UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington
D. C. 20549





FORM
10-Q





QUARTERLY
REPORT UNDER SECTION 13 or 15 (d)


OF THE
SECURITIES EXCHANGE ACT OF 1934


For the
quarterly period ended August 31, 2008


Commission
file number 000-23561





MEXORO
MINERALS LTD.


(Exact
name of small business issuer as specified in its charter)





Colorado
            0-23561
            84-1431797(State
      or other jurisdiction of incorporation)
            (Commission
      File Number)
            (IRS
      Employer Identification Number)C.
      General Retana
              #706
      Col. San Felipe
              Chihuahua,
      Chih. Mexico
            31203(Address
      of principal executive offices)
            (Zip
      Code)





Registrant’s
telephone number, including area code: +52 (614) 426 5505




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




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


Large
      accelerated filer o
            
            Acceleratedfiler o
            
            Non-accelerated
      filer o
            
            Smaller
      reporting company þ




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







State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 29,544,416 at October 1, 2008.














-  -





ITEM 1.
FINANCIAL STATEMENTS













MEXORO
MINERALS LTD.


(An
Exploration Stage Company)








CONSOLIDATED
FINANCIAL STATEMENTS


(Unaudited)


(Expressed
in U.S. Dollars)


AUGUST
31, 2008




































MEXORO MINERALS
LTD.


(An
Exploration Stage Company)


Consolidated
Balance Sheets


(Expressed
in U.S. Dollars)





August
      31,
            
            
            February
      29,2008
            
            
            2008(Unaudited)
            
            
            (Audited)AssetsCurrentCash
      and cash equivalents
            
            $
            1,352
            
            
            $
            12,947Accounts
      receivable
            
            
            420,937
            
            
            
            278,847Prepaid
      expenses
            
            
            56,126
            
            
            
            104,936478,415
            
            
            
            396,730Equipment(note
      4)
            
            
            447,016
            
            
            
            460,941Total
      assets
            
            $
            925,431
            
            
            $
            857,671LiabilitiesCurrentAccounts
      payable and accrued liabilities
            
            $
            2,013,752
            
            
            $
            655,677Current
      portion of loans payable (note 8)
            
            
            39,912
            
            
            
            71,256Promissory
      notes (note 6)
            
            
            1,784,654
            
            
            
            1,480,702Convertible
      debentures (note 7)
            
            
            1,060,753
            
            
            
            -4,899,071
            
            
            
            2,207,635Loans payable(note
      8)
            
            
            21,731
            
            
            
            27,481Total
      liabilities
            
            
            4,920,802
            
            
            
            2,235,116Stockholders’
      deficiencyCapital
      stockPreferred
      stockAuthorized:
      20,000,000 shares without par value (note 9)Issued:
      nilCommon
      stockAuthorized:
      200,000,000 shares without par valueIssued:
      24,119,028 (February 29, 2008 – 25,380,502)
              (note
      10)
            
            
            24,119,028
            
            
            
            22,978,654Additional
      paid-in capital
            
            
            11,984,543
            
            
            
            11,155,687Stock
      subscriptions
            
            
            4,943
            
            
            
            330,000Accumulated
      deficit from prior operations
            
            
            (2,003,427
            )
            
            
            (2,003,427
            )Accumulated
      deficit during the exploration stage
            
            
            (38,066,090
            )
            
            
            (33,828,011
            )Accumulated
      other comprehensive income (loss)
            
            
            (34,368
            )
            
            
            (10,348
            )Total
      stockholders’ deficiency
            
            
            (3,995,371
            )
            
            
            (1,377,445
            )Total
      liabilities and stockholders’ deficiency
            
            $
            925,431
            
            
            $
            857,671





Going-concern
(note 3)


Commitments
(notes 5, 12 and 14)


Subsequent
events (note 15)


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





F-1







MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Consolidated
Statements of Operations and Deficit


(Unaudited)
(Expressed in U.S. Dollars)





Period
      fromInception
      ofExplorationThree
      Months Ended
            
            Six
      Months Ended
            
            (March
      1, 2004)August
      31,
            
            August
      31,
            
            August
      31,
            
            August
      31,
            
            To
      August 31,2008
            
            2007
            
            2008
            
            2007
            
            2008ExpensesGeneral
      and administrative
            $
            504,751
            $
            356,858
            $
            931,161
            $
            1,292,123
            $
            5,266,856Stock-based
      compensation (note 11)
            
            151,252
            
            735,670
            
            339,762
            
            1,673,378
            
            6,060,558Mineral
      exploration (note 5)
            
            1,462,062
            
            564,358
            
            2,754,885
            
            1,232,634
            
            6,525,063Impairment
      of mineral property costs
            
            -
            
            -
            
            -
            
            -
            
            16,145,422Operating
      loss
            
            (2,118,065)
            
            (1,656,886)
            
            (4,025,808)
            
            (4,198,135)
            
            (33,997,899)Other
      income (expenses)Foreign
      exchange
            
            10,313
            
            2,938
            
            29,115
            
            2,938
            
            30,472Interest
      expense
            
            (124,940)
            
            -
            
            (236,978)
            
            -
            
            (4,234,699)Interest
      income
            
            -
            
            3,228
            
            -
            
            (3,129)
            
            -Loss
      on sale of assets
            
            (1,822)
            
            -
            
            (4,408)
            
            -
            
            (4,408)Gain
      on settlement of debt
            
            -
            
            -
            
            -
            
            -
            
            140,444Net
      loss
            
            (2,234,514)
            
            (1,650,720)
            
            (4,238,079)
            
            (4,198,326)
            
            (38,066,090)Accumulated
      deficit, beginning
            
            (35,831,576)
            
            (28,279,013)
            
            (33,828,011)
            
            (25,731,407)
            
            -Accumulated
      deficit, ending
            $
            (38,066,090)
            $
            (29,929,733)
            $
            (38,066,090)
            $
            (29,929,733)
            $
            (38,066,090)Other
      comprehensive incomeForeign
      exchange gain (loss) on translation
            
            6,030
            
            (2,834)
            
            (24,020)
            
            13,093
            
            (34,368)Total
      comprehensive loss
            $
            (2,228,484)
            $
            (1,653,554)
            $
            (4,262,099)
            $
            (4,185,233)
            $
            (38,100,458)Total
      loss per share – basic and diluted
            $
            (0.08)
            $
            (0.07)
            $
            (0.16)
            $
            (0.19)
            $
            -Weighted
      average number of shares of common stock – basic and
    diluted
            
            26,901,395
            
            22,372,008
            
            26,440,237
            
            21,767,370
            
            -











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





F-2







MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Consolidated
Statements of Cash Flow


(Unaudited)
(Expressed in U.S. Dollars)





Period
      fromInception
      ofSix
      Months Ended
            
            
            ExplorationAugust
      31,
            
            
            August
      31,
            
            
            (March
      1, 2004)2008
            
            
            2007
            
            
            to
      August 31, 2008Cash
      flows from operating activitiesNet
      loss
            
            $
            (4,238,079
            )
            
            $
            (4,198,326
            )
            
            $
            (38,066,090
            )Write
      off of note receivable
            
            
            
            
            
            
            -
            
            
            
            57,500Acquisition
      of resource properties costs for stock
            
            
            
            
            
            
            -
            
            
            
            13,645,000Issuance
      of shares for consulting services
            
            
            
            
            
            
            -
            
            
            
            90,000Depreciation
            
            
            44,121
            
            
            
            31,575
            
            
            
            148,360Discount
      on convertible debenture
            
            
            93,400
            
            
            
            -
            
            
            
            268,400Non-cash
      component of gain on settlement of debt
            
            
            
            
            
            
            -
            
            
            
            (182,259
            )Stock-based
      compensation
            
            
            341,723
            
            
            
            1,673,378
            
            
            
            7,585,519Beneficial
      conversion feature
            
            
            64,133
            
            
            
            -
            
            
            
            3,781,633Prepaid
      expense
            
            
            50,048
            
            
            
            71,917
            
            
            
            (45,187
            )Accounts
      receivable
            
            
            (130,430
            )
            
            
            (15,692
            )
            
            
            (391,775
            )Customer
      deposits
            
            
            
            
            
            
            -
            
            
            
            (44,809
            )Notes
      payable
            
            
            
            
            
            
            -
            
            
            
            109,337Accounts
      payable and accrued liabilities
            
            
            1,530,072
            
            
            
            724,243
            
            
            
            2,956,428Cash
      used in operating activities
            
            
            (2,245,012
            )
            
            
            (1,712,905
            )
            
            
            (10,087,943
            )Investing
      activityInvesting
      activitiesPurchase
      of property and equipment
            
            
            (13,171
            )
            
            
            (35,394
            )
            
            
            (561,471
            )Cash
      used in investing activity
            
            
            (13,171
            )
            
            
            (35,394
            )
            
            
            (561,471
            )Financing
      activitiesProceeds
      from loans payable
            
            
            -
            
            
            
            47,685
            
            
            
            182,454Proceeds
      from notes payable
            
            
            935,156
            
            
            
            465,088
            
            
            
            2,579,158Proceeds
      from convertible debentures
            
            
            1,370,000
            
            
            
            -
            
            
            
            5,062,500Proceeds
      from exercise of options
            
            
            
            
            
            
            -
            
            
            
            78,000Proceeds
      from exercise of warrants
            
            
            
            
            
            
            1,264,976
            
            
            
            3,144,377Repayment
      of loans payable
            
            
            (39,561
            )
            
            
            -
            
            
            
            (126,020
            )Repayment
      of notes payable
            
            
            (33,950
            )
            
            
            -
            
            
            
            (393,950
            )Repayment
      of convertible debentures
            
            
            -
            
            
            
            -
            
            
            
            (530,000
            )Stock
      subscriptions
            
            
            4,943
            
            
            
            -
            
            
            
            174,943Issuance
      of common stock
            
            
            4,942
            
            
            
            -
            
            
            
            482,051Cash
      provided by financing activities
            
            
            2,241,530
            
            
            
            1,777,749
            
            
            
            10,653,513Outflow
      of cash and cash equivalents
            
            
            (16,653
            )
            
            
            29,450
            
            
            
            4,099Effect
      of foreign currency translation on cash
            
            
            5,058
            
            
            
            3,756
            
            
            
            (24,824
            )Cash
      and cash equivalents, beginning
            
            
            12,947
            
            
            
            13,148
            
            
            
            22,077Cash
      and cash equivalents, ending
            
            $
            1,352
            
            
            $
            46,354
            
            
            $
            1,352Supplemental
      cash flow informationInterest
      paid
            
            $
            14,034
            
            
            $
            -
            
            
            $
            209,321Common
      stock issued on conversion of debt
            
            
            103,000
            
            
            
            -
            
            
            
            3,320,500Common
      stock issued on settlement of notes payable
            
            
            635,008
            
            
            
            -
            
            
            
            1,047,808Common
      stock issued for mineral property costs
            
            
            -
            
            
            
            -
            
            
            
            500,000Shares
      issued for services
            
            
            67,424
            
            
            
            -
            
            
            
            157,424








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





F-3







MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




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 was engaged in two business acquisitions and one business
opportunity, none of which generated a significant profit or created 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 operations to mineral
exploration. Accordingly, as of March 1, 2004, the Company is considered to be
an exploration stage company.






On May
25, 2004, the Company completed a “Share Exchange Agreement” 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 a joint
venture agreement with Minera Rio Tinto, S.A. de C.V. (“MRT”), a company duly
incorporated pursuant to the laws of Mexico, which is controlled by an officer
of the Company. In August 2005, the Company cancelled the joint venture
agreement in order to directly pursue mineral exploration opportunities through
a wholly-owned Mexican subsidiary, Sunburst Mining 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 5).
On January 20, 2006, Sierra Minerals was dissolved.






On May 5,
2008, the Company signed a letter of intent (‘LOI’) to enter into a strategic
alliance with Paramount Gold and Silver Corp. (‘Paramount’). The agreement
called for Paramount to invest a minimum of $4 million and a maximum of $6
million into the Company, at a fixed price of $0.50 per unit by June 23, 2008.
On June 18, 2008, the Company and Paramount agreed to extend the date from June
23, 2008 to July 21, 2008. The Company and Paramount then agreed to extend the
date to August 5, 2008. On August 6, 2008 Mexoro terminated the LOI with
Paramount as Paramount did not meet the terms of the agreement.






During
the six months ended August 31, 2008, Paramount provided Mexoro $1,370,000 in
the form of secured convertible debentures bearing interest at a rate of 8% per
annum for a term of one year. Paramount has the option to convert the debt into
units.






The
accompanying unaudited consolidated financial statements have been prepared in
accordance with United States generally accepted accounting principles (“US
GAAP”) for interim financial information and with the instructions to Form
10-QSB and Item 310 of Regulation S-B. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete consolidated financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
six months ended August 31, 2008 are not necessarily indicative of the results
that may be expected for the year ending February 28, 2009. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company’s annual report on Form 10-KSB for the year
ended February 29, 2008.









F-4







MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




2.
            SIGNIFICANT
      ACCOUNTING POLICIES




(a)
            Recent
      accounting pronouncements





(i)
            In
      December 2007, the FASB issued SFAS No. 141 (R), “Business Combinations”,
      and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
      Statements”. SFAS No. 141 (R) requires an acquirer to measure the
      identifiable assets acquired, the liabilities assumed and any
      noncontrolling interest in the acquiree at their fair values on the
      acquisition date, with goodwill being the excess value over the net
      identifiable assets acquired. SFAS No. 160 improves the relevance,
      comparability, and transparency of financial information provided to
      investors by requiring all entities to report noncontrolling (minority)
      interests in subsidiaries in the same way as equity in the consolidated
      financial statements. In addition, SFAS No. 160 eliminates the diversity
      that currently exists in accounting for transactions between an entity and
      noncontrolling interests by requiring they be treated as equity
      transactions. The calculation of earnings per share will continue to be
      based on income amounts attributable to the parent. SFAS No. 141 (R) and
      SFAS No. 160 are effective for financial statements issued for fiscal
      years beginning after December 15, 2008. Early adoption is prohibited. We
      have not yet determined the effect on our consolidated financial
      statements, if any, upon adoption of SFAS No. 141 (R) or SFAS No.
      160.




(ii)
            In
      February 2008, the FASB issued FASB Staff Position (“FSP”) FAS No. 140-3,
      “Accounting for Transfers of Financial Assets and Repurchase Financing
      Transactions”, which provides a consistent framework for the evaluation of
      a transfer of a financial asset and subsequent repurchase agreement
      entered into with the same counterparty. FSP FAS No. 140-3 provides
      guidelines that must be met in order for an initial transfer and
      subsequent repurchase agreement to not be considered linked for
      evaluation. If the transactions do not meet the specified criteria, they
      are required to be accounted for as one transaction. This FSP will be
      effective March 1, 2009, and shall be applied prospectively to initial
      transfers and repurchase financings for which the initial transfer is
      executed on or after adoption. The adoption of FSP FAS No. 140-3 will not
      have an impact on our consolidated financial condition or results of
      operations.




(iii)
            In
      March 2008, the FASB issued SFAS No. 161, “Disclosure About Derivative
      Instruments and Hedging Activities, an amendment to Financial Accounting
      Standards Board Financial Accounting Standard No. 133”.  SFAS
      No. 161 requires among other things, enhanced disclosure about the volume
      and nature of derivative and hedging activities and a tabular summary
      showing the fair value of derivative instruments included in the statement
      of financial position and statement of operations. SFAS No. 161 also
      requires expanded disclosure of contingencies included in derivative
      instruments related to credit risk. SFAS No. 161 is effective for fiscal
      2009. The adoption of SFAS No. 161 will not have an impact on our
      consolidated financial condition or results of
  operations.




(iv)
            In
      May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally
      Accepted Accounting Principles”. This Statement identifies the sources for
      GAAP in the U.S. and lists the categories in descending order. An entity
      should follow the highest category of GAAP applicable for each of its
      accounting transactions. The adoption will not have a material effect on
      the Company’s consolidated financial
statements.







F-5





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




2.
            SIGNIFICANT
      ACCOUNTING POLICIES (CONTINUED)




Recent
accounting pronouncements (continued)




(v)
            In
      May 2008, the FASB issued FSP No. APB 14-1, “Accounting for Convertible
      Debt Instruments That May Be Settled in Cash Upon Conversion (Including
      Partial Cash Settlements)” (previously FSP APB 14-a), which will change
      the accounting treatment for convertible securities which the issuer may
      settle fully or partially in cash. Under the final FSP, cash settled
      convertible securities will be separated into their debt and equity
      components. The value assigned to the debt component will be the estimated
      fair value, as of the issuance date, of a similar debt instrument without
      the conversion feature, and the difference between the proceeds for the
      convertible debt and the amount reflected as a debt liability will be
      recorded as additional paid-in capital. As a result, the debt will be
      recorded at a discount reflecting its below market coupon interest rate.
      The debt will subsequently be accreted to its par value over its expected
      life, with the rate of interest that reflects the market rate at issuance
      being reflected on the income statement. This change in methodology will
      affect the calculations of net income and earnings per share for many
      issuers of cash settled convertible securities. The FSP is effective for
      financial statements issued for fiscal years beginning after December 15,
      2008, and interim periods within those fiscal years. The Company is
      currently evaluating the impact of the adoption of FSP No. APB 14-1 on its
      consolidated financial statements.




(vi)
            In
      June 2008, the FASB issued FSP EITF 03-6-1, "Determining Whether
      Instruments Granted in Share-Based Payment Transactions Are Participating
      Securities", which applies to the calculation of earnings per share
      (“EPS”) under Statement 128 for share-based payment awards with rights to
      dividends or dividend equivalents. Under the final FSP EITF 03-6-1,
      Unvested share-based payment awards that contain nonforfeitable rights to
      dividends or dividend equivalents (whether paid or unpaid) are
      participating securities and shall be included in the computation of EPS
      pursuant to the two-class method. The FSP EITF 03-6-1 is effective for
      financial statements issued for fiscal years beginning after December 15,
      2008, and interim periods within those fiscal years. The Company is
      currently evaluating the impact of the adoption of EITF 03-6-1 on its
      consolidated financial statements.





F-6





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




3.
            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 August 31, 2008, the Company had a
working capital deficiency of $4,420,656 (February 29, 2008 - $1,810,905) and
cumulative losses during the exploration period of $38,066,090 (February 29,
2008 - $33,828,011). These conditions raise substantial doubt about the
Company’s ability to continue as a going concern.






The
Company intends to reduce its cumulative losses through the attainment of
profitable operations, from its investment in a Mexican mining venture (note 5).
In addition, the Company has conducted private placements of convertible debt
and common stock (note 10), which have generated a portion of the initial cash
requirements of its planned Mexican mining ventures (note 5).






4.
            EQUIPMENT




1.
              EQUIPMENT
  August
      31, 2008
              
              
              February
      29,2008Cost
              
              
              Accumulated
      Depreciation
              
              
              Net
      BookValue
              
              
              Net
      BookValueSoftware
              
              $
              25,594
              
              
              $
              17,000
              
              
              $
              8,594
              
              
              $
              7,739Machinery
              
              
              349,610
              
              
              
              50,409
              
              
              
              299,201
              
              
              
              305,221Vehicles
              
              
              167,070
              
              
              
              63,819
              
              
              
              103,251
              
              
              
              109,173Computers
              
              
              34,445
              
              
              
              15,354
              
              
              
              19,091
              
              
              
              21,798Office
      equipment
              
              
              20,489
              
              
              
              3,610
              
              
              
              16,879
              
              
              
              17,010$
              597,208
              
              
              $
              150,192
              
              
              $
              447,016
              
              
              $
              460,941




5.
            MINERAL
      PROPERTIES






The
Company incurred exploration expenses as follows in the six months ended August
31, 2008:




Cieneguita
      Operations
            
            
            Sahuayacan
            
            
            Guazapares
            
            
            Cieneguita
            
            
            Encino
      Gordo
            
            
            New
      Projects
            
            
            TotalDrilling
      and sampling
            
            $
            -
            
            
            $
            -
            
            
            $
            373,472
            
            
            $
            1,195,880
            
            
            $
            -
            
            
            $
            -
            
            
            $
            1,569,352Geological,
      geochemical, geophysics
            
            
            -
            
            
            
            -
            
            
            
            88,038
            
            
            
            245,912
            
            
            
            -
            
            
            
            40,978
            
            
            
            374,928Land
      use permits
            
            
            53
            
            
            
            74,954
            
            
            
            48,049
            
            
            
            124,246
            
            
            
            (1,646
            )
            
            
            -
            
            
            
            245,656Automotive
            
            
            260
            
            
            
            -
            
            
            
            3,425
            
            
            
            6,905
            
            
            
            -
            
            
            
            -
            
            
            
            10,590Travel
            
            
            694
            
            
            
            321
            
            
            
            29,319
            
            
            
            18,126
            
            
            
            213
            
            
            
            -
            
            
            
            48,673Consulting
            
            
            12,989
            
            
            
            -
            
            
            
            119,302
            
            
            
            88,358
            
            
            
            -
            
            
            
            -
            
            
            
            220,649Equipment
            
            
            109
            
            
            
            -
            
            
            
            21,116
            
            
            
            18,138
            
            
            
            -
            
            
            
            -
            
            
            
            39,363General
            
            
            8,764
            
            
            
            5,151
            
            
            
            83,866
            
            
            
            147,451
            
            
            
            442
            
            
            
            -
            
            
            
            245,674$
            22,869
            
            
            $
            80,426
            
            
            $
            766,587
            
            
            $
            1,845,016
            
            
            $
            (991
            )
            
            $
            40,978
            
            
            $
            2,754,885




F-7








MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




5.
            MINERAL
      PROPERTIES (CONTINUED)






The
Company incurred exploration expenses as follows in the six months ended August
31, 2007:




Cieneguita
            
            
            Sahuayacan
            
            
            Guazapares
            
            
            San
      Antonio
            
            
            San
      Francisco
            
            
            Encino
      Gordo
            
            
            TotalDrilling
      and sampling
            
            $
            -
            
            
            $
            324,834
            
            
            $
            116,691
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            441,525Geological,
      geochemical, geophysics
            
            
            16,500
            
            
            
            83,169
            
            
            
            17,223
            
            
            
            -
            
            
            
            -
            
            
            
            42,739
            
            
            
            159,631Land
      use permits
            
            
            17,810
            
            
            
            51,374
            
            
            
            7,680
            
            
            
            400
            
            
            
            30,530
            
            
            
            1,886
            
            
            
            109,680Automotive
            
            
            3,523
            
            
            
            47
            
            
            
            718
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            4,288Travel
            
            
            18,082
            
            
            
            15,201
            
            
            
            18,040
            
            
            
            -
            
            
            
            -
            
            
            
            3,411
            
            
            
            54,734Consulting
            
            
            143,020
            
            
            
            30,026
            
            
            
            71,517
            
            
            
            -
            
            
            
            -
            
            
            
            5,124
            
            
            
            249,687Equipment
            
            
            68,901
            
            
            
            -
            
            
            
            11,201
            
            
            
            -
            
            
            
            -
            
            
            
            786
            
            
            
            80,888General
            
            
            107,488
            
            
            
            -
            
            
            
            25,942
            
            
            
            -
            
            
            
            -
            
            
            
            (1,229
            )
            
            
            132,201$
            375,324
            
            
            $
            504,651
            
            
            $
            269,012
            
            
            $
            400
            
            
            $
            30,530
            
            
            $
            52,717
            
            
            $
            1,232,634




Since May
2004, the Company has held interests in gold exploration properties in
Mexico.






In August
2005, the Company formed its wholly owned subsidiary, Sunburst de Mexico, which
allowed the Company to take title to the properties in the name of Sunburst de
Mexico. On August 25, 2005, the Company entered into property agreements with
MRT, which provided Sunburst de Mexico options to purchase the mineral
concessions of the Cieneguita and Guazapares properties and the right of refusal
on three Encino Gordo properties. The Company also entered into an exploration
and sale agreement, in October 2006, with Minera Emilio for the mineral
concessions of the Sahuayacan Property.






In August
2005, the parties also entered into an operator’s agreement, that gave MRT the
sole and exclusive right and authority to manage the Cieneguita Property, and a
share option agreement which granted MRT the exclusive option to acquire up to
100% of all outstanding shares of Sunburst de Mexico if the Company did not
comply with the terms of the property agreements. The operator’s agreement and
share option agreement were cancelled on December 5, 2008 when the Company and
Sunburst de Mexico entered into a new contract with MRT as described below under
Encino Gordo property.





F-8





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




5.
            MINERAL
      PROPERTIES (CONTINUED)






The
material provisions of the property agreements are as follows:




Cieneguita






MRT
assigned to Sunburst de Mexico, with the permission of the Cieneguita Property’s
owner, Corporativo Minero, S.A. de C.V. (“Corporativo Minero”), all of MRT’s
rights and obligations acquired under a previous agreement (the Cieneguita
option agreement), including the exclusive option to acquire the Cieneguita
Property for a price of $2,000,000. As the Cieneguita Property was not in
production by May 6, 2006, Sunburst de Mexico was required to pay $120,000 to
Corporativo Minero to extend the contract. Corporativo Minero agreed to reduce
the obligation to $60,000, of which $10,000 was paid in April 2006 and the
balance paid on May 6, 2006. The Company made this payment to Corporativo Minero
and the contract was extended.






The
Company has the obligation to pay a further $120,000 per year for the next 13
years and the balance of the payments in the 14th year, until the total amount
of $2,000,000 is paid. The Company renegotiated the payment due May 6, 2007, to
$60,000 payable on November 6, 2007, which was paid, and the balance of $60,000
was paid on December 20, 2007. We paid $60,000 on May 12, 2008 of the $120,000
due on May 6, 2008, and the balance was paid in June 2008. We are not in default
on our payments.






In the
alternative, if the Cieneguita Property is put into production, of which there
is no guarantee, the Company must pay the Cieneguita owners $20 per ounce of
gold produced, if any, from the Cieneguita Property to the total $2,000,000 due.
In the event that the price of gold is above $400 per ounce, the property
payments payable to the Cieneguita owners from production will be increased by
$0.10 for each dollar increment over $400 per ounce. The total payment of
$2,000,000 does not change with fluctuations in the price of gold. Non-payment
of any portion of the $2,000,000 total payment will constitute a default. In
such case, the Cieneguita owners will retain ownership of the concessions, but
the Company will not incur any additional default penalty. MRT retained no
interest in the Cieneguita Property.




Guazapares






MRT
assigned to Sunburst de Mexico, with the consent of the Guazapares Property
owner Compañía Minera, S.A. de C.V. (“Compañía Minera”), MRT’s rights and
obligations concerning the Guazapares Property, including the exclusive option,
for a term of four years, to purchase eight of the Guazapares Property
concessions upon payment of $910,000. The total payments for the Company to
acquire and retain 100% ownership of all eight concessions are as follows:
November 30, 2005 - $100,000 (this payment date was extended – see below),
October 31, 2006 - $60,000 (this payment date was extended to February 28, 2007,
then to May 31, 2007 and then to August 31, 2007- see below), August 2, 2007 -
$140,000 (see below), August 2, 2008 - $110,000 (see below) and August 2, 2009 -
$500,000.






On
September 19, 2007, Sunburst de Mexico, Mexoro and MRT entered into an agreement
to defer any and all property payments regarding Guazapares currently owing to
MRT and which would otherwise become due by December 31, 2007, until such time
as Sunburst de Mexico and Mexoro have sufficient funds to make the payments, in
the opinion of the disinterested directors of Mexoro.






Mexoro
agreed to issue 250,000 shares to MRT and/or its assignees in consideration for
the deferral of any and all Guazapares Property payments currently outstanding
and those arising on or before December 31, 2007.






In
return, Sunburst de Mexico granted MRT a 2.5% net smelter royalties (“NSR”) and
the right to extract from the Guazapares concessions up to 5,000 tons per month
of rock material; this right will terminate on exercise of the option to
purchase the concessions. Otherwise, MRT retained no interest in the Guazapares
Property.





F-9





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




5.
            MINERAL
      PROPERTIES (CONTINUED)




San
Francisco (Guazapares)






MRT
assigned to Sunburst de Mexico, for a term of 60 months, commencing from June
25, 2004 (the “Option Period”), with the consent of the San Francisco
concessions owner Minera Rachasa, S.A. de C.V. (“Minera Rachasa”), MRT’s rights
and obligations acquired under the San Francisco option agreement, including the
option to purchase the San Francisco concessions for a price of $250,000 on June
25, 2009.






To
maintain the option, Sunburst de Mexico assumed the obligation to pay to the San
Francisco owner cumulative annual payments. The payments are: $20,000 on June
25, 2006 (paid); $30,000 on June 25, 2007 (paid); and $40,000 on June 25, 2008
(paid).






If the
option is exercised prior to the expiration of the Option Period by payment of
the purchase price of $250,000; the obligation to pay the annual payments will
be terminated. MRT and the San Francisco owner reserved a combined 2.5% NSR. MRT
reserved no other rights on the San Francisco concessions.




San
Antonio (Guazapares)






MRT
assigned to Sunburst de Mexico, with the consent of the San Antonio concessions
owner (Rafael Fernando Astorga Hernández), MRT’s rights and obligations acquired
under the San Antonio option agreement, including the option to purchase the San
Antonio concessions for a price of $500,000, commencing on January 15, 2004 (the
signing date of the San Antonio option agreement) and due on January 15,
2010.






To
maintain the option, Sunburst de Mexico assumed the obligation to pay to the San
Antonio owner cumulative annual payments. The remaining payments are: $50,000 on
January 15, 2008 (this payment was deferred to January 31, 2008 and paid) and
$50,000 on January 15, 2009.






If the
option is exercised prior to the expiration of the option period by payment of
the purchase price, the obligation to pay the annual payments will be
terminated. The San Antonio owner reserved the right to extract from the San
Antonio concessions up to 50 tonnes per day of rock material; this right will
terminate on the date of the exercise of the option. MRT and the San Antonio
owner reserved a combined 2.5% NSR to be paid to them. MRT reserved no other
rights on the San Antonio concessions.






Encino
Gordo






On
December 8, 2005, the Company and Sunburst de Mexico entered into a “New
Agreement” with MRT to exercise their option under the sale and purchase of the
mining concessions agreement, dated August 18, 2005, 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.






The
following are additional material terms of the New Agreement:




(a)
            The
      share option 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. On April 6, 2006, MRT agreed to
      waive its option to purchase the shares of Sunburst de Mexico and also
      waived the Company’s obligation to transfer $1,500,000 to Sunburst de
      Mexico. The property agreements were modified to change the NSR to a
      maximum of 2.5% for all properties covered by the agreements. The property
      agreements contained NSRs ranging from 0.5% to
  7%;






F-10





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




5.
            MINERAL
      PROPERTIES (CONTINUED)




(c)
            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, and $2,100,000 was charged to
      operations for the year ended February 28, 2006. This issuance fulfilled
      the Company’s payment obligations under the previous property
      agreements;





(d)
            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; and





(e)
            The
      operator’s agreement with MRT was
cancelled.




Sunburst
de Mexico purchased two of the Encino Gordo concessions from MRT for a price of
1,000 pesos (approximately US$100), and MRT assigned to Sunburst de Mexico a
first right of refusal to acquire three additional Encino Gordo concessions. The
total payments to acquire 100% of these three additional concessions are as
follows: $10,000 on June 30, 2006 (paid); $25,000 on December 31, 2006 (paid),
$50,000 on December 31, 2007 ($20,000 of this payment was made on January 3,
2008 and the balance was paid on February 29, 2008), $75,000 on December 31,
2008, $125,000 on December 31, 2009 and $200,000 on December 31,
2010.




Sahuayacan






On June
21, 2006, Sunburst de Mexico entered into an exploration and sale option
agreement of mining concessions with Minera Emilio, S.A. de C.V. (“Minera
Emilio”) for mineral concessions of the Sahuayacan Property. Minera Emilio
granted the Company the exclusive right to conduct exploration on the Sahuayacan
Property and the Company must pay $282,000 in the following manner: $20,000 on
date of signing agreement (paid); $10,000 due December 1, 2006 (paid); $2,500
per month effective from August 21, 2006 to July 21, 2007, for a total of
$30,000 (paid); $3,500 per month effective from August 21, 2007 to July 21, 2008
for a total of $42,000 (paid); and $5,000 per month effective August 21, 2008 to
July 21, 2011 (all have been paid to date) for a total of $180,000 until the
balance of the total $282,000 is paid (36 months).




Segundo
Santo Nino (Sahuayacan)






On May
15, 2006, Sunburst de Mexico entered into an exploration contract with Jose
Maria Rascon and Sabino Amador Rascon Polanco and, on November 20, 2007,
Sunburst de Mexico entered into an exploration contract with Rene Muro Lugo (all
three representatives constitute the “Concessionaires”) for the Segundo Santo
Nino concession on the Sahuayacan Property. Each concession representative owns
33.3% of the total Segundo Santo Nino title. The Company must pay the
Concessionaires a total of $255,000 for this concession. The payments to acquire
100% of this concession are as follows: all payments up to February 13, 2008
totaling $65,000 have been paid, July 13, 2008 - $20,000 (overdue), February 13,
2009 - $20,000, July 13, 2009 - $30,000 and February 13, 2010 -
$120,000.




La
Maravilla (Sahuayacan)






On
January 25, 2008, Sunburst de Mexico entered into an exploration and option
agreement with Maria Luisa Wong Madrigal for mineral concessions under the “La
Maravilla” project on the Sahuayacan Property. The Company must pay Maria Luisa
Wong Madrigal $600,000 to acquire 100% of this concession as follows: $33,000 –
January 25, 2008 (paid); $33,000 – July 25, 2008 (paid); $34,000 – January 25,
2009; $500,000 – at the option to purchase the concession or 36 months – January
25, 2010.






F-11





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




6.
            PROMISSORY
      NOTES






As at
August 31, 2008, the Company had $1,784,654 (February 29, 2008 - $1,480,702) of
promissory notes outstanding, comprising the following:




(a)
            $487,997
      (CHF 565,000) of promissory notes accruing interest at a rate of 7.5% p.a.
      payable semi-annually. The principal and interest on the notes was due and
      payable on April 30, 2008. The Company did not make the payment by April
      30, 2008 and is in default. Interest rate payable during the default
      period is 12%.





(b)
            $1,296,657
      of promissory notes is due to related parties and close associates that
      bear no interest and have no terms of
repayment.




During
the six months ended August 31, 2008, the Company converted promissory notes of
$635,008 into $1.00 units. The units consist of two common shares and one
warrant exercisable at $0.75 each (note 10).






7.
            CONVERTIBLE
      DEBENTURES






On May 5,
2008, the Company signed a LOI to enter into a strategic alliance with
Paramount. The agreement called for Paramount to invest a minimum of $4 million
and maximum of $6 million into the Company, fixed at a price of $0.50 per unit
by June 23, 2008. The investment timeline was extended until July 21, 2008, and
then to August 5, 2008. On August 6, 2008 Mexoro terminated the LOI with
Paramount as Paramount did not meet the terms of the agreement.






The
Company issued secured convertible debentures to Paramount as
follows:






On May 9,
2008, the Company issued $500,000 in convertible debentures to Paramount, with a
maturity date of one year, accruing interest at 8% per year payable in arrears
and convertible at the option of the holder.






On June
10, 2008, the Company issued $70,000 in convertible debentures to Paramount,
with a maturity date of one year, accruing interest at 8% per year payable in
arrears and convertible at the option of the holder.






On June
25, 2008, the Company issued $300,000 in convertible debentures to Paramount,
with a maturity date of one year, accruing interest at 8% per year payable in
arrears and convertible at the option of the holder.






On July
11, 2008, the Company issued $500,000 in convertible debentures to Paramount,
with a maturity date of one year, accruing interest at 8% per year payable in
arrears and convertible at the option of the holder.






As at
August 31, 2008, there were $1,370,000 convertible debentures
outstanding.






Paramount
may convert all or a portion of the principal amount of the debenture into units
consisting of one share of our common stock and half a warrant to purchase one
share of our common stock. Subject to certain adjustments upon the occurrence of
various capital reorganizations and other events, the units are convertible at
$0.50 per unit for a total of up to 2,740,000 shares of common stock and up to
1,370,000 warrants at $0.75 to purchase shares of common stock (the “Warrants”).
The Warrants have a term of four years from the date that Paramount converts the
debenture or the portion of the debenture covering those warrants. A holder of
the Warrants may exercise those Warrants at $0.75 (subject to adjustments upon
the occurrence of certain events like stock splits).






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:




2008Expected
      volatility
            
            
            70%
      - 111
            %Expected
      dividend rate
            
            
            -Expected
      life of warrants in years
            
            
            4Risk-free
      rate
            
            
            2.30%
      - 3.41
            %





F-12





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




8.
            LOANS
      PAYABLE






As at
August 31, 2008, there were loans payable in the amount of $61,643, of which
$39,912 is current and $21,731 is long-term. The loans are repayable in monthly
installments of $4,442, including interest ranging from 5.3% to 15.6% per annum,
and are secured by specified automotive equipment.






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






In August
2008, the Company converted $142,508 (MXN 1,449,989) (note 6) of promissory
notes into subscription proceeds and issued 280,000 common shares. The
subscribers to the subscription proceeds have agreed to purchase one unit for
each $1.00 of debt. Each unit consists of two shares of the Company’s common
stock and one warrant each exercisable at $0.75, which expire in four
years.






In July
2008, the Company converted $67,424 of debt into 150,000 common
shares.






In June
2008, the Company converted $60,000 of debt into subscription proceeds and
issued 120,000 common shares. The subscribers to the subscription proceeds have
agreed to purchase one unit for each $1.00 of debt. Each unit consists of two
shares of Company’s common stock and one warrant each exercisable at $0.75,
which expire in four years.






In June,
2008, the Company issued 9,885 shares of common stock in a private
placement.






In May
2008, the Company converted $535,500 of debt into subscription proceeds and
issued 1,071,000 common shares. The subscribers to the subscription proceeds
have agreed to purchase one unit for each $1.00 of debt. Each unit consists of
two shares of Company’s common stock and one warrant each exercisable at $0.75,
which expire in four years.






On April
25, 2008, stock subscriptions of $330,000 were converted into 330,000 shares of
common stock.






In fiscal
2008, the Company issued 1,174,000 shares of common stock on the exercise of
1,174,400 warrants where each warrant was exercisable into shares of common
stock at the price of $1.00 per share. The warrants were to expire on April 30,
2008.






In the
second and third quarter of fiscal 2008, the Company issued 1,000,000 shares of
common stock on the exercise of 1,000,000 warrants where each warrant was
exercisable into shares of common stock at the price of $0.75 per share. The
warrants were to expire on December 31, 2007.






In the
first two quarters of fiscal 2008, the Company issued 1,000,000 shares of common
stock on the exercise of 1,000,000 warrants where each warrant was exercisable
into shares of common stock at the price of $0.50 per share. The warrants were
to expire on June 30, 2007.






On
November 7, 2007, the Company issued 670,000 shares of common stock on the
exercise of 670,000 warrants where each warrant was exercisable into shares of
common stock at the price of $1.00 per share. The warrants were to expire on
December 31, 2007.






On
September 20, 2007, the Company issued 250,000 shares of common stock pursuant
to an agreement in consideration of deferral of any and all Guazapares Property
payments currently outstanding and those arising on or before December 31, 2007.
The shares were valued at $1.16 per share, based on the closing quoted market
price on September 18, 2007.











MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




10.
            COMMON
      STOCK (CONTINUED)






On
September 20, 2007, the Company issued 250,000 shares of common stock pursuant
to the Encino Gordo contract. The shares were valued at $1.16 each, based on the
closing quoted market price on September 18, 2007.






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.






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






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 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 was 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. On April 6,
2006, these shares were issued.






11.
            STOCK
      COMPENSATION PROGRAM






On April
29, 2008, the board of directors approved the granting of stock options
according to the 2008 Nonqualified Stock Option Plan (“2008 Option Plan”)
whereby the board is authorized to grant to employees and other related persons
stock options to purchase an aggregate of up to 6,000,000 shares of the
Company's common stock. Subject to the adoption of the 2008 Option Plan, all of
the options were granted and vest, pursuant to the terms of the 2008 Option
Plan, in six equal installments, with the first installment vesting at the date
of grant, the second installment vesting October 29, 2008, the third installment
vesting April 29, 2009, the fourth installment vesting October 29, 2009, the
fifth installment vesting April 29, 2010 and the last installment vesting
October 29, 2010.






On April
29, 2008, the Company granted 400,000 stock options to employees at a price of
$0.52 per share and 850,000 stock options to management at a price of $0.52 per
share.






In the
six months ended August 31, 2008, the Company has agreed to grant share stock
awards to officers and directors for each newly discovered reserves of 1,000,000
oz AU (or Au-Ag equivalent) to a maximum of 400,000 shares.






In the
six months ended August 31, 2008, the Company entered into a consulting
agreement with Sam Osman to conduct public relations for the Company. Mr. Osman
was granted 200,000 options to purchase 200,000 common shares of the Company at
a price of $0.52 per share, expiring June 30, 2010.






In the
six months ended August 31, 2008, the Company awarded 1,450,000 options to
purchase common shares (2007 – 1,635,000) and recorded stock-based compensation
expense of $327,470 (2007 - $698,878). The weighted average fair value of each
option granted for the six months ended August 31, 2008 was $0.27. The following
weighted average assumptions were used for the Black-Scholes option-pricing
model to value stock options granted in 2008:




2008Expected
      volatility
            
            
            62%
      - 72
            %Expected
      dividend rate
            
            
            -Expected
      life of options in years
            
            
            2 -
      10Risk-free
      rate
            
            
            2.82%
      - 3.86
            %




There
were no capitalized stock-based compensation costs at August 31, 2008 or August
31, 2007.





F-14





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




11.
            STOCK
      COMPENSATION PROGRAM (CONTINUED)






The
summary of option activity under the 2008 Option Plan as of August 31, 2008, and
changes during the period then ended, is presented below:




Weighted
            
            
            Number
      of
            
            
            Weighted-
            
            
            AggregateAverage
            
            
            Shares
            
            
            Average
            
            
            IntrinsicExercise
            
            
            
            
            
            Remaining
            
            
            ValuePrice
            
            
            
            
            
            ContractualOptions
            
            
            
            
            
            
            
            TermBalance
      at March 1, 2008
            
            $
            0.87
            
            
            
            2,475,000
            
            
            
            7.93
            
            
            $
            222,500Options
      granted
            
            
            0.52
            
            
            
            1,450,000
            
            
            
            7.86
            
            
            
            -Options
      exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Options
      cancelled/forfeited
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance
      at August 31, 2008
            
            $
            0.74
            
            
            
            3,925,000
            
            
            
            7.86
            
            
            $
            -Exercisable
      at August 31, 2008
            
            $
            0.73
            
            
            
            1,979,167
            
            
            
            7.27
            
            
            $
            -







The
weighted-average grant-date fair value of options granted during the six months
ended August 31, 2008 and August 31, 2007 was $0.49 and $0.80,
respectively.






A summary
of the status of the Company’s nonvested options as of August 31, 2008, and
changes during the six months ended August 31, 2008, is presented
below:




Weighted-averageGrant-DateNon-vested
      options
            
            Shares
            
            
            Fair
      ValueNonvested
      at February 29, 2008
            
            
            1,065,000
            
            
            $
            0.76Granted
            
            
            1,450,000
            
            
            
            0.29Vested
            
            
            (569,167
            )
            
            
            0.39Nonvested
      at August 31, 2008
            
            
            1,945,833
            
            
            $
            0.46







As of
August 31, 2008, there was an estimated $845,698 of total unrecognized
compensation cost related to nonvested share-based compensation arrangements
granted under the 2007 and 2008 nonqualified stock option plans. That cost is
expected to be recognized over a weighted-average period of approximately 1.65
years.





F-15





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




12.
            WARRANTS






As at
August 31, 2008, the Company had a total of 3,103,443 (February 29, 2008 –
4,486,100) 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 3,103,443 shares of common stock in the event that these warrants are
exercised.






During
the six months ended August 31, 2008, the Company received $nil from warrants
exercised.






The
outstanding warrants include 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. All the warrants were fully
vested upon issuance.






At August
31, 2008, there were 1,000,000 Series D Warrants and 1,000,000 Series E Warrants
outstanding. The Series E Warrants will become exercisable only when the Series
D Warrants have been fully exercised.  Unless terminated earlier as a
result of failure to vest, the Series D and Series E Warrants will each expire
on December 31, 2008.






The
Company had issued 2,917,500 warrants exercisable at $1.00 each pursuant to the
issuance of convertible debentures. These warrants expired on April 30,
2008.






The
Company had issued 375,000 warrants exercisable at $1.00 each pursuant to the
issuance of a private placement unit offering. These warrants expired on April
30, 2008.






The
following table summarizes the continuity of the Company’s share purchase
warrants:




Number
      of
              Warrants
            
            
            Weighted
      Average
              Exercise
      PriceBalance,
      February 28, 2007
            
            
            8,217,500
            
            
            $
            1.00Issued
            
            
            113,000
            
            
            
            1.00Cancelled
            
            
            -
            
            
            
            -Exercised
            
            
            (3,844,400
            )
            
            
            0.80Balance,
      February 29, 2008
            
            
            4,486,100
            
            
            $
            1.17Issued
            
            
            990,443
            
            
            
            0.72Cancelled
            
            
            (2,043,100
            )
            
            
            1.00Exercised
            
            
            (330,000
            )
            
            
            1.00August
      31, 2008
            
            
            3,103,443
            
            
            $
            1.15







As at
August 31, 2008, the following share purchase warrants were
outstanding:




Number
      of Warrants
            
            
            Exercise
      Price
            
            Expiry
      Date250,000
            
            
            $
            0.65
            
            June
      30, 2012740,443
            
            
            $
            0.75
            
            April
      to August, 20121,000,000
            
            
            $
            1.25
            
            December
      31, 20081,000,000
            
            
            $
            1.50
            
            December
      31, 2008113,000
            
            
            $
            1.00
            
            January
      31, 20103,103,443




F-16





MEXORO
MINERALS LTD.


(An
Exploration Stage Company)


Notes
to Consolidated Financial Statements


Six
Months Ended August 31, 2008


(Unaudited)
(Expressed in U.S. Dollars)




13.
            RELATED
      PARTY TRANSACTIONS






For the
six months ended August 31, 2008, the Company paid or accrued management fees of
$104,440 (August 31, 2007 - $298,597) to certain officers and directors and to
companies controlled by directors. The Company also paid or accrued $7,449
(August 31, 2007 - $47,929) to certain officers and directors and to companies
controlled by directors for travel, office and other related
expenses.






As at
August 31, 2008, accounts payable of $84,000 (August 31, 2007 - $36,876) were
owing to an officer and director of the Company and $nil (August 31, 2007 -
$91,771) was owing to companies controlled by directors. In addition, promissory
notes of $706,791 (August 31, 2007 - $106,050) were owed to companies controlled
by directors (note 6).






All
related party transactions are in the normal course of business at the exchange
amount agreed to by each party.






14.
            COMMITMENTS






During
the year ended February 28, 2007, the Company entered into an agreement for the
lease of new office premises for a two-year period, commencing on September 15,
2006 and ending on September 14, 2008. The Company is committed to spend
approximately $22,800 under this arrangement.






On July
1, 2008, the Company entered into an investor relations agreement with Vastani
Company (“Vastani”), whereby Vastani will act as an investor relationship
advisor to the Company. The Company has agreed to pay a monthly retainer of
€20,000 and 1,000,000 warrants to purchase shares of the Company’s common stock.
This includes 250,000 warrants at a price of $0.65 per share vesting on signing,
250,000 warrants at an execution price of $1.30 per share vesting after 90 days,
250,000 warrants at a price of $2.00 per share vesting after 120 days and
250,000 warrants at a price of $2.75 per share vesting after 180 days. The
warrants expire on June 30, 2012.






15.
            SUBSEQUENT
      EVENTS




a)
            On
      September 9, 2008, the Company retained the services of Haywood Securities
      of Toronto, Canada to sponsor the listing of the common shares of Mexoro
      on the TSX or TSX-V exchange.





b)
            On
      September 10, 2008, the Company sold 212,500 units (consisting of two
      common shares of the Company and one Series A warrant, exercisable at
      $0.75 to purchase one share) at a price of $0.80 per unit for the total
      purchase price of $170,000. The warrants have a term of four
      years.




F-17





ITEM
2.





MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS





Certain
statements contained in this Form 10-Q 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 of Financial Condition
and Results of Operations" and elsewhere in this Form 10-Q. 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
United States 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




Mexoro
Minerals Ltd. (“Mexoro” or the “Company”) is a start-up exploration stage
company and has not yet generated or realized any revenues from exploration
projects, which commenced on May 1, 2004. On September 9, 2008, we announced
that we retained the services of Haywood Securities Inc. of Toronto, Canada to
sponsor the listing of our common shares on the TSX or TSX-V exchange. As of
August 31, 2008, we had $1,352 in our bank account.





On May 5,
2008, we signed a letter of intent (”LOI”) to enter into a strategic alliance
with Paramount Gold and Silver Corp. (“Paramount”) to combine mining and
exploration expertise, along with efficient use of personnel, drill rigs and
current mining concessions to improve efficiencies and potentially reduce costs
for both companies. We believed that the alignment of interest between the two
companies created synergy, especially as the two companies’ Guazapares projects
are contiguous and create a large land position located in the state of
Chihuahua, Mexico.





The LOI
called for Paramount to invest a minimum of $4 million and maximum of $6 million
into our Company, at a fixed price of $0.50 per unit by June 23, 2008. This date
was extended until July 21, 2008 and then to August 5,
2008.  Paramount was unable to complete the minimum investment on
August 5, 2008, and as such, the strategic alliance with Paramount was
terminated on August 6, 2008.










On May 9,
2008, we issued a secured convertible debenture (the “Debenture”) with a
one-year term in the amount of $500,000. In connection with the issuance of the
Debenture, we entered into a “Security Agreement” with Paramount that secures
our assets until there has been full compliance with the terms of the
Debenture.  Paramount may convert all or a portion of the principal
amount of the Debenture into units consisting of one share of our common stock
and half a warrant to purchase one share of our common stock. Subject to certain
adjustments upon the occurrence of various capital reorganizations and other
events, the units are convertible at $0.50 per unit for a total of up to
1,000,000 shares of common stock and up to 500,000 warrants at $0.75 to purchase
shares of common stock (the “Warrants”). The Warrants have a term of four years
from the date that Paramount converts the Debenture or the portion of the
Debenture covering those warrants. A holder of the Warrants may exercise those
Warrants at $0.75 (subject to adjustments upon the occurrence of certain events
like stock splits).





On June
23, 2008, we signed an addendum to the strategic alliance granting Paramount an
extension for the closing of the transaction until July 21, 2008. As such,
Paramount invested an additional $370,000 into our Company under the same terms
as the original secured convertible debenture. This debenture is convertible
into up to 740,000 shares of our common stock and up to 370,000 warrants which
are exercisable into shares of our common stock at $0.75 per share.





On July
16, 2008, we received an additional payment from Paramount in the amount of
$500,000 pursuant to the strategic alliance. This additional advance allowed
Mexoro to continue its ongoing drill program on both the Cieneguita and
Guazapares projects. The funds are advanced by way of a secured convertible
debenture which bears interest at a rate of 8% per annum for a term of one year.
Paramount has the option to convert the debt into units. Along with this
additional advance, Mexoro agreed to extend the closing deadline of the
strategic alliance transaction until August 5, 2008 with Paramount's continued
commitment to fund Mexoro's operating expenses.





On August
6, 2008, the strategic alliance between Mexoro and Paramount was terminated,
including Paramount’s right of first refusal on financings. As a result of
Paramount holding convertible debentures in the amount of $1,370,000 resulting
from advances made to Mexoro Minerals to fund exploration, they agreed to defer
interest payments on the advances until September 10, 2008.  The
September 10, 2008 interest payment date has subsequently been extended again to
October 10, 2008.





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
have raised sufficient funds in our recent offerings to allow us to continue in
business until October 31, 2008, 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
12-month period from September 2008 to August 2009, we need to raise additional
capital to maintain operations. We will need a minimum of $1,349,000 for
property payments and an additional $840,000 for general and administrative
costs. This does not include any capital to execute our exploration programs as
detailed below. The following table shows our contractual property payments that
are due until August 2009:










Name
            Date
            Payment
      Type
            USDGuazapares
      Property1
            August
      2008
            Property
      payment
            $110,000Sahuayacan
      Property
            August
      2008 to July 2011
            Property
      payments
            $170,000Encino
      Gordo Property
            December
      2008
            Property
      payment
            $75,000San
      Antonio (Guazapares)
            January
      2009
            Property
      payment
            $50,000Sahuayacan
      Property (La Maravilla)
            January
      2009
            Property
      payment
            $34,000Segundo
      Santo Nino (Sahauyacan)
            November
      2008 and May 2009
            Property
      payment
            $40,000Cieneguita
      Property
            May
      2009
            Property
      payment
            $120,000San
      Francisco (Guazapares)
            June
      2009
            Property
      payment
            $250,000Guazapares
      Property
            August
      2009
            Property
      payment
            $500,000


1All
Guazapares payments due by December 31, 2008 have been deferred, until in the
opinion of the directors of Mexoro, Sunburst de Mexico and Mexoro have
sufficient funds to make the payments. This includes deferred payments of
$100,000 due in November 2005, $60,000 due in August 2006 and $140,000 due in
August 2007.





Additionally,
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 do not have any additional
sources of additional capital to fund our operations beyond October 31, 2008. 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 October 31, 2008, 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.










Plan of
Operation




Summary





Our
business plan is to proceed with the exploration of our Mexican mineral
properties to determine whether they contain commercially exploitable reserves
of gold, silver or other metals. On May 5, 2008, we entered into a strategic
alliance with Paramount to invest between $4 million and $6 million in our
company by July 21, 2008. Paramount forwarded an initial $500,000 on May 9,
2008, an additional $370,000, on June 23, 2008, and a final payment of $500,000
on July 16, 2008 for a total investment of $1,370,000 in the form of secured
convertible debentures. The proceeds from these placements were primarily used
to continue the drilling programs on our Cieneguita and Guazapares properties.
As the Paramount strategic alliance was terminated, and in order to continue our
exploration plans and fund general administrative expenses as a minimum, we will
need to raise additional working capital to maintain basic operations. We would
plan to raise those funds through the sale of equity or debt. At this time we do
not have any sources to raise additional capital, and we cannot assure you that
we will be able to find sources to raise additional capital. Failure to raise
any additional capital would most likely require us to cease operations and
abandon all of our exploration properties.





In the
event that our exploration program finds exploration targets that warrant
additional exploration work, including exploration by drilling, we will not have
enough cash available to fund an expanded exploration program. If we decide to
expand our exploration program, we would need to raise additional capital to
meet these needs. We currently do not have any sources of additional capital
available to us, and we may not have any in the future. The failure to raise
additional capital would severely curtail our ability to conduct any additional
exploration work that might be warranted because of the results of our current
exploration program.





We are
not involved in any research and development on our exploration properties. We
have no known reserves on the Cieneguita Property. Our original strategy was to
put the Cieneguita property into production, and as such we purchased
approximately $250,000 worth of new and used mining equipment to be used for
heap leach production. We contemplated putting the Cieneguita Property into
production during 2008 but recent positive exploration results from our drilling
programs have changed that plan. It is management’s plan to try and sell the
equipment that we have purchased. At this time, we have no estimates on what the
equipment will be worth in the secondary market. If we are unable to sell it, we
may lose all of our capital investment. We cannot assure you that we will be
able to sell the equipment at a price to recover our original investment, or at
all.












In the
event that we did discover a mineral deposit on one of our properties, of which
there is no guarantee, we would need to expend substantial amounts of capital to
put any of our properties into production, if so warranted. The amount of such
expenditures is indeterminable at this time as our exploration program has not
advanced far enough to provide us with results to determine this
information.





Such
expenditures depend upon the size of the mineralized body, the grade of the
mineralized and the type of mining that is required to extract any minerals that
may be found. Regardless, we do not have enough capital available to us to make
any such expenditure that would be required to put any mineral property into
production, and we therefore would have to raise the additional capital or, if
possible, enter into a joint venture for the production phase. If we were to
form a joint venture, we cannot assess what our final position in the project
would be. We do not have any sources of capital available to us at this time to
fund such a project if one should be discovered.





We hired
our VP of Exploration on March 1, 2007. We also hired an office administrator
for our office in Chihuahua. We hired one geologist in 2006, three geologists in
2007 and another geologist in February 2008 to work on our exploration programs.
One of our geologists resigned in June 2008. We do not expect any significant
change in additional contractors to conduct exploration over the next 12 months.
Other than the VP of Exploration and our geologists, all of the employees we
hire are contracted from third parties specializing in providing employees for
Mexican companies. In using third party contractors, we minimize our exposure to
Mexican employment law, and all liabilities are undertaken by the third party
contractors providing the services. We pay a flat rate to the third parties for
their services.





In the
event that we should find a mineable reserve, it is management’s intention to
contract the mining and milling of any mineralized reserves out to third
parties. We do not have any known reserves at this time.







Exploration
Projects – Current Status




In the
following summaries of the current status of our exploration projects, we do not
purport to have an SEC Industry Guide 7 compliant mineral reserve.  We
do believe, however, that the quantity of mineralized materials as set out in
the summaries fall within the definitions and classifications of the Canadian
Institute of Mining.  For purposes of satisfying Canadian National
Instrument 43-101 (“NI 43-101”), the qualified person who has done the geologic
modeling and the resource calculation and has reviewed our results is Dana C.
Durgin, MSc. Economic Geology. He is a Certified Professional Geologist (CPG
#10364) with the American Institute of Professional Geologists, and a Registered
Professional Geologist in Wyoming (PG-2886). Mr. Francisco Barry Quiroz, MSc. In
Economic Geology and our V.P. Exploration, is the technical person who prepared
or supervised the preparation of the technical information that is summarized
below.  While Mr. Quiroz is a member in good Standing of the Society
of Economic Geologists (SEG) and of the Asociacion de Ingenieros Mineros,
Metalurgistas y Geologos de Mexico (AIMMGM), membership in such organizations is
not recognized under NI 43-101.  The disclosure of all our results
from our exploration work were prepared under the supervision of Mr. Quiroz and
reviewed by Mr. Durgin.











Cieneguita




On August
28, 2008, we announced the completion of a cross section-based geologic model at
Cieneguita by Delve Consultants, which calculated inferred geologic material of
14.86 million tons at a grade of 2.12 g/t gold-equivalent. This preliminary
estimate was done to better understand the geologic controls of mineralization,
and the distribution of areas requiring more drilling rather than as a rigorous
reserve estimate.





The
preliminary estimate confirmed that the Cieneguita mineralized material is
hosted in a diatreme breccia, shaped like a funnel which has been flattened
laterally. At the surface, the mineralized body is one kilometer long and
averages 200 meters in width. The north and south sides are nearly vertical; the
east and west sides are more gently inclined. One of the drill holes was stopped
in the breccia at 290 meters, and thus it appears that the breccia body extends
to at least that depth.





This is
an in situ geologic body. Neither mining procedures nor metallurgical recoveries
were considered in the calculation. However, because this is a poly-metallic
sulfide body, processing by floatation will probably be necessary. In
calculating the estimate, geology and individual assays from 45 drill holes
(only the first 37 of these had assays) were displayed on 4 longitudinal
sections and 23 cross sections at 40 meter intervals. Using this data and
surface mapping, an interpretive geologic model was built and an estimate was
calculated. A cut-off grade of $30 per ton gold-equivalent was used to define
the boundaries of mineralized bodies. On cross sections, mineralization was
projected half the distance to adjacent sections, and half the lateral distance
to adjacent holes or 50 meters, whichever was less. The gold-equivalent figures
were calculated using $850 per ounce gold, $15.50 per ounce silver, $0.75 per
pound lead, and $0.90 per pound zinc.





In
addition to producing an inferred geologic report, this modeling also pointed
out high priority areas in which to concentrate the ongoing drilling program. We
believe that focusing on these areas, coupled with infill drilling, has the
potential to expedite the expansion of the mineralized material. It appears that
the best grades and greatest thicknesses of this Au-Ag-Pb-Zn mineralization are
concentrated in the western half of the deposit, south of the earlier Pit #2 by
Glamis Gold, whose subsidiary previously produced on the site. Management
believes that Pit #2 is also the area of the inferred throat of the diatreme, so
mineralization is expected to extend to greater depths in that area, though we
cannot assure you of that result. Also, because of the restrictions that were
placed on defining the limits of the mineralized blocks, there appears to be
potentially large volumes of mineralized material that were not included in the
calculation, due to wide drill spacing of 80 meter centers.












The phase
I exploration program at Cieneguita, carried out from November 2006 to February
2007, was initially focused on a systematic geological mapping (1:1,000) and
sampling of roadcut and outcrop exposures. This exploration program outlined the
main mineralization zone which has been traced in outcrops approximately 800
meters along strike. In addition, three new high-grade gold areas were
identified beyond the known limits of mineralization.





The
results from the mapping and sampling campaign outlined two main high-grade gold
mineralization areas which are providing additional evidence to increase the
known mineralized zone of the Cieneguita system to the NE. Analysis of the
alteration, structural setting and geochemistry of the northeast part of the PIT
1 area indicates that there is potential for a structurally controlled body to
the northeast of the known PIT 1 area. Assay results have been received for
samples from roadcuts and outcrop exposures on the Cieneguita Property. The
values ranged from trace to 31.6 g/t Au taken from several two meter channel
sample located 75 meters to the NE of the known PIT 1 area. This high-grade gold
sample is part of the NE PIT1 area, a 20 meters exposure averaging 5.43 g/t Au.
The high-grade gold mineralization encountered at the NE PIT 1 area is part of
the same structural trend identified in the PIT 1 area where gold values ranged
from trace to 29 g/t Au.





All drill
holes from this first phase drilling program have been focused on extending
zones of high-grade gold mineralization identified by previous drilling programs
(Glamis drilling program, 1994-1996). Drill hole CI-4 and CI-11 failed to
intersect any economical mineralization.





Mineralized
grades in the drilling were intersected by drillholes CI-02, CI-05, CI-06 CI-08,
CI-09, CI-10 and CI-21 as follows:





·
            Drill
      hole CI-02


o
            5
      meters (m) with 6.13 g/t Au from 97.50 to 102.50
  m


·
            Drill
      hole CI-05


o
            4.10
      m with 2.75 g/t Au from 40.90 to 45.0
m


o
            4.60
      m with 2.89 g/t Au from 62.90 to 67.50
m


o
            6.00
      m with 1.16 g/t Au, 56.1 g/t Ag, 0.44% Pb and 0.76% Zn from 118 to 124
      m


o
            4.50
      m with 0.69 g/t Au, 183.56 g/t Ag, 0.39% Pb and 1.23% Zn from 147.50 to
      152 m


o
            6.00
      m with 0.62 g/t Au, 81.35 g/t Ag, 1.92% Pb and 3.55% Zn from 156.50 to
      162.50 m


·
            Drill
      hole CI-06


o
            11.70
      m with 2.58 g/t Au from 12.3 to 24m


·
            Drill
      hole CI-08


o
            From
      96.50 to 122.00 m (25.50 m) with 0.31 g/t Au, 48.49 g/t Ag, 0.82% Pb &
      1.22%Zn


o
            From
      130.75 to 141.24 m (10.50 m) with 0.96 g/t Au, 90.34 g/t Ag, 0.52% Pb
      & 0.91 % Zn


§
            Including:
      6 m with 1.47 g/t Au, 140.95 g/t Ag, 0.44% Pb and 0.61%
  Zn


·
            Drill
      hole CI-09


o
            From
      8.40 to 12.20 m (3.80 m) with 1.39 g/t Au and 149.9 g/t
  Ag


o
            From
      52.70 to 60.20 m (7.50 m) with 0.43 g/t Au, 105.58 g/t Ag, 0.40%Pb and
      0.64% Zn


§
            Including:
      1.50 m with 0.54 g/t Au, 171 g/t Ag, 0.72% Pb and 1.49%
  Zn


·
            Drill
      hole CI-10


o
            From
      0.0 to 6.00 m (6.0 m) with 1.19 g/t Au and 27.7 g/t
  Ag


o
            From
      74.50 to 94.0 m (19.50 m) with 0.73 g/t Au, 57.56 g/t Ag, 0.73% Pb &
      1.03% Zn


§
            Including:
      3 m with 0.81 g/t Au, 96.55 g/t Ag, 1.28% Pb and 2.47%
  Zn


o
            From
      95.50 to 100.0 m (4.50 m) with 1.34 g/t Au, 140.90 g/t Ag, 0.09% Pb and
      0.13% Zn


o
            From
      109.0 to 118.0 m (9.0 m) with 0.26 g/t Au, 277.88 g/t Ag, 0.26% Pb and
      0.42% Zn


§
            Including:
      1.50 m with 0.28 g/t Au, 976 g/t Ag, 0.20% Pb and 0.19%
  Zn


·
            Drill
      hole CI-21


§
            From
      42.5 to 116.5 m (74.00 m) with 1.72 g/t Au and 119. g/t
  Ag


§
            Including
      10.5 m with 2.42 g/t Au and 244.36 g/t
Ag


§
            Including
      16.5 m with 2.66 g/t Au and 135.22 g/t
Ag


§
            Including
      12.00 m with 1.66 g/t Au and 71.69 g/t
Ag












On July
17, 2008, we announced assay results from six additional drill holes at
Cieneguita (CI-25, CI-27 to CI-29 and CI-31 to CI-32) which intersected high
grade mineralization. On July 28, 2008, we announced assay results from three
additional holes (CI-30, CI-33 and CI-35) of which CI-30 and CI-35 confirmed the
presence of a near surface sulfide mineralization characterized by Au + Ag (±
Pb-Zn) by and the deeper sulfides Ag + Pb + Zn (± Au) mineralization.CI-33 did
not intersect economic mineralization as it was drilled outside the known limit
of the economic mineralization trying to extend the zone to the
northwest.





·
            Drill
      hole CI-25


§
            Intersected
      46.50 m of 1.10 g/t Au, 332.60 g/t Ag, 0.35% Pb & 0.66%
    Zn


§
            Including
      10.95 meters of 2.13 g/t Au, 976 g/t Ag, 0.38% Pb & 0.96%
      Zn


§
            Including
      13.45 meters of 1.30 g/t Au, 149.53 g/t Ag, 0.57%Pb & 0.68%
      Zn


§
            Including
      two very narrow high grade veins with 0.15 m of 8.23 g/t Au, 5500 g/t Ag
      and 0.1 m of 8.84 g/t Au, 3130 g/t
Ag


·
            Drill
      hole CI-27


§
            Intersected
      85.50 m of 0.70 g/t Au & 54.46 g/t
Ag


§
            Including:
      7.50 meters of 1.54 g/t Au, 148.66 g/t Ag, 0.15% Pb &
      0.32%Zn


§
            Including
      9.00 meters of 1.07 g/t Au, 82.47 g/t Ag, 0.18 % Pb & 0.22%
      Zn


·
            Drill
      hole CI-29


§
            Intersected
      30 m of 0.66 g/t Au, 58.75 g/t Ag, 0.45% Pb & 0.58%
  Zn


§
            Including
      10.50 meters of 1.01 g/t Au, 92.71 g/t Ag, 0.37% Pb & 0.33%
      Zn


§
            Including15
      m of 1.77 g/t Au & 66.65 g/t Ag


§
            Including
      6 m of 3.55 g/t Au and 116.75 g/t
Ag


§
            Including
      64.60 m of 0.56% Pb & 0.80% Zn


§
            Including
      12.80 m of 0.28% Pb & 0.70% Zn


·
            Drill
      hole CI-30


§
            0
      to 94.0 m with 1.21 g/t Au, 79.81 g/t Ag, 0.78% Pb and 1.19%
      Zn


§
            238.0
      to 248.50  with 17.24 g/t Ag, 0.49% Pb and 0.76%
    Zn












On
September 4, 2008, we announced assay results from six additional holes which
continue to increase the size of the mineralized material.





·
            Drill
      hole CI-34


·
            46.00
      meters (0 to 46.0 m) averaging 4.68 g/t Au, 87.67 g/t Ag, 0.24% Pb and
      0.22% Zn


·
            93.0
      meters (128.5 to 221.5 m) with 0.10 g/t Au, 15.81 g/t Ag, 0.55% Pb and
      0.85% Zn.


·
            Drill
      hole CI-35


§
            0
      to 31.0 meters with 1.72 g/t Au, 67.36 g/t AG, 0.56% Pb and 0.72%
      Zn


§
            261
      to 272.60 meters with 0.34% Pb and 0.54%
Zn





·
            Drill
      holes CI-36 and CI-39 intersected significant precious metal
      mineralization near the surface. Both holes were collared to the
      north-northeast of CI-34 in the vicinity of Pit No.2, just at the limit of
      the known mineralized area. CI-36 intersected 33.0 meters (14.50 to 47.5
      m) averaging 0.48 g/t Au and 43.89 g/t Ag and 13.5 meters (68.50 to 82.0
      m) with 0.53 g/t Au and 41.64 g/t
Ag.


·
            CI-39
      intersected 79.60 meters (12.9 to 91.20 m) averaging 0.43 g/t Au and 17.05
      g/t Ag.


·
            Three
      drill holes, CI-26, CI-37 and CI-38, were completed in a low-grade
      precious and base metal mineralization zone close to an andesitic
      post-mineral dyke in the central portion of the Cieneguita mineralized
      system. Drill holes CI-37 and CI-38 intersected important precious metal
      mineralization starting from surface and ended significant base metal
      mineralization.


·
            CI-38
      intersected 91 meters (0 to 91 m) averaging 0.46 g/t Au and 15.20 g/t Ag
      and ended with 29.05 meters (147.25 to 176.30) averaging 0.26 g/t Au,
      31.38 g/t Ag, 0.51% Pb and 1.01%
Zn.


·
            Hole
      CI-37 intersected 15 meters (10.50 to 25.5 m) 0.34 g/t Au and 48.88 Ag and
      ended with 10.60 meters (202.50 to 213.10) with 0.18 g/t Au, 26.89 g/t Ag,
      0.54% Pb and 0.69% Zn.












The
following map shows the location of the drill holes:








10





According
to our VP Exploration, field evidence and drilling results have confirmed that
Cieneguita is a system composed by an oxide-mixed mineralized varying in
thickness from five to 20 meters and a sulfide zone exhibiting mineralization at
250 meters depth. Gold mineralization at Cieneguita occurs mainly as
disseminated and minor proportion structurally-controlled. Mineralization is
hosted by breccias and tuffs varying in composition from rhyolite to dacite. The
main mineralized and altered zones have been developed to the northwest (PIT-1
area) and southeast (PIT-2 area). These mineralized zones consist mainly of
acid-sulphate alteration, including quartz-alunite assemblages exhibiting small
and localized areas with residual or vuggy silica. Cieneguita is interpreted to
represent a high-sulphidation gold-silver system.





According
to our VP Exploration, drilling results have demonstrated the extension of the
Cieneguita mineralized system at depth down at least to 250 meters where
mineralization is mainly hosted by sulphides. The mineralization zone is still
open to the south and to depth. Drilling program continues and a second stage
drilling program has been proposed to define the complete mineralization system
and provide a Canadian National Instrument 43-101 (“NI 43-101”) resource
estimation.





Drill
holes CI-13, CI-14 and CI-17 were collared beyond the known limits of the
mineralization intersecting only anomalous gold in most of the intervals. Holes
CI-15 and CI-16 were collared in the PIT 1 area to the northeast of the
Cieneguita system. The drill holes were designed to test the near-surface oxide
mineralization identified at the PIT 1 area. The results show that gold
mineralization is associated to an oxidation zone exhibiting a thickness of up
to approximately 25 meters. Gold mineralization is also hosted in this area by a
dacitic tuff and hydrothermal breccia bodies.





Holes
CI-18 and CI-21 were collared on, and to the south of, PIT 2 in a southeast
direction. The drill holes were designed to test anomalous and high grade gold
values obtained from surface samples taken during the mapping process carried
out in 2007. The results indicate the continuation to the southeast of both the
near surface oxide mineralization and the deeper sulfide gold-silver (+Pb-Zn)
mineralization. Follow-up drill holes may be programmed to test the extension of
the mineralized intervals to the east and at depth. Gold and silver
mineralization intersected in drill hole CI-21 may represent a new hydrothermal
mineralization center at the southwest margin of the Cieneguita system that
could increase the potential of the Cieneguita project
significantly.





Drill
hole CI-21 identified a new gold zone to the south of Pit 2 and expanded the
deposit at depth. Highlights from CI-21 include an intercept of 74 meters of
1.72 g/t Au and 119.77 g/t Ag; which included 10.50 meters of 2.42 g/t Au and
244.36 g/t Ag and 16.50 meters of 2.66 g/t Au and 135.22 g/t Ag.





Hole
CI-21 was collared to the south of Pit 2 in a southeast direction. This drill
hole was designed to test anomalous and high grade gold values obtained from
surface samples taken during the mapping process carried out in 2007. The
results indicate an expansion of both the near surface oxide mineralization and
the deeper sulfide gold-silver (+lead-zinc) mineralization. Gold, silver and
base metals mineralization intersected in drillhole CI-21 may represent a new
hydrothermal mineralization center at the southwest portion of the Cieneguita
system that could significantly increase the potential of the project. Hole
CI-23 did not encounter economic mineralization.












On August
18, 2008, we announced we would be adding a second drill rig to the Cieneguita
Project to complete infill drilling on 40 meter spacing so that a resource
estimate compliant to NI 43-101 can be made as soon as possible.





On
September 4, 2008, we released the results of six diamond core drill holes,
bringing the total to 52 drill holes completed, with assay results now complete
through holes CI-47 Drill hole CI-34 further confirmed and expanded near-surface
mineralization in the west portion of the known mineralized system at
Cieneguita. Drill holes CI-36 and CI-39 intersected significant precious metal
mineralization near the surface. Both holes were collared to the north-northeast
of CI-34 in the vicinity of Pit No.2, just at the limit of the known mineralized
area. Hole CI-34 extended the mineralization identified in CI-21, CI-30 and
CI-35 further west and it suggests that it is remains open in that direction.
Three drill holes, CI-26, CI-37 and CI-38, were completed in a low-grade
precious and base metal mineralization zone close to an andesitic post-mineral
dyke in the central portion of the Cieneguita mineralized system. Drillholes
CI-37 and CI-38 intersected important precious metal mineralization starting
from surface and ended significant base metal mineralization.





·
            Drill
      hole CI-34 intersected broad
intervals


§
            including
      46.00 meters averaging 4.68 g/t Au, 87.67 g/t Ag, 0.24% Pb and 0.22%
      Zn


§
            including
      93.0 meters with 0.10 g/t Au, 15.81 g/t Ag, 0.55% Pb and 0.85%
      Zn


·
            Drill
      hole CI-36


§
            intersected
      33.0 meters averaging 0.48 g/t Au and 43.89 g/t
  Ag


§
            intersected
      13.5 meters with 0.53 g/t Au and 41.64 g/t
Ag.


·
            Drill
      hole CI-39


§
            intersected
      79.60 meters averaging 0.43 g/t Au and 17.05 g/t
  Ag


·
            Drill
      hole CI-37


§
            intersected
      15 meters with 0.34 g/t Au and 48.88
Ag


§
            intersected
      10.60 meters with 0.18 g/t Au, 26.89 g/t Ag, 0.54% Pb and 0.69%
      Zn


·
            Drill
      hole CI-38


§
            intersected
      91 meters averaging 0.46 g/t Au and 15.20 g/t
Ag


§
            intersected
      29.05 meters averaging 0.26 g/t Au, 31.38 g/t Ag, 0.51% Pb and 1.01%
      Zn





Drill
hole CI-34 was collared in the western portion of the Cieneguita mineralized
system, where the best grades and greatest thickness of precious and base metals
mineralization have been found, which seems to represent the main conduit of the
diatreme. Mineralization intersected in CI-34 and CI-29 suggests that
mineralization still remains open to west, southwest and to depth in the western
part of the Cieneguita deposit.














·
            Drill
      holes CI-44, CI-45 and CI-46 have confirmed and expanded mineralization in
      the west-southwest parts of the Cieneguita mineralized body. The three
      drill holes intersected broad intervals of mineralization and have ended
      in mineralization prior to reaching their target depth. Diamond drill hole
      CI-46, which intersected 23.00 meters averaging 8.93 grams per ton
      gold and 63.69 grams per ton silver, further demonstrates the
      continuity and depth extent of mineralization in the main part of the
      Cieneguita deposit. Drill holes CI-44 and CI-45 have extended
      mineralization a minimum of 100 meters to the southwest of previously
      reported drill hole CI-34. Hole CI-44 intersected 18.40 meters
      averaging 1.10 grams gold per ton and 30.25 grams silver per ton
      whereas CI-45 intersected 43.00 meters with 0.5 grams gold per ton,
      36.51 grams silver per ton, 0.28% lead and 0.40%
  zinc.






·
            Hole
      CI-46 is a significant hole because it has high grades over a long
      interval (23.00 meters of 8.93 grams per ton gold and 63.39 grams per ton
      silver) – the first time this has been seen at the Cieneguita
      project.  It included two assay intervals greater than 32 grams per
      ton.  This intercept suggests that there are high grade, structurally
      controlled zones within the more generally disseminated body of
      mineralization, which may help to raise the overall grade of the
      deposit.






With
these new mineralized intervals, mineralization at Cieneguita has been traced
along a length of 1,000 meters and remains open to west-southwest and to depth
in the western part of the mineralized body.






·
            Drill
      holes CI-40, CI-41 and CI-47 were completed in the central-east part of
      the Cieneguita mineralized body and intersected attractive mineralization
      grading 48.80 meters averaging 0.86 grams per ton gold, 166.91 grams per
      ton silver, 0.52% lead and 1.10% zinc including 16.70 meters
      averaging 1.18 grams per ton gold, 366.86 grams per ton silver, 0.76% lead
      and 1.76% zinc. These intersections extend at least 50 meters to the south
      of the previously reported high-grade intersections in drill hole
      CI-25.






Drill
hole CI-40 was collared in the eastern portion of the Cieneguita system close to
the western limit of the Pit 1 area intersecting several intervals including
1.88 grams per ton gold over 4.50 meters.




Drill
holes CI-42 and C-43 were collared to the west of the Cieneguita mineralized
body beyond the known limit of the mineralization. CI-42 was completed in the
west-northwest edge of the known limit of mineralization intersecting attractive
gold intervals and broad intervals of lead ± zinc ± silver mineralization. CI-42
returned 15 meters averaging 0.42 grams per ton gold and 17.23 gram per ton
silver and 22.60 meters grading 40.89 grams per ton silver, 0.71% lead and
1.13% zinc. CI-43 intersected favorable alteration and local mineralization
grading 0.46 grams per ton gold over 18.00 meters and 53.84 grams per ton silver
over 15.00 meters.







Reconnaissance-style
exploration and a detailed mapping and sampling program of the Piedras Blancas
area, 500 meters to the south, are currently in progress, aimed to identify
additional drilling targets within Mexoro’s concessions at its Cieneguita
project.






Mexoro’s
exploration drilling program continues to the west, where access road and
drilling platforms have been completed to explore Cieneguita’s potential in the
westerly direction. Parallel to this exploration drilling in the western
portion, an infill drilling program has been initiated, including preparing
access roads and drilling platforms and bringing in a second drill
rig.














A summary
of the Cieneguita assay results are described in the table below:





Hole
            From
            To
            Interval
            Au
            Ag
            Pb
      (%)
            Zn
      (%)ID
            (m)
            (m)
            (m)
            (g/t)
            (g/t)CI-01
            4.60
            6.40
            1.80
            1.487.85
            16.45
            8.60
            1.0521.50
            30.00
            8.50
            1.35CI-02
            73.50
            78.00
            4.50
            1.2194.10
            102.50
            8.40
            2.83110.15
            113.00
            2.85
            2.33192.00
            195.00
            3.00
            1.60CI-03
            48.85
            74.50
            25.65
            1.40
            24.4682.00
            95.50
            13.50
            2.01
            21.34CI-05
            33.50
            52.50
            19.00
            1.7762.90
            82.50
            19.60
            1.69118.00
            125.00
            7.00
            1.16
            49.16
            0.36
            0.34147.50
            162.50
            15.00
            0.74
            106.53
            0.93
            1.79CI-06
            12.30
            24.00
            11.70
            2.58CI-07
            0.0
            11.50
            11.50
            0.7874.60
            78.50
            3.90
            0.5
            114.26
            0.15
            0.41102.50
            104.00
            1.5
            1.32111.50
            113.00
            1.50
            1.95CI-08
            3.50
            5.00
            1.50
            1.0896.50
            122.00
            25.50
            0.31
            48.49
            0.82
            1.21130.75
            141.25
            10.50
            0.96
            90.34
            0.52
            0.91166.75
            170.70
            3.95
            
            
            1.02
            1.18198.25
            201.40
            3.15
            
            
            0.09
            1.34CI-09
            8.40
            12.20
            3.80
            1.39
            149.9052.70
            60.20
            7.50
            0.44
            105.58
            0.40
            0.66102.20
            109.70
            7.50
            0.25
            39.08
            0.47
            1.31CI-10
            0.00
            6.00
            6.00
            1.19
            22.7012.50
            15.25
            3.25
            1.14
            22.1074.50
            94.00
            19.50
            0.73
            57.56
            0.73
            1.0395.50
            100.00
            4.50
            1.39
            140.90
            0.09
            0.131.09
            118.00
            9.00
            0.26
            277.88
            0.26
            0.42CI-12
            54.00
            55.50
            1.50
            1.7287.00
            88.50
            1.50
            1.07139.50
            159.00
            19.50
            0.76














Hole
            From
            To
            Interval
            Au
            Ag
            Pb
      (%)
            Zn
      (%)ID
            (m)
            (m)
            (m)
            (g/t)
            (g/t)CI-13
            84.40
            92.00
            9.10
            0.45111.50
            123.25
            11.75
            0.81210.50
            213.50
            3.00
            
            
            0.50
            0.85282.50
            293.00
            10.50
            
            
            0.55
            0.94CI-14
            114.50
            117.50
            3.00
            1.53135.00
            144.00
            9.00
            0.95CI-15
            0.0
            10.50
            10.50
            2.15
            34.62CI-16
            0.0
            19.30
            19.30
            1.57
            26.50CI-18
            0.0
            14.50
            14.50
            1.10
            26.9581.50
            93.50
            12.00
            0.37
            100.64102.50
            149.00
            46.50
            0.47
            58.75165.50
            170.00
            4.50
            0.58
            37.90171.50
            186.59
            15.00
            0.44
            27.15189.50
            197.00
            7.50
            0.29
            82.12
            0.26
            0.56197.00
            207.50
            10.50
            0.53
            42.64215.00
            228.50
            13.50
            0.93
            50.47248.00
            251.00
            3.00
            0.14
            20.30
            0.38
            0.46264.50
            276.50
            12.00
            0.18
            21.01
            0.64
            1.02Including
            264.50
            269.00
            4.50
            0.21
            28.33
            1.03
            1.82CI-19
            15.50
            32.50
            15.00
            0.75
            106.14Including
            17.50
            23.50
            6.00
            1.33
            145.17CI-20
            0.0
            19.00
            19.00
            0.89Including
            11.50
            14.50
            3.00
            1.09CI-21
            42.50
            116.50
            74.00
            1.72
            119.77Including
            42.50
            53.00
            10.50
            2.42
            244.36Including
            76.00
            92.50
            16.50
            2.66
            135.22Including
            98.50
            110.50
            12.00
            1.66
            71.69CI-22
            0.0
            89.50
            89.50
            0.57
            50.98
            0.10
            0.17Including
            15.00
            30.00
            15.00
            1.03
            59.58Including
            21.00
            27.00
            6.00
            1.68
            75.07
            0.40
            0.81Including
            77.00
            89.50
            12.50
            0.84
            79.96Including
            84.50
            89.50
            5.00
            1.17
            157.03CI-24
            0.0
            59.50
            59.50
            1.31
            60.38Including
            12.50
            42.05
            29.55
            1.65
            90.90Including
            15.50
            29.00
            13.50
            1.70
            161.81Including
            47.85
            52.00
            4.15
            1.32
            38.55
            0.50
            1.25Hole
            From
            To
            Interval
            Au
            Ag
            Pb
      (%)
            Zn
      (%)ID
            (m)
            (m)
            (m)
            (g/t)
            (g/t)CI-25
            0.00
            25.20
            25.20
            0.53
            66.34
            0.44
            0.7452.00
            98.50
            46.50
            1.10
            332.60
            0.35
            0.66Including
            56.95
            69.05
            10.95
            2.13
            976.05
            0.38
            0.96Including
            69.05
            82.50
            13.45
            1.30
            149.53
            0.57
            0.68279.30
            293.90
            14.60
            0.19
            110.31
            0.25
            0.63CI-27
            11.10
            24.60
            13.50
            0.60
            26.84
            0.24
            0.3544.10
            126.60
            85.50
            0.70
            54.46Including
            56.10
            63.60
            7.50
            1.54
            148.66
            0.15
            0.32Including
            110.10
            119.10
            9.00
            1.07
            82.47
            0.18
            0.22CI-28
            61.50
            158.00
            96.50
            0.62
            61.75Including
            42.50
            87.40
            44.90
            0.40
            69.44Including
            113.00
            120.50
            7.50
            1.16
            143.24Including
            125.00
            137.00
            12.00
            1.04
            114.71CI-29
            5.00
            56.00
            51.00
            0.50
            55.03
            0.34
            0.46Including
            26.00
            56.00
            30.00
            0.66
            58.75
            0.45
            0.58Including
            45.50
            56.00
            10.50
            1.01
            92.71
            0.37
            0.3381.50
            96.50
            15.00
            1.77
            66.65Including
            90.50
            96.50
            6.00
            3.55
            116.75132.50
            197.00
            64.60
            
            
            0.56
            0.80End
      of hole
            225.50
            238.30
            12.80
            
            
            0.28
            0.70CI-30
            0.0
            154.0
            154.0
            0.88
            58.34
            0.61
            0.93Including
            0.0
            94.0
            94.0
            1.21
            79.81
            0.78
            1.19CI-31
            0.00
            11.30
            11.30
            0.80
            9.7159.50
            66.10
            6.60
            1.07
            162.42
            0.37
            0.74101.50
            104.50
            3.00
            1.46CI-32
            4.10
            7.55
            3.45
            0.90
            68.7546.50
            61.00
            14.50
            1.89
            84.01
            0.22
            0.2976.50
            80.30
            3.80
            1.10CI-34
            0.0
            46.00
            46.00
            4.68
            87.67
            0.24
            0.22Including
            0.0
            13.00
            13.00
            6.52
            266.52
            0.80
            0.73Including
            20.50
            44.50
            24.00
            5.00
            13.55CI-34
            128.50
            221.50
            93.00
            0.10
            15.81
            0.55
            0.85CI-35
            0.0
            103.0
            103.0
            0.75
            63.64
            0.39
            0.52Including
            0.0
            31.0
            31.0
            1.72
            67.36
            0.56
            0.72CI-36
            14.50
            47.50
            33.00
            0.48
            43.89Including
            14.50
            22.00
            7.50
            0.84
            58.20CI-36
            68.50
            82.00
            13.50
            0.53
            41.64CI-36
            12.90
            91.20
            79.60
            0.43
            17.05Including
            29.50
            32.50
            3.00
            1.29
            204.60CI-37
            10.50
            25.50
            15.00
            0.34
            48.88Ended
      In
            202.50
            213.10
            10.60
            0.18
            26.89
            0.54
            0.69CI-38
            0.0
            91.00
            91.00
            0.46
            15.20Including
            14.40
            37.00
            22.60
            0.61
            39.43Including
            59.50
            91.00
            31.50
            0.57
            7.90Ended
      In
            147.25
            176.30
            29.05
            0.26
            31.38
            0.51
            1.01












Drillhole
            From
      (m)
            To
      (m)
            Interval
      (m)
            Au
      (g/t)
            Ag
      (g/t)
            Pb
      (%)
            Zn
      (%)CI-46
            0
            23.00
            23.0
            8.93
            63.39
            0.073
            0.1262.00
            91.00
            29.0
            0.17
            50.47
            0.17
            0.37End
      of Hole
            195.30
            242.75
            47.45
            0.13
            10.61
            0.34
            0.58CI-45
            0
            43.00
            43.0
            0.50
            36.51
            0.28
            0.4078.50
            96.50
            18.0
            0.22
            47.77
            0.34
            0.57105.50
            148.50
            43.0
            0.10
            16.98
            0.52
            0.82End
      of Hole
            195.00
            208.05
            13.05
            0.16
            22.49
            0.89
            1.20CI-44
            15.55
            31.00
            15.45
            0.43
            20.4847.10
            65.50
            18.4
            1.10
            30.25153.00
            181.00
            28.0
            0.22
            25.98
            0.71
            0.88End
      of Hole
            185.50
            196.85
            11.35
            
            15.34
            0.64
            0.91





Drillhole
            From
      (m)
            To
      (m)
            Interval
      (m)
            Au
      (g/t)
            Ag
      (g/t)
            Pb
      (%)
            Zn
      (%)CI-47
            0
            48.80
            48.80
            0.86
            166.91
            0.52
            1.10Including
            5.60
            19.70
            4.10
            1.03
            54.67
            0.39
            0.83Including
            32.10
            48.80
            16.70
            1.18
            366.85
            0.76
            1.7657.90
            65.70
            7.80
            0.53
            101.37
            0.41
            0.5882.30
            90.00
            7.70
            0.51
            21.94CI-41
            0
            55.60
            0.49
            29.3561.50
            67.50
            6.00
            0.67
            126.0076.50
            91.50
            15.00
            0.42
            28.30CI-40
            0
            5.30
            5.30
            0.4936.50
            41.00
            4.50
            1.8851.50
            56.00
            4.50
            1.16





Drillhole
            From
      (m)
            To
      (m)
            Interval
      (m)
            Au
      (g/t)
            Ag
      (g/t)
            Pb
      (%)
            Zn
      (%)CI-43
            0
            18.00
            18.00
            0.46
            15.3722.50
            37.50
            15.00
            0.30
            53.84CI-42
            4.00
            19.00
            15.00
            0.42
            17.2346.90
            69.50
            22.60
            0.17
            40.89
            0.71
            1.13101.00
            115.00
            15.00
            0.17
            33.00
            1.03
            0.92








The
Cieneguita Property is without known reserves as defined wither by the SEC’s
Industry Guide 7 or NI 43-101. Our proposed programs are exploratory in
nature.










Guazapares




A 19
drillhole program has been completed on the Guazapares project totalling 2,670
meters. The most recent drilling results are from 16 completed holes drilled at
the San Francisco Este, San Francisco Centro and El Cantilito concessions, three
of the main targets identified in the project. All drill holes in the San
Francisco Centro and El Cantilito concessions intersected long intervals of gold
and silver mineralization.





The
drilling commenced on the San Antonio area, where three diamond holes (GU-01,
GU-02, and GU-03) have been drilled for 452.85 meters. All three holes
intersected mineralization at a depth of approximately 100 meters. Surface and
underground sampling from San Antonio indicates the mineralization extends from
surface to a depth of at lease 135 meters with a width varying from 1.2 meters
to 12 meters in thickness. The mineralized structure has a strike length of 800
meters and is open to the northwest and southeast as well as to
depth.





The
GU-01, GU-02 and GU-03 holes have been focused on extending zones of high-grade
mineralization encountered in the San Antonio adit where a new high grade gold
zone in the underground samples returned grades of 37 g/t gold and 1,000 g/t
silver over two meters. The highest grades occurred within vein-breccias, quartz
veins and quartz stockworked veins exhibiting multiple pulses of hydrothermal
activity. Analysis of the mineralization and alteration assemblages, structural
setting and geochemistry of the San Antonio target area indicates that the high
gold values tend to cluster in two main mineralization styles:





1.
            Mineralized-shoots
      developed along the extensive San Antonio vein
  system.


2.
            Large
      and structurally controlled breccia bodies or structural zones developed
      in the intersections of mainly NW and NE trending faults and
      structures.







San
Francisco Este Target




The San
Francisco Este target is characterized by mineralized veins/breccias and quartz
veins stockworked zones. The mineralized and altered zone on this target trends
predominantly northwest. Drillholes GU-04 to GU-07 and GU-17 to GU-18 were
designed to test the silver (± gold) mineralization identified on surface. GU-04
intersected 9.55 meters with 2.17 g/t Au Eq from surface down to 10 meters
depth. Drillhole GU-08 encountered a mineralized interval of 5.20 meters with
1.68 g/t Au Eq. These intervals complement previous results for the surface
sampling where we reported silver values from trace to 2,160 g/t Ag. Drillholes
GU-05, GU-06 and GU-07 reported only gold and silver anomalies and did not
intersect economic mineralization.




San
Francisco Centro Target




The San
Francisco Centro target is characterized by quartz veins, veins/breccias and
quartz veins stockworked areas exhibiting multiple pulses of hydrothermal
activity. Mineralization in San Francisco Este tends to cluster in
mineralized-shoots developed primarily in the intersection of main structures.
Drillholes GU-08 to GU-13 were planned to test the east-west mineralized
structure identified during the mapping and sampling process in the central part
of the concessions. All drillholes intersected mineralization from surface down
to 100 meters depth. Drillhole GU-10 intersected 13.75 meters with 2.75 g/t AU
Eq. and 22.98 meters with 2.80 g/t Au Eq. from 8.15 meters down to 85 meters
depth. Drillhole GU-13 intercepted 9.0 meters with 3.63 g/t Au Eq. and 4.50
meters with 1.56 g/t Au Eq.




El
Cantilito Target




El
Cantilito is a mineralized zone produced mainly along northeast vein-structures
where mineralization tends to cluster in mineralized-shoots and mineralized
stock works developed in structural jogs and/mineralized intersection of main
structures. Drillholes GU-14 to GU-16 and GU-19 were designed to test the
outcropping mineralized structures. Drillholes GU-15 and GU-16 were collared in
the west margin of the known limit of the mineralized structure and it appears
to have opened up the exploration further west along El Cantilito structures.
Drillhole GU-15 was stopped at 168 meters depth still in mineralization
intersected 17.06 meters with 1.26 g/t Au Eq. including 1.30 meters with 6.10
g/t Au Eq. Drillhole GU-16 intercepted 18.92 meters with 4.33 g/t Au Eq.
including 7.74 meters with 9.10 g/t Au Eq. Highlights of the mineralized drill
intercepts are presented below:












·
            Drillhole
      GU-01 intersected 3.87 meters with 2.072 g/t Au and 22.66 g/t Ag;
      Including 1.00 meters with 4.83 g/t
Au


·
            Drillhole
      GU-02 intersected 1.35 meters with 2.54 g/t
Au


·
            Drillhole
      GU-03 intersected 1.50 meters with 3.17 g/t Au and 42.6 g/t
    Au


·
            Drillhole
      GU-04 intersected 9.55 meters grading 2.17 g/t Au Eq; including 2.12
      meters @ 4.78 g/t Au Eq.


·
            Drillhole
      GU-05 to GU-07 did not intersect economical
  mineralization


·
            Drillhole
      GU-08 intersected 5.68 meters with 1.68 g/t Au
  Eq.


·
            Drillhole
      GU-10 intersected 13.75 meters with 2.75 g/t Au Eq. & 22.98 meters
      with 2.8o g/t Au Eq; including 4.60 meters at 5.75 g/t Au Eq & 2.30
      meters @ 9.71 g/t Au Eq.


·
            Drillhole
      GU-11 intersected 17.89 meters with 2.58 g/t Au Eq; including 4.91 meters
      with 4.72 g/t Au Eq.


·
            Drillhole
      GU-12 did not intersect economical
  mineralization


·
            Drillhole
      GU-13 intersected 9 meters with 3.63 g/t Au Eq and 4.50 meters with 1.56
      g/t Au Eq; including 2.75 meters with 7.93 g/t Au
  Eq.


·
            Drillhole
      GU-14 intersected 19.86 meters with 1.29 g/t Au Eq; including 2.12 meters
      with 2.06 g/t Au Eq and 2.89 meters with 3.44 g/t Au
  Eq.


·
            Drillhole
      GU-15 intersected 17.06 meters with 1.26 g/t Au Eq; including 1.30 meters
      with 6.10 g/t Au Eq.


·
            Drillhole
      GU-16 intersected 18.92 meters with 4.33 g/t Au Eq; including 7.74 meters
      with 9.10 g/t Au Eq.


·
            Drillhole
      GU-17 and GU-18 did not intersect economical
  mineralization


·
            Drillhole
      GU-19 did not intersect economical
  mineralization.












The
following is a map of the drillhole locations:










20





In May
2008, we moved a drill rig onto the Guazapares Property to commence the second
round of drilling. A 6,000 meter diamond drilling program commenced in June
2008. The drill program may test alteration and mineralization targets, as well
as additional areas identified during a drill campaign completed in December
2007.





The three
main target areas include San Antonio, San Francisco, and El Cantilito. Drilling
is expected to initially test alteration and mineralization centers located
along these structural trends. The high priority target is where San Antonio,
San Francisco, and El Cantilito mineralized structures intersect each other in
the central part of the project area (drill holes GU-20, GU-22 and GU-23 are
located within that target). Continuation along strike and at depth of the
Antonio, San Francisco, and El Cantilito mineralized structures are anticipated
to be tested with this second stage diamond drilling program. Drilling is
anticipated to consist of 150-200 meter drill holes, with deeper drilling
reserved for areas that show the best results.





In
addition, targets Montana de Oro and Blanquita, which were identified during
recent detailed mapping and geochemical sampling program at 1:1,000 scale, are
anticipated to be also tested during this drill program.





To date
three holes have been completed in this second round of drilling. The results of
these holes are pending.







Encino
Gordo




During
fiscal 2007, we carried out a detailed and property scale mapping and sampling
program outlining numerous gold, silver and gold-copper coincident geochemical
anomalies. Phase 1 of the exploration program was undertaken in an effort to
define the style and characteristics of the mineralization areas indicated by
the geochemical anomalies. Within this stage several gold and sulphide
mineralization areas including pyrite and chalcopyrite have been identified
within an over 500 meters stockwork area and fault-veins structure.





All
information and field evidence gathered during the mapping and sampling process
suggest the presence of “porphyry” style alteration and mineralization
characterized by the presence a concentric alteration patterns (potassic
alteration grading outward to quartz-sericite and propylitic alteration),
coincident Cu, Au and Mo geochemical anomalies and a multiple-event of veining.
We cannot assure you that we will find such a deposit, if we find any deposit at
all.





Stage II
of the exploration program aimed to detail and characterize all identified
alteration and mineralization areas and define and prioritize drilling sites is
underway and is expected to be completed by the first quarter of 2009. In
addition, a stream sediment sampling program is being undertaken to fully
evaluate all the concessions.










Sahuayacan




Mexoro
has completed a diamond drilling program of 13 holes comprising 2,027.35 meters.
Nine of the 13 holes were directed to test the Santo Niño vein, two drillholes
were collared on the La Cumbre target and two more were drilled on the south of
the property to test the Santa Teresa target. Of the 13 drillholes only three
have intersected economically attractive mineralization. The mineralized
intercepts are as follows:





·
            Drillhole
      SDH-01 collared on the Santo Niño vein intersected 7.50 meters with 2.56
      g/t Au (from 65.00 to 72.50 meters) and 8.0 m with 2.98 g/t Au (from 96.50
      to 104.5 meters).





·
            Drillhole
      SDH-05 collared on La Cumbre target intersected intense altered zone
      dominated by abundant limonites, exhibiting 4.5 m @ 1.77 g/t Au from 0 to
      4.5 meters in depth.





·
            Drillhole
      SDH-12 drilled to test the Santa Teresa vein has intersected a high grade
      mineralized zone, from 74.50 to 82.00 for a total of 7.5 meters @ 56.01
      g/t Au and 283.22 g/t Ag.





A
detailed report with the most recent drilling results has been completed. All
data and field information collected is being evaluated and a second phase
exploration and drilling campaign is being planned on selected targets. A second
phase drilling program is anticipated to be aimed to define the potential volume
and grade of the mineralized system at Sahuayacan, primarily focusing on the
Santa Teresa and La Cumbre targets which may represent a mineralization system
developed along a caldera margin. Additional targets have been identified along
the circular feature that seems to control the emplacement of alteration and
mineralization zones on the Sahuayacan Project.







Exploration
Projects – Potential and Next Exploration Stage




Our
exploration team plans to aggressively pursue as a high priority:





1.
            Advancing
      all projects to the next exploration
stage,


2.
            Exploring
      and try to increment the known mineralization at the Cieneguita advanced
      project and


3.
            Designing,
      implementing and managing a strong new targets generation and identifying
      an advanced projects program aimed at expanding our
    portfolio.





The
following exploration program has been planned for each of the
projects:












Sahuayacan




Surface
mapping and drilling results are suggesting that the high gold values tend to
cluster at certain areas along the Santo Niño and the Santa Teresa vein
structures with intervening areas of low gold grades. A more disseminated
deposit seems to be present at the La Cumbre area. Our VP Exploration believes
that the cluster of high gold values indicate the development of
mineralized-shoots within the extensive Sahuayacan system as evidenced by the
intercepts from the SDH-1 in the Santo Niño vein and the SDH-12 along the Santa
Teresa vein.





Our VP
Exploration believes that all evidence is suggesting that the mineralization is
controlled by a circular feature that may represent a caldera margin running
from the Santa Teresa target up to north to the La Cumbre target. This evidence
opens up the potential to further extend the mineralization found at Santa
Teresa and La Cumbre targets further north.





Next
exploration stage is anticipated to include mapping and sampling along the
circular feature trying to define additional mineralization areas and drilling
targets.





The
figure below shows the different geological elements encountered in the
Sahuayacan system and is also exhibiting the relationship between the Santo
Niño, La Cumbre and Santa Teresa target areas.










23





If
management decides to continue drilling, we will need to raise additional
funding through the sale of debt or equity because we do not have sufficient
capital to continue such an exploration program. Additional drilling would cost
a significant amount of money, and we cannot assure you  that we would
be able to raise such additional amounts of money. We have not identified any
additional sources of funding to implement such a program





We have
budgeted $763,000 for exploration on the Sahuayacan Property in
2009.





The
Sahuayacan Property is without known reserves as defined wither by the SEC’s
Industry Guide 7 or NI 43-101. Our proposed programs are exploratory in
nature.







Guazapares




The
mineralization systems encountered in the Guazapares project are essentially of
two types: a silver-dominated system at San Francisco Este, San Francisco
Centro, and El Cantilito which exhibits localized areas of high-grade gold
mineralization; whereas at San Antonio the system is dominated by gold
mineralization. Surface mapping and drilling results are suggesting that the
high-grade mineralization tends to cluster at certain areas along the
mineralized veins with intervening areas of low-grade mineralization. The
cluster of high-grade mineralization is suggesting the development of
mineralized-shoots as evidenced by the intercepts from drillholes GU-04 and from
GU-08 to GU-16.





The
present drilling results are providing the evidence to highlight the potential
of several areas in the Guazapares project. Main potential targets are shown in
the figure below.





1.
            Drilling
      results on the San Francisco Este target are opening the potential to
      explore further northwest along the same
  structure.


2.
            Drillholes
      GU-12 and GU-13 at are suggesting the development of high-grade
      mineralized-shoots along structure’s inflections and have opened up the
      exploration potential to the west and
northwest.


3.
            Drilling
      results at El Cantilito (GU-16) have opened up the exploration potential
      to the west of the system which is a covered terrain. Drillhole GU-15 is
      also opening potential to the west along the El Cantilito mineralized
      system and since GU-15 was stopped in mineralization at 169 meters depth
      the exploration potential is still open at
  depth.


4.
            All
      mineralized system and targets are suggesting the potential to explore
      where all system intersects each other creating the right setting to
      develop attractive mineralization
zones.




















25





Diamond
drilling at Guazapares encountered mineralization in most of the drillholes. The
highest grades occurred within vein-breccias, quartz veins and quartz
stockworked veins exhibiting multiple pulses of hydrothermal
activity.





Analysis
of the mineralization and alteration assemblages, structural setting and
geochemistry of the project area indicates that the high gold values are
spatially associated to a rhyolite-dacite dome and tend to cluster in two main
mineralization styles:





·
            Mineralized-shoots
      developed along the extensive San Antonio vein
  system.


·
            Large
      and structurally controlled breccia bodies or structural zones developed
      in the intersections of mainly NW and NE trending faults and
      structures.










26





The
mineralized-shoots still remain open in all directions highlighting the
potential for high grade gold mineralization beneath covered areas on project
area, though we cannot assure you that there will be such
mineralization.





Drilling
continues to explore newly identified altered and mineralized areas and
extending the mineralized trends and mineralized-shoots remaining with open
potential in Guazapares.





On July
31, 2008, we received a technical report prepared by Apex Geoscience Ltd. on the
Guazapares property, summarized as follows.  During 2006 and 2007,
Mexoro Minerals Ltd. completed rock grab, rock channel and rock chip sampling
throughout parts of the Property. In total, 398 rock samples were collected. Of
the 398 samples, 83 contain greater than 0.5 grams per tonne gold (“g/t Au”) and
are ‘anomalous’, 45 contain between 0.15 g/t Au and 0.5 g/t Au and are ‘possibly
anomalous’, 108 samples contain greater than 20 grams per tonne silver (“g/t
Ag”) and are ‘anomalous’ and 45 samples contain between 10 g/t Ag and 20 g/t Ag
and are ‘possibly anomalous’.





From July
30, 2007 to the end December 2007, Mexoro completed drilling at their Guazapares
Property which consisted of 19 drillholes totaling 2670.65 meters. In total,
1888 halved drillcore samples were collected and submitted for analysis. More
specifically, six holes were drilled at the San Francisco Este Area (GU-04 to 07
and GU-17,18); six holes were drilled at the San Francisco Centro Area (GU-08 to
GU-13); three holes were drilled at the San Antonio Area (GU-01 to 03); and four
holes were drilled at the El Cantilito Area (GU-14 to 16 and GUP19). Drilling
results include anomalous intersections from each of the San Francisco, San
Antonio and El Cantilito areas including: 3.87 m of 2.072 g/t Au and 22.66 g/t
Ag (San Antonio); 17.98 m of 2.58 g/t Au equivalent (“Eq”; San Francisco); and
18.92 m of 4.33 g/t Au Eq (El Cantilito).





Based on
historic exploration and mining by throughout this part of the Sierra Madre
Occidental silver-gold belt, current gold and silver prices and the recent
exploration at the Guazapares Property, further work is recommended which should
include but not be limited to: Phase 1 (a) detailed prospecting and mapping
throughout the property. The property has excellent outcrop exposure. The
prospecting, mapping and sampling should focus on identifying alteration
(silicification, argillic, propylitic), brecciation and veining. One geologist
and an assistant should spend approximately 60 days completing the prospecting
and mapping and collect about 400 rock grab and/or rock channel and/or rock chip
samples; (b) follow-up drilling at each of the San Francisco Este, San Francisco
Centro and El Cantilito Areas. More specifically, drilling northwest along the
same structure at San Francisco Este, west and northwest of San Francisco Centro
and west of El Cantilito (5500 meters drilling). Phase 2: At least 2000 meters
drilling should be completed at newly developed targets and where known
mineralization and alteration exists on surface. This drilling is contingent on
the results of Phase 1.





In total,
approximately 7500 meters of core drilling should be completed in Phase 1 and 2.
The total budget to complete the recommended exploration (already in progress)
is $1,515,000.  If management decides to continue drilling, we will
need to raise additional funding through the sale of debt or equity because we
do not have sufficient capital to continue such an exploration program.
Additional drilling would cost a significant amount of money, and we cannot
assure you that we would be able to raise such significant additional amounts of
money. We have not identified any additional sources of funding to implement
such a program.





The
Guazapares Property is without known reserves as defined wither by the SEC’s
Industry Guide 7 or NI 43-101. Our proposed programs are exploratory in
nature.














Cieneguita




The
recent exploration activities at Cieneguita have provided us with results that
highlight the potential of this project. Mapping and sampling around Cieneguita
has identified two new areas of mineralization that are 500 meters south of the
current known mineralized zones. These two areas are exhibiting same size,
characteristics, and intensity of alteration-mineralization to the mineralized
zone previously encountered on Cieneguita. Detailing mapping and sampling is
currently underway.





Leaching
tests on oxide and mixed mineralized samples have returned a recovery above 90%,
whereas the recovery in the sulphide mineralization is showing recoveries
varying from 70% to 75% with a leaching process lasting 25 to 30 days. Leaching
tests, combined with the assay results from drilling and the new mineralized,
areas identified are providing the possibility to increase known zones and to
make the Cieneguita mineralized material an attractive property in the region.
We cannot assure you that we will be able to identify an economic mineralized
body at this property. Considering the latest results and findings, the proposed
work program for Cieneguita may include:





·
            Extending
      the current drilling program from 4,000 meters to 6,000
      meters,


·
            Testing
      leaching to the sulfide encountered at depth by current drilling program
      and


·
            Detailed
      mapping and sampling of the two new areas identified within our property
      500 meters away from Cieneguita.





On July
31, 2008, we received a technical report prepared by Apex Geoscience Ltd. on the
Cieneguita property, based on exploration and detailed mapping conducted in 2007
and summarized as follows.  The Pit 1 North area (Tajo 1) yielded a
rock chip sample which assayed at 31.60 grams per tonne gold (g/t Au) over 2
meters (m). A chip sample taken in the Pit 2 South area (Tajo 2) yielded 4.83
g/t Au and 94.5 g/t silver (Ag). Sampling at the Central Zone returned a 2.5 m
chip sample containing 4.22 g/t Au and 20.4 g/t Ag. Historic and recent sampling
at already identified zones include Pit 1, which yielded 25.10 g/t Au and Pit 2,
which yielded 14.90 g/t Au.





Based on
historic exploration and mining by Glamis Gold Corporation, current gold and
silver prices and the recent exploration at the Cieneguita Property, further
work is recommended, which should include but not be limited to: (1), the
completion of 2007/2008 drilling campaign (already initiated) which was designed
to: (a) better understand the property geology; (b) better understand structures
controlling known mineralization; (c) extend near surface oxide/ mixed sulphide
mineralization to depth; (d) test new geological and geochemical targets
developed during the 2007 surface exploration (i.e. Piedras Blancas, 500m south
of Tajo 1); and (e) determine if more work is necessary to expand the known
exploration potential and move towards developing NI43-101 compliant resources
and/or reserves. In total, 9,500 meters of core drilling are planned (in
progress).





The
budget to complete the exploration drilling is $2,000,000. If management decides
to continue drilling, we will need to raise additional funding through the sale
of debt or equity because we do not have sufficient capital to continue such an
exploration program. Additional drilling would cost a significant amount of
money, and we cannot assure you that we would be able to raise such additional
amounts of money. We have not identified any additional sources of funding to
implement such a program. If we can not obtain additional financing, we could
seek a joint venture partner if the drilling results warranted it. We do not
have any joint venture partners at this time, and we cannot assure you that we
will be able to find one if the Cieneguita Property warranted such a joint
venture.








The
Cieneguita Property is without known reserves as defined wither by the SEC’s
Industry Guide 7 or NI 43-101. Our proposed programs are exploratory in
nature.














Encino
Gordo




We
carried out a detailed and property scale mapping and sampling program on the
Encino Gordo project outlining a porphyry-style mineralization exhibiting
numerous gold, silver and gold-copper coincident geochemical anomalies. We have
identified two drilling targets in the project area; however in order to define
the system better, we have planned a geophysical survey (IP and magnetics) to
know the potential of the near-mesothermal (porphyry-style) system present at
the Encino Gordo Property before the drilling program.










The above
figure illustrates coincident Cu and Au geochemical anomalies on the Encino
Gordo Property which are spatially associated to a potassic alteration core
resembling the classical geochemical-alteration signature of the porphyry
systems.












Management
and our VP of Exploration will review the information provided by phase 1 of the
exploration plan and determine whether a drill program is recommended. Even if a
drill program is recommended and we receive our permits that have been applied
for in advance, we do not have sufficient information at this time to estimate
what the drill 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 may be provided by phase 1 of the
exploration plan.





We have
budgeted $740,000 for exploration on the Encino Gordo Property in 2009. If
management decides to continue with this project, we will need to raise
additional funding through the sale of debt or equity because we do not have
sufficient capital to continue such an exploration program. We cannot assure you
that we would be able to raise such additional amounts of money. We have not
identified any additional sources of funding to implement such a program. If we
can not obtain additional financing, we could seek a joint venture partner. We
do not have any joint venture partners at this time, and we cannot assure you
that we will be able to find one if the Encino Gordo Property warranted such a
joint venture.





The
Encino Gordo Property is without known reserves as defined wither by the SEC’s
Industry Guide 7 or NI 43-101. Our proposed programs are exploratory in
nature.







Target
Generation and Growth Strategy




A
fundamental component of our strategy is to advance all of our properties to the
drilling stage and implement a strong generative and property acquisition
program through a well established financial process and a proper funding
consistency.





The
proposed generative program contemplates four main directions:





1.
            A
      new targets generation program that may create a pipeline of quality
      properties providing a steady stream of new prospect and/or projects for
      us to explore, farm-out and/or joint venture
  out,


2.
            A
      property acquisition program aimed at identifying and acquiring at low
      cost (whenever possible) early- to mid-stage properties on selected
      locations along the main gold-silver belts in
  Mexico,


3.
            A
      focus on small- to medium-size gold-silver deposits (minimum deposits
      containing 250,000 ounces of Au Eq.)
and


4.
            The
      new targets generation and property acquisition program may be initially
      focused on the Sierra Madre belt and Central Mexico. It may be extended
      further south in Mexico and other countries if conditions and a project’s
      potential warranted.












The
proposed exploration program is to be undertaken by the Mexoro’s exploration
team using in-house knowledge in combination for support and guidance of
high-quality consultant with expertise in the region. The new targets generation
program is aimed at feeding our project pipeline two at drilling stage and/or
near drilling stage projects per year.





Phase I - Target
Generation





Objectives





·
            Identify
      two to four target areas (approximately 20 x 30 kilometers) which have
      potential to host small- to medium-size gold and/or gold-silver
      deposits.


·
            Identify
      one or two specific opportunities with close to drill ready targets. For
      example, identify old workings or existing mines with good upside
      potential.


·
            Time
      frame: six months.





Key
Steps and Exploration Tools





After
initial evaluations of potential gold and gold-silver deposits, it has become
evident that the acquisition and evaluation of more detailed geological maps and
geochemistry with field follow-up is critically important in identifying new
areas of mining potential. Careful and selective use of such data may be the
most immediate and cost-effective way to focus exploration efforts toward
prospective gold-silver areas.





Key steps
may include, among other considerations:





·
            Acquiring
      geological maps 1:250,000 and 1:50,000 (from Servicio Geologico
      Mexicano),


·
            Generating
      geological and mineral occurrences base
maps,


·
            Identifying
      key host rocks,


·
            Completing
      structural interpretation from known geology, TM imagery, and geophysical
      data (if available),


·
            Integrating
      mineral occurrences, alteration, lithology and
  structures,


·
            Completing
      initial targeting using the above compilation
  and


·
            Selecting
      and prioritizing targets.














Results
of Operations







Three
and six months ended August 31, 2008 compared to the three and six months ended
August 31, 2007.





In this
discussion of our results of operations and financial condition, amounts, other
than per-share amounts, have been rounded to the nearest thousand
dollars.





Revenues





We did
not earn revenues during the three or six months ended August 31, 2008 or 2007
because we did not have commercial production on 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.





Operating
Costs





We did
not incur any operating costs during the three or six months ended August 31,
2008 or 2007 due to the fact that we did not achieve production from exploration
activities during either year.





Expenses





Our
expenses increased to $2,118,000 for the three months ended August 31, 2008
compared to $1,657,000 for the three months ended August 31, 2007. The increase
is primarily attributable to higher mineral exploration and administrative costs
offset by lower stock-based compensation to officers, directors and consultants.
The expenses decreased slightly to $4,026,000 for the six months ended August
31, 2008 compared to $4,198,000 for the six months ended August 31, 2007. Our
exploration expense increased considerably during the current six month period,
which was offset by lower administrative and stock-based compensation
expenses.





General
and administrative cash expenses increased to $505,000 in the three months ended
August 31, 2008 compared to $357,000 in the three months ended August 31, 2007.
The increase during the current three month period is attributable to higher
legal costs and investor relations expenses as we redirected our focus on the
strategic alliance with Paramount. The expenses decreased to $931,000 for the
six months ended August 31, 2008 compared to $1,292,000 for the six months ended
August 31, 2007. This was entirely due to lower investor relation expenses in
the current six month period.





Management
and consultant fees decreased to $44,000 and $123,000 in the three and six
months ended August 31, 2008 from $126,000 and $299,000 in the three and six
months ended August 31, 2007. The decrease was attributable to; lower expenses
for an investor relations contract that ended in April 2008, lower management
fees paid to the chief executive officer due to his resignation in April 2008
and certain management fees in Mexico being charged to exploration expenses. We
also spent only $200,000 in the six months ended August 31, 2008 compared to
$564,000 in the six months ended August 31, 2007 on investor relations
activities.












Stock-based
compensation expense decreased to $151,000 and $340,000 in the three and six
months ended August 31, 2008, respectively, from $736,000 and $1,673,000 in the
three and six months ended August 31, 2007. The 2008 amount had $332,000 of
stock-based compensation expense relating to options granted to officers,
directors and consultants and $8,000 of stock-based compensation relating to
warrants. The 2007 amount relates to warrants issued and stock options granted
to management and key personnel for $974,000 and $699,000
respectively.





Mineral
exploration in the three and six months ended August 31, 2008 increased to
$1,462,000 and $2,755,000 compared to $564,000 and $1,233,000 for the three and
six months ended August 31, 2007 as we continue to advance our mineral
exploration program. We anticipate that exploration expenditures may increase in
fiscal 2009 as a result of exploration activities on our Mexican mineral
properties.





Loss





Our net
loss increased to $2,235,000 and $4,238,000 for the three and six months ended
August 31, 2008 compared to $1,651,000 and $4,198,000 for the three and six
months ended August 31, 2007, respectively.





This
increase in our loss was primarily attributable to higher mineral exploration
costs, and higher interest expense recognized in 2008 relating to beneficial
conversion feature and the fair value of warrants for the warrants issued to
Paramount.





The net
losses in both 2008 and 2007 were comprised of items not requiring an outlay of
cash. In 2008, the non-cash component of stock-based compensation was $340,000.
In 2007, the non-cash component of stock-based compensation was $1,673,000. We
anticipate that we will continue to incur a loss 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, if
ever. We cannot assure you that we will 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
August 31, 2008, we had total assets of $925,000, total liabilities of
$4,921,000 and a deficit of $38,066,000 accumulated during the exploration
stage.












Cash and Working
Capital





We had
cash and cash equivalents of $1,352 as of August 31, 2008, compared to cash of
$13,000 as of February 29, 2008. We had working capital deficiency of $4,421,000
as of August 31, 2008, compared to a working capital deficiency of $1,811,000 as
of February 29, 2008 and $1,276,000 as of May 31, 2007.





We will
require additional financing during the current fiscal year according to our
planned exploration activities. We plan to spend approximately $3,670,000 from
September 2008 to February 2009 to carry out exploration and administration
activities on our Mexican mineral properties. We also anticipate spending
approximately $1,593,000 during the next 6 months on general and administrative
costs.





We will
need to raise additional working capital to maintain basic operations. We plan
to raise those funds through the sale of equity or debt. At this time we do not
have any sources to raise additional capital and we cannot assure you that we
will be able to find sources to raise additional capital. Failure to raise any
additional capital would most likely require us to cease operations and abandon
all of our exploration properties.





The
amount of working capital could be adversely affected further in the event
claims are made against us alleging that certain shares we previously issued
pursuant to Form S-8 registration statements constituted an illegal public
offering because we were a “shell company” at the time and, as a result, was not
eligible to use Form S-8 for registration of shares under the Securities Act of
1933. In August and October of 2005, we issued shares of common stock to an
officer as compensation for consulting services. The two share issuances were
for a combined total of 30,000 shares and each of the share issuances was made
pursuant to a registration statement on Form S-8 under the Securities Act of
1933.  Although we believe these shares were properly issued, a claim
could be made that issuance of the shares constituted an illegal public offering
because we were a “shell company” at the time. Shell companies  [i.e.
companies which have no or nominal operations and either (i) no or nominal
assets; (ii) assets consisting solely of cash and cash equivalents; or (iii)
assets consisting of any amount of cash and cash equivalents and nominal other
assets] are not eligible to use Form S-8 for registration under the Securities
Act of 1933. If either of these transactions did violate federal securities
laws, subsequent purchasers of the shares may have claims against us for damages
or for rescission of their purchase transaction and recovery of the full
subscription price paid, together with interest. As of the date of this
quarterly report, no one has made or threatened any claim against us alleging
violation of the federal securities laws. In the event such claims were
successfully asserted, we cannot assure you that we would have sufficient funds
available to pay and it is likely that we would be required to use funds
currently designated as working capital for that purpose. That would
substantially reduce the amount of working capital available for other purposes
and, in that event, we could be forced to cease or discontinue certain
operations and to liquidate certain assets to pay our liabilities, including,
but not limited to, rescission claims.




Cash Used in Operating
Activities





Cash used
in operating activities increased to $2,245,000 for the six months ended August
31, 2008 compared to $1,713,000 for the six months ended August 31, 2007. The
cash used in operating activities was primarily for general and administrative
expenses and exploration costs.





Cash Used in Investing
Activities





We used
cash of $13,000 for purchase of equipment for the six months ended August 31,
2008 compared to cash used of $35,000 for the purchase of equipment for the six
months ended August 31, 2007.












Financing
Activities





Cash
provided by financing activities increased to $2,242,000 for the six months
ended August 31, 2008 compared to $1,778,000 for the six months ended August 31,
2007. Almost all of the cash provided by financing activities was from issuing
of warrants and notes payables. 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.





In
January 2006, we began issuing 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 of shares of our
common stock at $1.00 per share and $25,000 of debt, which may be converted to
shares of common stock at $0.50 per share and was exercisable until April 30,
2008. As of February 28, 2006, we had issued convertible debentures in the
amount of $652,000. In addition, the warrants are redeemable by us at $0.01 per
share in the event our common stock closes with a bid price, on average, over
$3.00 per share for a consecutive 20-day period and settled on a physical basis.
2,043,100 of these warrants expired on April 30, 2008.





In order
to get assistance with financing activities, on January 30, 2006, we entered
into a Consulting Agreement with G.M. Capital Partners, Ltd., a British Virgin
Islands company (“GM Capital”). Under the agreement, GM Capital will provide us
with a variety of services including financial public relations, strategic
planning, acquisition consulting and assistance in securing equity or debt
financing. Specifically, GM Capital agreed to provide financial public relations
counsel services including (i) being a liaison between us and our stockholders;
(ii) advising us with respect to existing and potential market makers,
broker-dealers, underwriters and investors as well as being the liaison for us
with respect to communications and information (e.g., interviews, press
releases, stockholder reports, etc.) as well as planning, designing, developing,
organizing, writing and distribution such communications and information; (iii)
assisting us in establishing an investor relations program and advising us with
respect to stockholder meetings, interviews of our officers by the financial
media, and interviews of our officers by analysts, market markers,
broker-dealers and other members of the financial community; and (iv) assisting
in making us, our management, products and services, and financial situation and
prospects, known to the financial press and publications, broker-dealers, mutual
funds, institutional investors, market makers, analysts, investment advisors and
other members of the financial community. GM Capital also agreed to provide
strategic planning services, which included (i) consulting with us as to, the
management, marketing, consulting, strategic planning, corporate organization
and structure, financial matters in connection with the operation of our
business , expansion of projects; (ii) reviewing and advising us regarding our
overall progress, needs and condition; (iii) assisting us in the monitoring of
services provided by our advertising firm, public relations firm and other
non-legal professionals to be employed by us; and (iv) advising us on the
continued development of an investor relations program and the stimulation of
interest in our business by institutional investors and other members of the
financial community.












Under the
terms of the agreement, we paid GM Capital the following: (i) a monthly fee of
$10,000, (ii) 10% success fee for any financing facilitated by GM Capital
outside of the United States, and (iii) the issuance of a total of 5,000,000
warrants, each of which entitled the holder to purchase one share of our common
stock. The warrants are exercisable at the right of the holder, have no
redemption features, and are settled on a physical basis. 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. The Series A
Warrants fully vested upon issuance. They were to be exercisable at any time
following their issuance but were to expire on June 30, 2007 if not fully
exercised on or before that date. The remaining series of Warrants would each
vest and become exercisable only at the time that the immediately preceding
series has been fully exercised. Therefore, the Series B Warrants will vest only
upon the timely exercise of all Series A Warrants, and the same restriction will
apply to each of the succeeding series of warrants (i.e. the Series C, D and E
Warrants). Unless terminated earlier as a result of failure to vest, the Series
B and Series C Warrants would each expire on December 31, 2007 and the Series D
and Series E Warrants will each expire on December 31, 2008. However, the
Agreement also stipulates that G.M. Capital cannot exercise any warrants if,
after the exercise, G.M. Capital would own 4.99% or more of the issued and
outstanding common stock of Mexoro. G.M. Capital is an accredited investor.
These warrants were issued pursuant an exemption from registration under
Regulation S of the Securities Act of 1933, as amended. 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
stock-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.





On August
31, 2006, we entered into an Amended Consulting Agreement with G.M. Capital. All
of the terms remained the same except for the following:





1.
            G.M.
      Capital represented that it does fall within United States jurisdiction in
      regard to this contract,


2.
            G.M.
      Capital is no longer required to provide services regarding the
      acquisition of a business because we do not plan to acquire a business in
      the near future,


3.
            G.M.
      Capital clarified that the investors, market makers, and other financial
      industry contacts which it will speak to in regard to our business are
      non-United States persons,


4.
            We
      acquired the sole discretion to determine how many Warrants G.M. Capital
      can exercise in order to restrict G.M. Capital’s beneficial ownership at
      any one time to no more than 4.99% of our issued and outstanding
      shares,


5.
            G.M.
      Capital will no longer be the liaison between us and our
      stockholders,


6.
            G.M.
      Capital will no longer advise us about potential market makers,
      broker-dealers, underwriters and investors
and


7.
            The
      Warrants were revised to remove the liquidated damages provision related
      to the registration rights of the holders of the
  Warrants.





Furthermore,
we had amended our agreement with G.M. Capital to eliminate any reference
whereby G.M. Capital would assist us in identifying, evaluating, structuring,
negotiating and closing acquisitions. In the event we discovered no material ore
reserves and have no more exploration plans to continue after June 2008 we would
be without the services of G.M. Capital to assist us in reformulating our
business plan. If we should abandon our exploration strategy, current management
has sufficient expertise to reformulate the business plan and pursue other
options without the help of G.M. Capital. G.M. Capital’s main function was to
identify and introduce potential investors to us in foreign jurisdictions for
raising capital through the sale of equity or debt.












In May
2008, we verbally terminated the agreement with G.M. Capital for providing
assistance in financing activities.





On March
4, 2006, we agreed to issue 1,651,000 common shares at a price of $0.25 per
share to settle $413,000 in promissory notes payable. As a condition, the
promissory note holders waived all accrued interest payable on the notes. On
April 6, 2006, these shares were issued and we recorded a $7,000 gain on
settlement of debt.





On April
3, 2006 and May 31, 2006, we issued 550,000 common shares and 200,000 common
shares, respectively and closed a private placement for total proceeds of
$375,000. As at February 28, 2006, we had received $170,000 of subscriptions for
this 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 our  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.





During
the quarter ended May 31, 2006, we issued a total of $2,265,500 convertible
debentures. The convertible debentures, with principal and accrued interest at
7% per year were convertible into $25,000 units at the option of the holder.
Each unit consisted of a warrant to purchase 25,000 of our  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 us at $0.01 per share in the event our
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, we are prohibited from effecting or entering into an agreement to affect
any subsequent financing involving a “Variable Rate Transaction” The term
Variable Rate Transaction means a transaction in which we issue or sell 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
holders of the debentures converted all of the debentures to shares of common
stock at $0.50 per share in June 2006.  We 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 2006, we 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.





During
the six months ended August 31, 2008, we issued a total of $1,370,000
convertible debentures to Paramount. The convertible debentures with principal
and accrued interest at 8% per year are convertible into 2,740,000 units at a
price of $0.50 per unit at the discretion of Paramount.  Each unit
shall be comprised of one common share plus one-half common share purchase
warrant. One full warrant is exercisable immediately at a price of $0.75 for
four years.












Going
Concern





Our
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 depends 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 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.





We have a
history of operating losses and will need to raise additional capital to fund
its planned operations. As at August 31, 2008, we had working capital deficiency
of $4,421,000 (August 31, 2007 - $1,276,000) and an accumulated deficit during
the exploration stage of $38,066,000 (August 31, 2007 - $29,930,000). These
conditions raise substantial doubt about our ability to continue as a going
concern.





We cannot
assure you that our operations will be profitable. We have conducted private
placements of convertible debt and common stock, which have generated funds to
satisfy all of the initial cash requirements of its planned Mexican mining
ventures. 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.







Off-Balance
Sheet Arrangements







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 is material to our
investors.













Item
3.                      Quantitative
and Qualitative Disclosure About Market Risk




As we did
not have to disclose quantitative and qualitative information about our market
risk as of and for our last fiscal year, this item is not applicable to us at
this time.




Item 4
and Item
4(T)                                           Controls
and Procedures




Evaluation
of Disclosure Controls and Procedures





The term
“disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This
term refers to the controls and procedures of a company that are designed to
ensure that information required to be disclosed by a company in the reports
that it files under the Exchange Act is recorded, processed, summarized, and
reported within the required time periods.





Our
acting principal executive officer and acting principal accounting officer
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as required by Rule 13a-15 of the
Exchange Act. Based on their evaluation of our disclosure controls and
procedures, our acting principal executive officer and acting principal
accounting officer concluded that our disclosure controls and procedures are
effective in ensuring that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms and in timely alerting the acting
principal executive officer and acting principal accounting officer to material
information required to be included in our periodic reports filed or furnished
with the SEC.





Management’s
Report on Internal Control over Financial Reporting.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) of the Securities
Exchange Act of 1934. Our internal control system was designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial reporting and the preparation of financial statements
for external purposes, in accordance with generally accepted accounting
principles.





Our
management, including our president, acting principal executive officer and
acting principal accounting officer conducted an evaluation of the effectiveness
of our internal control over financial reporting using the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission in Internal
Control — Integrated Framework. Based on its evaluation, our management
concluded that our internal control over financial reporting was effective as of
February 29, 2008.












Changes
in Internal Control over Financial Reporting





No change
in our internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) occurred during the period covered by this
report that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.





PART II -
OTHER INFORMATION





Other
than disclosed herein, all other sections in Part II are inapplicable to
us.





ITEM
1.                      LEGAL
PROCEEDINGS





Other than as disclosed herein, neither Mexoro nor its
properties are the subject of any pending legal proceedings and no such
proceeding is known to be contemplated by any governmental authority. We are not
aware of any legal proceedings in which any director, officer or affiliate of
Mexoro, any owner of record or beneficially of more than 5% of any class of our
voting securities, or any associate of any such director, officer, affiliate or
security holder of Mexoro, is a party adverse to Mexoro or any of its
subsidiaries or has a material interest adverse to Mexoro or any of its
subsidiaries.





In
November 2007, the British Columbia Securities Commission (“BCSC”) placed a
cease trade order (“CTO”) on the Company in the Province of British Columbia,
Canada affecting residents of British Columbia. This CTO was rescinded on
February 20, 2008 as we filed the required documents in British Columbia. On
February 20, 2008, the BCSC issued a second CTO requiring us to file a technical
report in British Columbia on its Mexican properties. This CTO was rescinded on
August 21, 2008 as we filed the required documents in British
Columbia.





In
February 2007, Mexoro obtained a temporary restraining order in a civil action
against Mr. Argang Schariat. The civil action for temporary restraining order
was made before the Tribunal of Vevey, Switzerland.  We believe that
Mr. Schariat is refusing to abide by the Swiss Court ruling and we are taking
the necessary steps to enforce our rights by filing a criminal complaint against
Mr. Schariat.  The hearing for this criminal complaint against Mr.
Schariat is scheduled for November 2008.












ITEM
2.                      UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





On April
28, 2008, we issued 217,500 units (each unit consisting of two common shares and
one Series A warrant, exercisable at $0.75 to purchase one share) to Severn
Consulting LLC in exchange for debt owed of $217,500 in promissory notes. The
warrants have a term of four years.  These shares and warrants were issued
to a US person relying on the exemption from the registration requirements of
the Securities Act of 1933 provided by Regulation D and/or Section 4(2) of the
Securities Act.





On April
28, 2008, we issued 27,000 units (each unit consisting of two common shares and
one Series A warrant, exercisable at $0.75 to purchase one share) to Liberty
Management in exchange for debt owed of $27,000 for investor relations
activities. The warrants have a term of four years. These shares and warrants
were issued to a US person relying on the exemption from the registration
requirements of the Securities Act of 1933 provided by Regulation D and/or
Section 4(2) of the Securities Act.





On April
30, 2008, we issued 165,000 units (each unit consisting of two common shares and
one Series A warrant, exercisable at $0.75 to purchase one share) to Hetfield
International in exchange for debt owed of $165,000 in promissory notes. The
warrants have a term of four years. These shares and warrants were issued to a
US person relying on the exemption from the registration requirements of the
Securities Act of 1933 provided by Regulation D and/or Section 4(2) of the
Securities Act.





On May 7,
2008, we issued 110,000 units (each unit consisting of two common shares and one
Series A warrant, exercisable at $0.75 to purchase one share) to Court Global in
exchange for debt owed of $110,000 in promissory notes. The warrants have a term
of four years. These shares and warrants were issued to a US person relying on
the exemption from the registration requirements of the Securities Act of 1933
provided by Regulation D and/or Section 4(2) of the Securities Act.





On May
15, 2008, we issued 16,000 units (each unit consisting of two common shares and
one Series A warrant, exercisable at $0.75 to purchase one share) to Manuel
Flores in exchange for debt owed of $16,000 for consulting services. The
warrants have a term of four years. These shares and warrants were issued to a
non-U.S. person relying on the exemption from the registration requirements of
the Securities Act of 1933 provided by Regulation S and/or Section 4(2) of the
Securities Act.





On June
6, 2008, we issued 4,942 units (each unit consisting of two common shares and
one Series A warrant, exercisable at $0.75 to purchase one share) to 74305
Alberta Ltd. for cash of $4,942. The warrants have a term of four years. These
shares and warrants were issued to a non-U.S. person relying on the exemption
from the registration requirements of the Securities Act of 1933 provided by
Regulation S and/or Section 4(2) of the Securities Act.





On June
26, 2008, we issued 60,000 units (each unit consisting of two common shares and
one Series A warrant, exercisable at $0.75 to purchase one share) to Capital
Financial Media in exchange for debt owed of $60,000 for investor relation
services received. The warrants have a term of four years. These shares and
warrants were issued to a US person relying on the exemption from the
registration requirements of the Securities Act of 1933 provided by Regulation D
and/or Section 4(2) of the Securities Act.





On July
7, 2008, we issued 150,000 shares to Vastani Company in exchange for marketing
services of $67,424 (Euro 43,942).  These shares and warrants were
issued to a non-U.S. person relying on the exemption from the registration
requirements of the Securities Act of 1933 provided by Regulation S and/or
Section 4(2) of the Securities Act.





On August
13, 2008, we issued 140,000 units (each unit consisting of two common shares and
one Series A warrant, exercisable at $0.75 to purchase one share) to North
Mining Investment Corporation in exchange for debt owed of $142,508 (MXN
1,449,989) in promissory notes. The warrants have a term of four
years.  These shares and warrants were issued to a non-U.S. person
relying on the exemption from the registration requirements of the Securities
Act of 1933 provided by Regulation S and/or Section 4(2) of the Securities
Act.












ITEM
6.                      EXHIBITS





The
following exhibits are filed in reference:





Exhibit
              Number
            Description10.1
            Secured
      Convertible Debenture by and between Paramount Gold and Silver Corp. and
      Mexoro Minerals Ltd. dated June 18, 2008 (herein incorporated by reference
      from our current report on Form 8-K dated June 18, 2008 and filed with the
      Securities and Exchange Commission on June 24, 2008).10.2
            Secured
      Convertible Debenture by and between Paramount Gold and Silver Corp. and
      Mexoro Minerals Ltd. dated July 11, 2008 (herein incorporated by reference
      from our current report on Form 8-K dated July 14, 2008 and filed with the
      Securities and Exchange Commission on July 15, 2008).10.3
            Amendment
      to Letter of Intent (May 2, 2008) between Mexoro Minerals Ltd. and
      Paramount Gold and Silver Corp. with respect to the Proposed Strategic
      Alliance, dated June 18, 2008.*10.4
            Termination
      of Letter of Intent between Paramount Gold and Silver Corp. and Mexoro
      Minerals Ltd. dated August 6, 2008 (herein incorporated by reference
      from  our current report on Form 8-K dated August 15, 2008 and
      filed with the Securities and Exchange Commission on August 15,
      2008).10.5
            Investor
      Relations Engagement Letter between the Vastani Company and Mexoro
      Minerals Ltd. dated July 1, 2008.*10.6
            Accrued
      interest on convertible debentures issued to Paramount Gold and Silver
      Corp. deferred to November 10, 2008 dated October 14,
    2008.*31.1
            Certification
      of Acting Principal Executive Officer and Acting
      Principal Accounting Officer of Mexoro Minerals Ltd. pursuant to Rule
      13a-14(a)/15d-14(a).*32.1
            Certification
      of Acting Principal Executive Officer and Acting
      Principal Accounting Officer of Mexoro Minerals Ltd. pursuant to 18
      U.S.C. Section 1350.*





*filed
herewith





42





SIGNATURES




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
Mineral Ltd.





/S/ Mario
Ayub


Name:  Mario
Ayub


Title:  Acting
Principal Executive Officer, Acting Principal Accounting Officer, President and
Director


Date:  October
20, 2008