and
          channel samples, 41 stream sediment samples and, 158 soil samples. We expect
          to
          receive the results back from our sampling taken by the crew by the end
          of
          February 2007. We intend to complete an evaluation of the underground workings
          to determine if they can be safely entered. If so, we intend to map these
          workings by the end of February 2007.
 
 Prior
          to
          optioning the property, we conducted some preliminary work on the property
          to
          verify certain data. As part of or preliminary work, we had one geologist
          taking
          geochemical sampling and mapping this property so that we can get a better
          understanding of the geology of the property and provide that information
          to our
          VP of Exploration. Once we have a better understanding of the geology of
          the
          property, we will be able to prepare a definitive exploration plan and
          exploration budget for this property.
 
 Because
          we have recently acquired the Sahauyacan Property, the specific goals of
          our
          exploration program have not been clearly defined at this time. We have
          done
          some preliminary work, as described above, but we have not yet prepared
          a
          detailed budget or exploration plan for this property. We do not expect
          to have
          a definitive exploration plan for this property until our VP of Exploration
          has
          had an opportunity to review all of the available material on the property.
 
 The
          Sahauyacan Property is without known reserves. Our proposed programs are
          exploratory in nature.
  Although
          three of our properties have been mined in the past, we are presently in
          the
          exploration stage and there is no assurance that a commercially viable
          mineral
          deposit exists in any of our properties. We do not have any proven or probable
          reserves on our properties.
 
 We
          have
          made a business decision to place a higher priority on the Cieneguita
          exploration program to define mineralized ore. However, we intend to proceed
          with exploration on all four properties simultaneously. If
          our
          exploration programs warrant drilling programs
          on the properties, we anticipate contracting two geologists and four assistants
          for supervising the drilling work and taking splits for the drilling
          samples.
 
 Once
          we
          receive results from these exploration programs, our management will assess
          whether to proceed to any further exploration phases. In making this
          determination, we will make an assessment as to whether the results are
          sufficiently positive to enable us to obtain the financing necessary to
          proceed.
          The decision will be based mainly on the recommendations of our senior
          geologist
          and VP of Exploration. Other factors that will influence the production
          decision
          will be the current price of gold bullion, availability of mining equipment
          and
          a mining feasibility study.
 
 **Results
          of Operations**
 
 Revenues


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We
          did
          not earn revenues during the three and nine months ended November 30, 2006
          or
          2005 because we did not have commercial production of any of our properties.
          We
          do not anticipate earning revenues until such time as we have entered into
          commercial production of our mineral properties, if ever. We are presently
          in
          the exploration stage of our business. We can provide no assurance that
          we will
          discover commercially exploitable levels of mineral resources on our properties
          or, if such resources are discovered, that we will enter into commercial
          production of our mineral properties. Interest income is recorded under
          Other
          Income in the Statement of Operations in the financial statements.
 
 Operating
          Costs
 
 We
          did
          not incur any operating costs during the three and nine months ended 2006
          and
          2005 due to the fact that we did not achieve production from exploration
          activities during either year.
 
 Expenses
 
 Our
          expenses during the three and nine months ended November 30, 2006 were
          $160,000
          and $958,000 respectively, compared to $148,594 and $232,458 respectively,
          for
          the three and nine months ended November 30, 2005. The increase is primarily
          attributable to higher General and administrative expenses as there were
          no
          stock based compensation expense and developing exploration program in
          comparative periods in 2005.
 
 The
          following table presents the general and administrative, stock-based
          compensation and mineral exploration expenses:


Three
                  months ended November 30
              
              Nine
                  months ended November 302006
              
              2005
              
              2006
              
              2005General
                  and administrative
              160,496
              
              148,594
              
              958,256
              
              232,458Stock-based
                  compensation
              487,250
              
              -
              
              1,709,750
              
              -Mineral
                  exploration
              333,050
              
              -
              
              937,548
              
              -Impairment
                  of mineral property costs
              -
              
              -
              
              -
              
              150,000





The
          increase in general and administrative cash expenses relates to higher
          management fees of $146,000 and $342,000 in the three and nine months ended
          November 30, 2006 respectively, from $66,000 and $98,000 in the three and
          nine
          months ended November 30, 2005. Finders’ fees increased to $285,000 in the nine
          months ended November 30, 2006 from $nil in the nine months ended November
          30,
          2005. The increase was attributable to two private placements; a unit offering
          and convertible debentures. Accounting and legal fees increased to $84,000
          and
          $177,000 in the three and nine months ended November 30, 2006 respectively,
          from
          $32,000 and $77,000 in the three and nine months ended November 30, 2005.
          The
          increase in fees was primarily attributable to higher auditing costs and
          the
          cost of regulatory filings with the SEC.
 
 Stock-based
          compensation expenses were $487,000 and $1,710,000 in the three and nine
          months
          ended November 30, 2006 compared to $nil in the three and nine months ended
          November 30, 2005. The $487,000 relates to three months of the quarterly
          amortization of warrants issued for services effective December 1, 2005,
          while
          the $1,710,000 relates to nine months of the quarterly amortization of
          warrants
          issued for services effective December 1, 2005, and $248,000 relates to
          25%
          vesting amount of the 800,000 stock options granted in February 2006 at
          a price
          of $0.50 per share. As at November 30, 2006, 50% of the 800,000 stock options
          have vested.
 
 Mineral
          exploration in the three and nine months ended November 30, 2006 increased
          to
          $333,050 and $938,000 respectively, compared to $nil for the nine months
          ended
          November 30, 2005. The Company was not in a developing exploration program
          during the nine months ended November 30, 2005. We anticipate that exploration
          expenditures will increase in fiscal 2007 as a result of exploration activities
          on our Mexican mineral properties.
 
 Acquisition
          of resource properties was $nil in the nine months ended November 30, 2006
          compared to $150,000 for the nine months ended November 30, 2005.
 
 Loss


-30-
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Our
          net
          loss increased to $968,000 and $5,883,000 for the three and nine months
          ended
          November 30, 2006 respectively, compared to $17,000 and $252,000 for the
          three
          and nine months ended November 30, 2005. The higher losses are attributed
          to
          increased expenses as stated above and expensing of $2,266,000 relating
          to the
          beneficial conversion feature on $2,241,000 of convertible debentures issued
          between March and May 2006. We anticipate that we will continue to incur
          losses
          until such time as we can commence the development stage of our operations
          and
          achieve significant revenues from sales of gold recovered from our Mexican
          mineral properties. There is no assurance that we will be able to commence
          the
          development stage of our operations at any of our Mexican mineral properties
          or
          achieve revenues.
 
 **Liquidity
          and Capital Resources**
 
 Since
          inception, we have undergone two unsuccessful business combinations, which
          have
          caused us to incur significant liabilities and have resulted in the accumulation
          of a substantial deficit during the exploration stage.  As of February 28,
          2006, we had total assets of $539,000, total liabilities of $1,144,000,
          and a
          deficit of $18,338,000 accumulated during the exploration stage. As of
          November
          30, 2006, we had total assets of $1,170,000, total liabilities of $119,000,
          and
          a deficit of $24,221,000 accumulated during the exploration stage.
 
 Cash
          and
          Working Capital
  We
          had
          cash of $842,742 as of November 30, 2006, compared to cash of $1,534,000
          as of
          August 31, 2006 and $1,580 as of November 30, 2005. We had working capital
          of
          $915,475 as of November 30, 2006, compared to working capital of $1,450,000
          as
          of August 31, 2006, and a working capital deficiency of $833,000 as of
          November
          30, 2005.
 
 Under
          our
          current business plan, we will not require additional financing this fiscal
          year. However, we will require additional financing during the current
          fiscal
          year if our planned exploration activities increase. We plan to spend
          approximately $3,200,000 in the next twelve months to carry out exploration
          and
          administration activities on our Mexican mineral properties, and in the
          event
          that our exploration is successful on our Cieneguita Property, we anticipate
          spending a further $2,200,000 on equipment and building a plant to put
          that
          property into production. We anticipate spending approximately $480,000
          during
          the next twelve months on general and administrative costs.
 
 We
          presently do not have sufficient financing to enable us to complete these
          plans
          and will require additional financing to perform future exploration work
          on our
          Mexican mineral properties. Our actual expenditures on these activities
          will
          depend on the amount of funds we have available as a result of our financing
          efforts. There is no assurance that we will be able to raise the necessary
          financing.
 
 Cash
          Used
          in Operating Activities
 
 Cash
          used
          in operating activities increased to $1,986,000 for the nine months ended
          November 30, 2006, compared to $68,000 for nine months ended November 30,
          2005.
          The cash used in operating activities came primarily from convertible debt
          and
          equity sales of our shares of common stock. It was primarily used for general
          and administrative costs and for the exploration program.
 
 Investing
          Activities
 
 Cash
          used
          in investing activities increased to $150,000 for the nine months ended
          November
          30, 2006 respectively, compared to $nil for the nine months ended November
          30,
          2005. Cash used in investing activities was used to acquire vehicles, office
          equipment, and computer equipment for our office in Mexico.
 
 Financing
          Activities
 
 Cash
          provided by financing activities amounted to $2,496,000 for the nine months
          ended November 30, 2006, compared to $35,000 for the nine months ended
          November
          30, 2005. All cash provided by financing activities in the nine months
          ended
          November 30, 2006 was provided by convertible debt, share issuances and
          the
          exercise of warrants. Cash provided by financing activities was used to
          fund our
          operating and investing activities. We anticipate continuing to rely on
          equity
          sales of our common stock or issuance of debt in order to continue to fund
          our
          business operations. Issuances of additional shares will result in dilution
          to
          our existing shareholders.


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On
          April
          3, 2006 and May 31, 2006 the Company issued 550,000 and 200,000 shares
          of common
          stock respectively pursuant to a private placement unit offering. Units
          consisted of one share of common stock and one-half of one warrant. Each
          full
          warrant entitles the investor to purchase an additional share of the Company’s
          common stock at a price of $1.00 per share and is exercisable until April
          30,
          2008. The units were priced at $0.50 each.
 
 On
          March
          4, 2006, the Company agreed to issue 1,651,200 shares of common stock at
          a price
          of $0.25 per share to settle $412,800 in promissory notes payable (note
          7). . As
          a condition, the promissory note holders waived all accrued interest payable
          on
          the notes. On April 6, 2006, these shares were issued and the Company recorded
          a
          $7,259 gain on settlement of debt.
  During
          the quarter ended May 31, 2006, the Company issued a total of $2,265,500
          convertible debentures. The convertible debentures, with principal and
          accrued
          interest at 7% per year are convertible into $25,000 units at the option
          of the
          holder.  Each unit consists of a warrant to purchase 25,000 of the
          Company’s shares of common stock at $1.00 and $25,000 of debt, which may be
          converted to shares of common stock at $0.50 per share and is exercisable
          until
          April 30, 2008.  In addition, the warrants are redeemable by the Company,
          at $.01 per share, in the event the Company’s Common Stock closes with a bid
          price, on average, over $3.00 per share for a consecutive 20-day period.
          Further, under the terms of the debenture, until May 2007, the Company
          is
          prohibited from effecting or entering into an agreement to effect any subsequent
          financing involving a “Variable Rate Transaction.” The term “Variable Rate
          Transaction means a transaction in which the Company issues or sells any
          debt or
          equity securities that are convertible into, exchangeable or exercisable
          for, or
          include the right to receive additional shares of Common Stock at a conversion,
          exercise or exchange rate or other price that is based upon and/or varies
          with
          the trading prices of or quotations for the shares of Common Stock at any
          time
          after the initial issuance of such debt or equity securities. The convertible
          debentures were originally issued as follows:


**Name**
              **Principal
                  Amount of Debentures**
              **Dated**1471158
                  Ontario Ltd.
              $15,000.00
              3/21/2006477291
                  BC Ltd
              $15,000.00
              2/2/2006518464
                  BC Ltd.
              $50,000.00
              3/14/2006601084
                  BC Ltd.
              $5,000.00
              2/27/2006Adelaar,
                  Jay
              $25,000.00
              3/17/2006Alpine
                  Atlantic Asset Management #1
              $100,000.00
              2/2/2006Alpine
                  Atlantic Asset Management #2
              $100,000.00
              2/9/2006Alpine
                  Atlantic Asset Management #3
              $250,000.00
              3/4/2006Aslan
                  Ltd.
              $100,000.00
              4/4/2006Barrington-Foote,
                  Joan
              $25,000.00
              2/3/2006Banca
                  del Gottardo
              $50,000.00
              5/8/2006Barton,
                  Sherri
              $5,000.00
              2/2/2006Buchamer,
                  Leslie
              $25,000.00
              4/3/2006Cavendish
                  Investments
              $50,000.00
              2/2/2006Cousins,
                  Dave
              $5,000.00
              2/2/2006CR
                  Innovations AG
              $100,000.00
              3/31/2006D'Altroy,
                  Curtis
              $25,000.00
              3/14/2006Devlin,
                  Dr. Paul G.
              $7,000.00
              2/2/2006Fodor,
                  Ignac
              $25,000.00
              3/23/2006G.B
                  Technical Services
              $50,000.00
              2/9/2006Galan,
                  Damon G
              $25,000.00
              2/24/2006Gelima
                  Capital
              $50,000.00
              3/31/2006Gringots
                  Venture Ltd.
              $15,000.00
              3/12/2006Guy,
                  Jarrett
              $12,500.00
              3/8/2006Harrison,
                  Patricia
              $25,000.00
              3/8/2006




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Hirji,
                  Sam
              $5,000.00
              2/2/2006Hsu,
                  Chih Cheng
              $50,000.00
              3/16/2006Hsu,
                  Tseng Hui
              $50,000.00
              3/6/2006Hseuh
                  , Hsiu-Wei
              $50,000.00
              3/10/2006Humber
                  Trading Inc.
              $250,000.00
              3/21/2006Jeboult,
                  Barry Hugh
              $25,000.00
              2/23/2006Jiao,
                  Xiao Meng
              $50,000.00
              3/28/2006Johal,
                  Rummen
              $25,000.00
              3/14/2006Johnston,
                  Elston
              $30,000.00
              2/2/2006Keiand
                  Capital Corp.
              $25,000.00
              3/17/2006Kennedy,
                  Deborah
              $30,000.00
              2/2/2006Kerasiotis,
                  Vasilios John
              $25,000.00
              3/8/2006Kimbell
                  Holdings Limited
              $50,000.00
              3/20/2006Kirwin,
                  Harry
              $50,000.00
              1/23/2006Kneir,
                  Gary
              $5,000.00
              2/2/2006L.E.
                  Management, Ltd.
              $7,500.00
              2/2/2006Lamont,
                  Ryan D.
              $25,000.00
              3/14/2006Levy,
                  Jamie
              $25,000.00
              3/16/2006Malette,
                  Charles
              $10,000.00
              2/2/2006Malkoc,
                  Dean E
              $5,000.00
              3/8/2006McGinnis,
                  Anne
              $15,000.00
              3/21/2006McGinnis,
                  Mark
              $15,000.00
              3/21/2006McKnight,
                  David T
              $10,000.00
              2/3/2006McKnight,
                  Michael
              $50,000.00
              2/9/2006McLean,
                  Kirk A
              $50,000.00
              2/22/2006Michie
                  Family Trust
              $3,000.00
              3/31/2006Monies,
                  Thomas Steen
              $25,000.00
              2/24/2006Monkman,
                  Thomas W.
              $25,000.00
              3/14/2006Morrison,
                  Dorothy
              $25,000.00
              3/17/2006Northwind
                  Investments, Inc.
              $25,000.00
              3/21/2006Norton,
                  John W.
              $10,000.00
              3/29/2006Nylund,
                  Gary
              $10,000.00
              3/17/2006Olea,
                  Luis
              $25,000.00
              3/31/2006PCD
                  Club
              $25,000.00
              2/27/2006Pedrosa,
                  Maria
              $50,000.00
              3/6/2006Porter,
                  Vern
              $7,500.00
              2/2/2006Poulson,
                  David A.
              $15,000.00
              3/21/2006Purewal,
                  Harpreet Singh
              $12,500.00
              3/14/2006Randhawa,
                  Michael S.
              $12,500.00
              3/14/2006Realprisma
                  Vers Treuhand AG
              $10,000.00
              4/6/2006Reaugh,
                  Larry
              $5,000.00
              2/2/2006Rechsheiner,
                  Max
              $25,000.00
              3/31/2006Ringoir,
                  Tom
              $5,000.00
              2/2/2006Rohner,
                  Kurt
              $25,000.00
              3/20/2006Ross,
                  Peter
              $50,000.00
              3/6/2006Roytor
                  & Co.
              $50,000.00
              4/4/2006RPC
              $10,000.00
              4/6/2006




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Rupp,
                  Bernhard
              $10,000.00
              3/31/2006RV
                  Construction Inc.
              $12,500.00
              3/8/2006Sage,
                  Ryan A
              $12,500.00
              3/8/2006Saloustros,
                  Joe
              $10,000.00
              2/23/2006Sausilito
                  Ltd.
              $37,500.00
              3/21/2006Schole,
                  Mattias
              $50,000.00
              3/31/2006Sheikh,
                  Asad
              $25,000.00
              3/21/2006Sheikh,
                  Mazhar-Ul-Haq
              $25,000.00
              3/21/2006Sklavenitis,
                  Terry
              $25,000.00
              3/17/2006Smith,
                  Charles
              $10,000.00
              2/2/2006Stark,
                  Robert Paul
              $10,000.00
              2/27/2006Stewart,
                  Craig
              $25,000.00
              3/8/2006Stuit,
                  Brad
              $25,000.00
              3/17/2006Tredger,
                  Peter
              $5,000.00
              2/2/2006Welsh,
                  Jordon
              $5,000.00
              2/2/2006Wittenberg,
                  Gerald
              $50,000.00
              2/7/2006Woo,
                  Chang
              $12,500.00
              3/14/2006Yaseniuk,
                  Jeremy
              $25,000.00
              3/14/2006Zacharuk,
                  Ed
              $5,000.00
              2/2/2006TOTAL
              $2,917,500





The
          holders of the debentures in the table above converted all of the debentures
          to
          shares of common stock at $0.50 per share in June 2006. The Company issued
          5,835,000 shares and 2,917,500 warrants to debenture holders upon the
          conversion. We have paid to the convertible debenture holders a total of
          $58,308, which is their accumulated interest on the debentures. During
          August
          2005, the Company cancelled 50,000 shares of common stock with respect
          to the
          conversion and 25,000 warrants with respect to this conversion due to
          non-payment of subscription funds.
 
 
 The
          amount of our convertible debt outstanding at November 30, 2006 was $nil
          compared to $30,000 at November 30, 2005.
 Going
          Concern
 
 Our
          consolidated financial statements have been prepared on a going concern
          basis,
          which assumes the realization of assets and settlement of liabilities in
          the
          normal course of business. Our ability to continue as a going concern is
          dependent upon our ability to generate profitable operations in the future
          and/
          or to obtain the necessary financing to meet our obligations and repay
          our
          liabilities arising from normal business operations when they become due.
          The
          outcome of these matters cannot be predicted with any certainty at this
          time and
          raise substantial doubt that we will be able to continue as a going concern.
          Our
          consolidated financial statements do not include any adjustments to the
          amount
          and classification of assets and liabilities that may be necessary should
          we be
          unable to continue as a going concern.
 
 The
          Company has a history of operating losses and will need to raise additional
          capital to fund its planned operations. The Company had working capital
          of
          $915,000 as of November 30, 2006, and an accumulated deficit during the
          exploration stage of $26,170,000. These conditions raise substantial doubt
          about
          the Company’s ability to continue as a going concern.
 
 The
          Company intends to reduce its cumulative loss through the attainment of
          profitable operations from its investment in a Mexican mining venture.
          There is
          no assurance that these operations will be profitable. In addition, the
          Company
          has conducted private placements of convertible debt and common stock,
          which
          have generated a portion of the initial cash requirements of its planned
          Mexican
          mining ventures.


**Off-Balance
        Sheet Arrangements**





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 Table
          of Contents




We
        currently do not have any off-balance sheet arrangements which 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 are material to
        our
        investors.





**ITEM
        3.**  **CONTROLS
        AND PROCEDURES**





**Evaluation
        of Disclosure Controls and Procedures:**





The
          Securities and Exchange Commission defines the term “disclosure controls and
          procedures” to mean a company's controls and other procedures of an issuer that
          are designed to ensure that information required to be disclosed in the
          reports
          that it files or submits under the Securities Exchange Act of 1934 is recorded,
          processed, summarized and reported, within the time periods specified in
          the
          Securities and Exchange Commission’s rules and forms. Disclosure controls and
          procedures include, without limitation, controls and procedures designed
          to
          ensure that information required to be disclosed by an issuer in the reports
          that it files or submits under the Securities Exchange Act of 1934 is
          accumulated and communicated to the issuer’s management, including its principal
          executive and principal financial officers, or persons performing similar
          functions, as appropriate to allow timely decisions regarding required
          disclosure. The Company maintains such a system of controls and procedures
          in an
          effort to ensure that all information which it is required to disclose
          in the
          reports it files under the Securities Exchange Act of 1934 is recorded,
          processed, summarized and reported within the time periods specified under
          the
          SEC's rules and forms and that information required to be disclosed is
          accumulated and communicated to principal executive and principal financial
          officers to allow timely decisions regarding disclosure.
 
 As
          of the
          end of the period covered by this report, we carried out an evaluation,
          under
          the supervision and with the participation of our chief executive officer
          and
          principal accountingchief financial officer, of the effectiveness of the
          design
          and operation of our disclosure controls and procedures. Based on this
          evaluation, our chief executive officer and principal accounting officer
          concluded that our disclosure controls and procedures are designed to provide
          reasonable assurance of achieving the objectives of timely alerting them
          to
          material information required to be included in our periodic SEC reports
          and of
          ensuring that such information is recorded, processed, summarized and reported
          with the time periods specified. Our chief executive office and principal
          accounting officer also concluded that our disclosure controls and procedures
          were effective as of November 30, 2006 to provide reasonable assurance
          of the
          achievement of these objectives.


**Changes
        in Internal Control over Financial Reporting**





There
        were no changes in our internal controls or in other factors that could affect
        these controls subsequent to the date of their evaluation, including any
        deficiencies or material weaknesses of internal controls that would require
        corrective action.




**PART
        II - OTHER INFORMATION**





**ITEM
        4.**  **UNREGISTERED
        SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**





None.




**ITEM
        5.**  **EXHIBITS**





The
        following exhibits are filed in reference:




2.1
                Securities
                    Purchase Agreement dated as of August 25, 2004 among Sunburst
                    Acquisitions
                    IV, Inc. (and identified purchasers) (incorporated by reference
                    from
                    Current Report on Form 8-K and filed with the Securities and
                    Exchange
                    Commission on August 31, 2004).
  2.2
                Share
                    Exchange Agreement, dated May 3, 2004, by and among Sunburst
                    Acquisitions
                    IV, Inc., a Colorado corporation, Sierra Minerals and Mining,
                    Inc., a
                    Nevada corporation, and the shareholders of Sierra Minerals & Mining,
                    Inc. (incorporated by reference from Current Report on Form 8-K/A
                    and
                    filed with the Securities and Exchange Commission on August 9,
                    2004).
  2.3
                Joint
                    Venture Agreement, dated April 26, 2004 and amended on June 1,
                    2004, by
                    and between Sierra Mining and Minerals, Inc., a Nevada corporation,
                    and
                    Minera Rio Tinto S.A. de C.V., a Mexican company (incorporated
                    by


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reference
                  from Current
                  Report on Form 8-K/A and filed with the Securities and Exchange
                  Commission
                  on August 9, 2004).
  2.4
                Amendment
                    to Joint Venture Agreement dated June 1, 2004 (incorporated by
                    reference
                    from Current Report on Form 8-K/A and filed with the Securities
                    and
                    Exchange Commission on August 9,
                    2004).
  3
                    (i)
                Articles
                    of Incorporation (incorporated by reference from Registration
                    Statement on
                    Form 10-SB/A filed with the Securities and Exchange Commission
                    on December
                    29, 1997).
 
 3
                    (ii)
                Bylaws
                    (incorporated by reference from Registration Statement on Form
                    10-SB/A
                    filed with the Securities and Exchange Commission on December
                    29,
                    1997).
  4.1
                Specimen
                    Common Stock Certificate (incorporated by reference from Registration
                    Statement on Form 10-SB/A filed with the Securities and Exchange
                    Commission on December 29, 1997).
  4.2
                Registration
                    Agreement dated April 20, 2004, by and among Sunburst Acquisitions
                    IV,
                    Inc., a Colorado company, and each of the purchasers in a private
                    placement of shares of Sunburst (incorporated by reference from
                    Current
                    Report on Form 8-K/A and filed with the Securities and Exchange
                    Commission
                    on August 9, 2004).
 
 10.1
                Distribution
                    Agreement between EPI and Sunburst Acquisitions IV, Inc. (incorporated
                    by
                    reference from Form 10-KSB filed with the Securities and Exchange
                    Commission on May 20, 2002).
  10.2
                Distribution
                    Agreement by and between Romlight International, Inc. and Sunburst
                    Digital, Inc. (incorporated by reference from Form 10-KSB filed
                    with the
                    Securities and Exchange Commission on June 11,
                    2003).
  10.3
                Promissory
                    Note between Sunburst Acquisitions IV, Inc. and Minera Rio Tinto
                    S.A. de
                    C.V. in the amount of $ 57,500 dated January 9, 2004 (incorporated
                    by
                    reference from Current Report on Form 8-K/A and filed with the
                    Securities
                    and Exchange Commission on August 9,
                    2004).
  10.4
                Promissory
                    Note between Sierra Mineral and Mining, Inc. and Minera Rio Tinto
                    S.A. de
                    C.V. in the amount of $ 167,500, dated May 3, 2004 (incorporated
                    by
                    reference from Current Report on Form 8-K/A and filed with the
                    Securities
                    and Exchange Commission on August 9,
                    2004).
  10.5
                Funds
                    Escrow Agreement dated July 2005, among Sunburst Acquisitions
                    IV, Inc.,
                    Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP, and
                    Grushko
                    & Mittman, P.C. (herein incorporated by reference from the Company’s
                    current report on Form 8-K dated July 1, 2005 and filed with
                    the
                    Securities and Exchange Commission on August 17,
                    2005).
 
 10.6
                Repayment
                    Agreement dated July 15, 2005 by and among Sunburst IV, Inc.
                    and
                    Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP. (herein
                    incorporated by reference from the Company’s current report on Form 8-K
                    dated July 1, 2005 and filed with the Securities and Exchange
                    Commission
                    on August 17, 2005).
 
 10.7
                Consulting
                    Agreement dated July 1, 2005 between Tracy A. Moore and Sunburst
                    Acquisitions IV, Inc. (herein incorporated by reference from
                    the Company’s
                    current report on Form 8-K dated July 1, 2005 and filed with
                    the
                    Securities and Exchange Commission on August 17,
                    2005).
  10.8
                SHARE
                    OPTION AGREEMENT among Minera Rio Tinto, S.A. de C.V. a corporation
                    duly
                    incorporated and validly existing pursuant to the laws of the
                    United
                    Mexican States and having an office at Pascual Orozco No. 2117
                    - A
                    Chihuahua, State of Chihuahua, Mexico 31310 and Sunburst Acquisitions
                    IV,
                    Inc., a corporation duly incorporated and validly existing pursuant
                    to the
                    laws of the State of Colorado, USA and having an office at Suite
                    206, 595
                    Howe St., Vancouver, B.C. Canada V6C 2T5 (herein incorporated
                    by reference
                    from the Company’s report on Form 8-K for report date August 22, 2005 and
                    filed with the Securities and Exchange Commission on August 25,
                    2005).
  10.9
                AGREEMENT
                    made and entered in the City of Chihuahua, State of Chihuahua
                    as of the
                    18th day of August,


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          of Contents




2005 among
                  COMPAÑÍA
                  MINERA DE NAMIQUIPA, S. A. DE C. V. a company duly incorporated
                  and
                  validly existing pursuant to the laws of the United Mexican States,
                  and
                  MINERA RIO TINTO, S. A. DE C. V. a company duly incorporated and
                  validly
                  existing pursuant to the laws of the United Mexican States, and
                  MARIO
                  HUMBERTO AYUB TOUCHE having a domicile at San Antonio No. 2036
                  Chihuahua,
                  Chihuahua and SUNBURST MINING DE MÉXICO, S. A. DE C. V., a company duly
                  incorporated and validly existing pursuant to the laws of the United
                  Mexican States (herein incorporated by reference from the Company’s report
                  on Form 8-K for report date August 22, 2005 and filed with the
                  Securities
                  and Exchange Commission on August 25,
                  2005).
  10.10
                AGREEMENT
                    made and entered at the City of Chihuahua, State of Chihuahua
                    on this the
                    18th day of August of the year 2005, among MINERA RIO TINTO,
                    S. A. DE C.
                    V. a company duly incorporated and validly existing pursuant
                    to the laws
                    of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                    V. a company duly incorporated and validly existing pursuant
                    to the laws
                    of the United Mexican States (herein incorporated by reference
                    from the
                    Company’s report on Form 8-K for report date August 22, 2005 and filed
                    with the Securities and Exchange Commission on August 25,
                    2005).
  10.11
                OPERATOR’S
                    AGREEMENT dated effective as of the 18th day of August, 2005,
                    among Minera
                    Rio Tinto, S.A. de C.V. a corporation duly incorporated and validly
                    existing pursuant to the laws of the United Mexican States and
                    having an
                    office at Pascual
  Orozco
                    No. 2117 - A Chihuahua, State of Chihuahua, Mexico 31310, and
                    Sunburst de
                    Mexico, S.A. de C.V. a corporation duly incorporated and validly
                    existing
                    pursuant to the laws of the United Mexican States and having
                    an office at
                    Suite 5, Avenida del Mar No.1022 Zona Costera, Mazatlan, State
                    of Sinaloa,
                    Mexico (herein incorporated by reference from the Company’s report on Form
                    8-K for report date August 22, 2005 and filed with the Securities
                    and
                    Exchange Commission on August 25,
                    2005).
  10.12
                ASSIGNMENT
                    OF CONTRACT AGREEMENT made and entered in the City of Chihuahua,
                    State of
                    Chihuahua as of this the 18th day of August, 2005 among MINERA
                    RIO TINTO,
                    S. A. DE C. V. a company duly incorporated and validly existing
                    pursuant
                    to the laws of the United Mexican States, and CORPORATIVO MINERO,
                    S.A. DE
                    C.V. a company duly incorporated and validly existing pursuant
                    to the laws
                    of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                    V. a company duly incorporated and validly existing pursuant
                    to the laws
                    of the United Mexican States (herein incorporated by reference
                    from the
                    Company’s report on Form 8-K for report date August 22, 2005 and filed
                    with the Securities and Exchange Commission on August 25,
                    2005).
  10.13
                ASSIGNMENT
                    OF CONTRACT AGREEMENT made and entered in the City of Chihuahua,
                    State of
                    Chihuahua as of this the 18th day of August, 2005, among MINERA
                    RIO TINTO,
                    S. A. DE C. V. a company duly incorporated and validly existing
                    pursuant
                    to the laws of the United Mexican States, and RAFAEL FERNANDO
                    ASTORGA
                    HERNÁNDEZ, having a domicile at Calle República de Uruguay No. 706 of the
                    City of Chihuahua, Chih, and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a
                    company duly incorporated and validly existing pursuant to the
                    laws of the
                    United Mexican States (herein incorporated by reference from
                    the Company’s
                    report on Form 8-K for report date August 22, 2005 and filed
                    with the
                    Securities and Exchange Commission on August 25,
                    2005).
  10.14
                ASSIGNMENT
                    OF CONTRACT AGREEMENT made and entered in the City of Chihuahua,
                    State of
                    Chihuahua as of this the 18th day of August, 2005 among MINERA
                    RIO TINTO,
                    S. A. DE C. V. a company duly incorporated and validly existing
                    pursuant
                    to the laws of the United Mexican States, having an office at
                    Av. Pascual
                    Orozco Number 2117- Altos, La Cima, C. P. 31310, Chihuahua, Chihuahua,
                    and
                    MINERA RACHASA, S.A. DE C.V., a company duly incorporated and
                    validly
                    existing pursuant to the laws of the United Mexican States, and
                    having an
                    office atNiños Héroes No. 410 Colonia Centro, Chihuahua, Chihuahua (RFC
                    BMM-900120-8B6), and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a company
                    duly incorporated and validly existing pursuant to the laws of
                    the United
                    Mexican States (herein incorporated by reference from the Company’s report
                    on Form 8-K for report date August 22, 2005 and filed with the
                    Securities
                    and Exchange Commission on August 25,
                    2005).
  10.15
                THE
                    NEW AGREEMENT entered into on December 8, 2005 among the Company,
                    Sunburst
                    Mexico, and MRT (herein incorporated by reference from the Company’s
                    report on Form 8-K for report date December 8, 2005 and


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 Table
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  filed
                  with the
                  Securities and Exchange Commission on December 14,
                  2005).
 
 10.16
                CREATION
                    OF A DIRECT FINANCIAL OBLIGATION AND UNREGISTERED SALES OF SECURITIES
                    ON
                    MARCH 31, 2006 (herein incorporated by reference from the Company’s report
                    on Form 8-K for report date March 31, 2006 and filed with the
                    Securities
                    and Exchange Commission on April 7,
                    2006).
 
 10.17
                AMENDMENT
                    TO AGREEMENT ENTERED INTO ON DECEMBER 8, 2005, entered into on
                    April 6,
                    2006 among Company, Sunburst Mexico, and MRT (herein incorporated
                    by
                    reference from the Company’s report on Form 8-K for report date April 6,
                    2006 and
 
 filed
                    with the Securities and Exchange Commission on April 7,
                    2006).31.1
                Certification
                    of Chief Executive Officer of
                    Mexoro Minerals Ltd. pursuant to Rule 13a-14(a)/15d-14(a).*
  31.2
                Certification
                    of Chief Financial Officer of
                    Mexoro Minerals Ltd. pursuant to Rule 13a-14(a)/15d-14(a).*
  32.1
                Certification
                    of Chief Executive Officer of
                    Mexoro Minerals Ltd.. pursuant to 18 U.S.C. Section 1350.*
  32.2
                Certification
                    of Chief Financial Officer of
                    Mexoro Minerals Ltd. pursuant to 18 U.S.C. Section 1350.*
  *filed
        herewith




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**SIGNATURE**





In
          accordance with the requirements of the Exchange Act, the registrant caused
          this
          report to be signed on its behalf by the undersigned, thereunto duly
          authorized.
 
 
 **MEXORO
          MINERALS LTD.**
 
 
 
 By:
          /S/
          Robert Knight
 Robert
          Knight, President and Director
  Date:
          March 16, 2007


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