**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**Form
      10-QSB**








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


**For
      the
      quarter ended November 30, 2006**





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


For
      the transition
      period from ____ to _____




**MEXORO
      MINERALS LTD.**


**(Formerly
      Sunburst Acquisitions IV, Inc.)**


(Name
      of small
      business in its charter)





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





Registrant’s
      telephone number, including area code: (800) 661-7830





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





Applicable
      only to
      issuers involved in bankruptcy proceedings during the past five
      years:





Check
      whether the
      issuer has filed all documents and reports required to be filed by Section
      12,
      13 or 15(d) of the Exchange Act after the distribution of securities under
      a
      plan confirmed by a court. Yes ____ No ____





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





Applicable
      only to
      corporate issuers:


State
      the number of
      shares outstanding of each of the issuer's classes of common equity, as of
      the
      latest practicable date: 21,036,102 at January 15, 2007.





Transitional
      Small
      Business Disclosure Format (Check one): Yes __ No X




1




**MEXORO
      MINERALS LTD.**


**(Formerly
      Sunburst Acquisitions IV, Inc.)**


**(An
      Exploration Stage Company)**




**Consolidated
      Financial Statements**


**November
      30, 2006**


**(Unaudited)
      (U.S. Dollars)**










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




2




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


**November
                        30,**
                      **2006**
                      **(Unaudited)**
                    ******February
                        28,******
                      **2006**
                      **(Audited)****Assets****Current**Cash
                        and cash
                        equivalents
                    
                    
                    
                    
                    $
                    842,742
                    
                    
                    
                    
                    $
                    479,530Amounts
                        receivable
                    
                    
                    
                    
                    
                    164,201
                    
                    
                    
                    
                    
                    10,069Prepaid
                        expenses
                    
                    
                    
                    
                    
                    27,490
                    
                    
                    
                    
                    
                    48,2691,034,433
                    
                    
                    
                    
                    
                    537,868**Equipment
                        (note 5)**
                    
                    
                    
                    
                    
                    135,345
                    
                    
                    
                    
                    
                    880**Total
                        assets**
                    
                    
                    
                    
                    $
                    1,169,778
                    
                    
                    
                    
                    $
                    538,748**Liabilities****Current**Accounts
                        payable and accrued liabilities
                    
                    
                    
                    
                    $
                    118,958
                    
                    
                    
                    
                    $
                    79,124Promissory
                        notes (note 7)
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    412,800118,958
                    
                    
                    
                    
                    
                    491,924**Convertible
                        debentures (note 8)**
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    652,000**Total
                        liabilities**
                    
                    
                    
                    
                    
                    118,958
                    
                    
                    
                    
                    
                    1,143,924**Stockholders’
                        equity (deficiency)****Capital
                        stock**Preferred
                        stockAuthorized:
                        20,000,000 shares without par value (note 9)Issued:
                        nil
                    
                    
                    
                    
                    
                    **-**
                    
                    
                    
                    
                    
                    **-**Common
                        stockAuthorized:
                        200,000,000 shares without par valueIssued:
                        21,036,102 (2006 - 12,799,902) (note 10)
                    
                    
                    
                    
                    
                    19,304,277
                    
                    
                    
                    
                    
                    15,573,977Additional
                        paid-in capital
                    
                    
                    
                    
                    
                    9,915,846
                    
                    
                    
                    
                    
                    7,402,346Stock
                        subscriptions
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    170,000Accumulated
                        deficit from prior operations
                    
                    
                    
                    
                    
                    (2,003,427
                    )
                    
                    
                    
                    
                    (2,003,427
                    )Accumulated
                        deficit during the exploration stage
                    
                    
                    
                    
                    
                    (26,170,128
                    )
                    
                    
                    
                    
                    (21,749,123
                    )Other
                        comprehensive income
                    
                    
                    
                    
                    
                    4,252
                    
                    
                    
                    
                    
                    1,051**Total
                        stockholders’ equity (deficiency)**
                    
                    
                    
                    
                    
                    1,050,820
                    
                    
                    
                    
                    
                    (605,176
                    )**Total
                        liabilities and stockholders’ equity (deficiency)**
                    
                    
                    
                    
                    $
                    1,169,778
                    
                    
                    
                    
                    $
                    538,748


Going
      concern (note 4)


Commitments
      (note
      6)


Contingent
      liability (note 14)


Subsequent
      events
      (note 15)





The
          accompanying notes are an integral part of these financial
          statements.
 3
 Table
          of Contents




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


**Period
                      from**
                  **Inception
                    of**
                **Exploration**
                **Stage****Three
                  Months Ended**
              
              **Nine
                  Months Ended**
              
              **March
                  1, 2004 to****November
                  30,**
              
              **November
                  30,**
              
              **November
                  30,**
              
              **November
                  30,**
              
              **November
                  30,****2005**
              
              **2006**
              
              **2005**
              
              **2006****Expenses**General
                  and
                  administrative
              
              $
              160,496
              
              $
              148,594
              
              $
              958,256
              
              $
              232,458
              
              $
              1,655,003Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              248,000
              
              
              -
              
              
              4,480,955Mineral
                  exploration
              
              
              333,050
              
              
              -
              
              
              937,548
              
              
              -
              
              
              937,548Acquisition
                  of resource properties
              
              
              -
              
              
              -
              
              
              -
              
              
              150,000
              
              
              15,306,422**Operating
                  loss**
              
              
              (493,546
              )
              
              (148,594
              )
              
              (2,143,804
              )
              
              (382,458
              )
              
              (22,379,928
              )**Other
                  income (expenses)**Interest
                  expense
              
              
              -
              
              
              (1,323
              )
              
              (2,320,973
              )
              
              (3,013
              )
              
              (3,967,157
              )Interest
                  income
              
              
              12,395
              
              
              -
              
              
              36,513
              
              
              -
              
              
              36,513Gain
                  on
                  settlement of debt (notes 7 and 8)
              
              
              -
              
              
              133,185
              
              
              7,259
              
              
              133,185
              
              
              140,444**Net
                  loss**
              
              
              (481,151
              )
              
              (16,732
              )
              
              (4,421,005
              )
              
              (252,286
              )
              
              (26,170,128
              )**Accumulated
                  deficit during the****exploration
                  stage, beginning (note 2)**
              
              
              (25,688,977
              )
              
              (3,856,769
              )
              
              (21,749,123
              )
              
              (3,621,215
              )
              
              -**Accumulated
                  deficit during the**exploration
                  stage, ending
              
              $
              (26,170,128
              )
              $
              (3,873,501
              )
              $
              (26,170,128
              )
              $
              (3,873,501
              )
              $
              (26,170,128
              )**Other
                  comprehensive income**Foreign
                  exchange gain (loss) on translation
              
              
              26,653
              
              
              (1,618
              )
              
              (4,252
              )
              
              4,554
              
              
              (4,252
              )**Total
                  comprehensive loss**
              
              $
              (454,498
              )
              $
              (15,114
              )
              $
              (4,425,257
              )
              $
              (247,732
              )
              $
              (26,158,522
              )**Total
                  loss per share** - basic and diluted
              
              $
              (0.02
              )
              $
              (0.01
              )
              $
              (0.25
              )
              $
              (0.14
              )**Weighted
                  average number of shares of****common
                  stock** - basic and diluted
              
              
              21,036,102
              
              
              1,782,028
              
              
              18,015,181
              
              
              1,763,738




The
          accompanying notes are an integral part of
          these financial statements.
 4
 Table
          of Contents




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


**Period
                        from**
                      **Inception
                          of**
                        **Exploration
                          Stage****Nine
                    Months Ended**
                
                **March
                    1, 2004 to****November
                    30,**
                
                **November
                    30,**
                
                **November
                    30,****2006**
                
                **2005**
                
                **2006****Operating
                    activities**Net
                    loss
                
                $
                (4,421,005
                )
                $
                (252,286
                )
                $
                (26,170,128
                )Adjustments
                    to reconcile net income (loss) to net cash flowsWrite
                    off of
                    note receivable
                
                
                -
                
                
                -
                
                
                57,500Acquisition
                    of resource properties for stock
                
                
                -
                
                
                150,000
                
                
                13,065,000Issuance
                    of
                    shares for Consulting Services
                
                
                -
                
                
                100,000
                
                
                -Amortization
                
                
                15,192
                
                
                -
                
                
                15,192Discount
                    on
                    convertible debenture
                
                
                -
                
                
                -
                
                
                175,000Non-cash
                    component of gain on settlement of debt
                
                
                -
                
                
                (133,185
                )
                
                (175,000
                )Stock-based
                    compensation
                
                
                248,000
                
                
                -
                
                
                6,093,955Beneficial
                    conversion feature
                
                
                2,265,500
                
                
                -
                
                
                3,717,500Prepaid
                    expense
                
                
                20,779
                
                
                -
                
                
                (21,010
                )Amounts
                    receivable
                
                
                (154,132
                )
                
                (13,094
                )
                
                (155,995
                )Customer
                    deposits
                
                
                -
                
                
                -
                
                
                (44,809
                )Accounts
                    payable and accrued liabilities
                
                
                39,834
                
                
                80,863
                
                
                96,765**Cash
                    used in operating activities**
                
                
                (1,985,832
                )
                
                (67,702
                )
                
                (3,346,030
                )**Investing
                    activity**Purchase
                    of
                    property and equipment
                
                
                (149,657
                )
                
                -
                
                
                (150,537
                )**Cash
                    used in investing activity**
                
                
                (149,657
                )
                
                -
                
                
                (150,537
                )**Financing
                    activities**Proceeds
                    from
                    notes payable
                
                
                -
                
                
                455,300
                
                
                562,800Proceeds
                    from
                    convertible debentures
                
                
                (652,000
                )
                
                -
                
                
                800,000Proceeds
                    from
                    exercise of options
                
                
                -
                
                
                43,000
                
                
                78,000Repayment
                    of
                    notes payable
                
                
                -
                
                
                (28,500
                )
                
                (178,500
                )Repayment
                    of
                    convertible debentures
                
                
                -
                
                
                (541,815
                )
                
                (530,000
                )Stock
                    subscriptions
                
                
                (170,000
                )
                
                107,500
                
                
                -Issuance
                    of
                    common stock
                
                
                3,317,500
                
                
                -
                
                
                3,589,609**Cash
                    provided
                    by (used in) financingactivities**
                
                
                2,495,500
                
                
                35,485
                
                
                4,321,909**Inflow
                    of cash and cash equivalents**
                
                
                360,001
                
                
                (32,217
                )
                
                825,342Effect
                    of
                    foreign currency translation on cash
                
                
                3,201
                
                
                (1,325
                )
                
                17,400**Cash
                    and cash equivalents, beginning**
                
                
                479,530
                
                
                35,122
                
                
                -**Cash
                    and cash equivalents, ending**
                
                $
                842,742
                
                $
                1,580
                
                $
                842,742**Supplemental
                    cash flow information**Interest
                    paid
                
                $
                55,473
                
                $
                -
                
                $
                162,157Common
                    stock
                    issued on conversion of debt
                
                
                2,917,500
                
                
                -
                
                
                3,217,500Common
                    stock
                    issued on settlement of notes payable
                
                
                412,800
                
                
                -
                
                
                412,800Shares
                    issued
                    for services
                
                $
                -
                
                $
                -
                
                $
                90,000





The
          accompanying notes are an integral part of
          these financial statements.
 5
 Table
          of Contents


**MEXORO
            MINERALS LTD.**
 **(Formerly
            Sunburst Acquisitions IV, Inc.)**
 **(An
            Exploration Stage Company)**
 **Notes
            to
            Consolidated Financial Statements**
 Nine Months
            Ended November 30, 2006
 **(Unaudited)
            (U.S. Dollars)**
 **1.**
                  **BASIS
                      OF
                      PRESENTATION**


Mexoro
        Minerals
        Ltd. (formerly Sunburst Acquisitions IV, Inc.) ("Mexoro" or the “Company”) was
        incorporated in the state of Colorado on August 27, 1997 and on February
        15,
        2006 its name was changed to Mexoro Minerals Ltd. The Company was formed
        to seek
        out and acquire business opportunities. Between 1997 and 2003, the Company
        engaged in two business acquisitions and one business opportunity, none of
        which
        generated a significant profit or created a sustainable business. All were
        sold
        or discontinued. Currently the main focus of the Company’s operations is in
        Mexico.
 
 The
        Company had
        previously been pursuing various business opportunities and, effective
        March 1, 2004, the Company changed its principal operations to mineral
        exploration. Accordingly, as of March 1, 2004 the Company is considered an
        exploration stage company.
 
 On
        May 25, 2004,
        the Company completed a share exchange transaction with Sierra Minerals and
        Mining, Inc. (“Sierra Minerals”), a Nevada corporation, which caused Sierra
        Minerals to become a wholly-owned subsidiary.  Sierra Minerals held certain
        rights to properties in Mexico that the Company now owns or has an option
        to
        acquire. Through Sierra Minerals, the Company entered into an arm’s length joint
        venture agreement with Minera Rio Tinto, S.A. De C.V. (“MRT”), a company duly
        incorporated pursuant to the laws of the United Mexican States, which is
        controlled by an officer and director of the Company. In August 2005, the
        Company cancelled the joint venture agreement in order to pursue directly
        the
        mineral exploration opportunities through a wholly-owned Mexican subsidiary,
        Sunburst de Mexico, S.A. de C.V. (“Sunburst de Mexico”). On August 25, 2005,
        Sunburst de Mexico, Mexoro and MRT entered into agreements providing Sunburst
        de
        Mexico the right to explore and exploit certain properties in Mexico. In
        December 2005, the Company and Sunburst de Mexico entered into a new agreement
        with MRT (the “New Agreement”) (note 6). On January 20, 2006, Sierra Minerals
        was dissolved.
 
 These
        interim
        consolidated financial statements include all adjustments, which in the opinion
        of management, are necessary in order to make the financial statements not
        misleading.
 
 **2.**
            **RESTATEMENT** 
 Management
        has
        determined that, in the year ending February 28, 2005, previous management
        used
        a nominal value to record the issuance of 860,000 shares of common stock
        (43,000,000 pre-split) pursuant to a share exchange agreement, and 120,000
        options (6,000,000 pre-split) issued as finders fees with respect to the
        share
        exchange agreement. Current management believes that a fair value should
        have
        been used and has restated each of these amounts. Management has also determined
        that in the year ending February 28, 2005, the Company should have recorded
        a
        beneficial conversion feature on convertible debentures that included conversion
        to common shares, warrants and additional investment rights. Management has
        also
        reclassified stock-based compensation expense from general and administrative
        to
        stock-based compensation.
  In
        the year ending
        February 28, 2006, management has corrected a calculation error in the recording
        of a beneficial conversion feature on warrants issued with the convertible
        debentures. Management has also reclassified accrued interest from promissory
        notes to accounts payable and accrued interest. After further review, management
        has determined that, in the year ending February 28, 2006, compensation expense
        recorded in the amount of $8,680,000 relating to the issuance of 7 million
        common shares was incorrect. Accordingly, these shares were issued as
        consideration for receiving cash proceeds of $70,000. Additionally, management
        has determined that, in the year ending February 28, 2006, shares issued
        for
        services and recorded as compensation expense was overstated by $10,000.
        Accordingly, this amount originally recorded as a compensation expense totalling
        $100,000 has been corrected and is now recorded as $90,000. Further, in the
        year
        ending February 28, 2006, management revised the disclosure in the consolidated
        statement of cash flows respecting the non-cash component of the gain on
        settlement of debt.




6
 Table
          of Contents




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


**2.**
            **RESTATEMENT
                (continued)**  In
        the three months
        ending May 31, 2006, management corrected an entry in the consolidated
        statements of cash flows which recorded shares issued for debt settlement
        as a
        cash transaction under the financing activities. There was no impact on cash
        provided from financing as a result of the changed disclosure.
 
 Management
        has
        accordingly restated the Company’s consolidated financial statements as at May
        31, 2006 and for the three-months ended May 31, 2006, and as at February
        28,
        2006 and for the year ended February 28, 2006.
 
 Accordingly,
        the
        accumulated deficit during the exploration stage in the Consolidated Balance
        Sheets and Consolidated Statement of Operations and Deficit have been restated.
        Please refer to the February 28, 2006 restated audited consolidated financial
        statements for additional information.
 
 **3.**
            **SIGNIFICANT
                ACCOUNTING POLICIES** 
 (a)
            Principles
                of
                consolidation 
 The
        accompanying
        financial statements include the accounts and activities of Mexoro Minerals
        Ltd.
        and its wholly-owned subsidiary, Sunburst de Mexico. All intercompany
        transactions have been eliminated in consolidation.
 
 (b)
            Financial
                instruments 
 (i)
            Fair
                value 
 The
        carrying values
        of cash and cash equivalents, amounts receivable, and accounts payable and
        accrued liabilities approximate their fair values because of the short-term
        maturity of these financial instruments. The carrying value of convertible
        debentures approximates their fair value because these instruments earn interest
        at the market rate.
 
 (ii)
            Interest
                rate
                risk 
 The
        Company is not
        exposed to significant interest rate risk due to the short-term maturity
        of its
        monetary current assets and current liabilities. The convertible debentures
        are
        not exposed to interest rate risk because the interest rate is fixed to
        maturity.
 
 (iii)
            Credit
                risk 
 The
        Company's
        financial assets that are exposed to credit risk consist primarily of cash
        that
        is placed with major financial institutions.
 
 (iv)
            Translation
                risk 
 The
        Company
        translates the results of non-U.S. operations into U.S. currency using rates
        approximating the average exchange rate for the year. The exchange rate may
        vary
        from time to time. Accordingly, there is a risk, but does not incur significant
        transactions in non-U.S. currency.


7
 Table
          of Contents




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


**3.** **SIGNIFICANT
        ACCOUNTING POLICIES (Continued)**
 
 (c)
            Equipment 
 Equipment
        is
        recorded at cost. Depreciation is provided on a declining-balance basis at
        30%
        on computer equipment, 25% on vehicles and 10% on office equipment.
 
 (d)
            Cash
                and cash
                equivalents 
 The
        Company
        considers all highly liquid debt instruments purchased with an original maturity
        of three months or less to be cash equivalents.
 
 (e)
            Basic
                and
                diluted income (loss) per share 
 The
        Company
        computes income (loss) per share in accordance with SFAS No. 128, "*Earnings
        per Share*", which requires presentation of both basic and diluted earnings
        per share (EPS) on the face of the statement of operations and deficit. Basic
        EPS is computed by dividing income (loss) available to common shareholders
        (numerator) by the weighted average number of shares outstanding (denominator)
        during the period. Diluted EPS gives effect to all dilutive potential common
        shares outstanding during the period using the treasury stock method and
        convertible preferred stock using the if-converted method. In computing diluted
        EPS, the average stock price for the period is used in determining the number
        of
        shares assumed to be purchased from the exercise of stock options or warrants.
        Diluted EPS excludes all dilutive potential shares if their effect is
        anti-dilutive. All previously stated share and per share balances have been
        restated to give retroactive effect to the 1:50 share consolidation that
        occurred on February 15, 2006.
 
 (f)
            Impairment
                or
                disposal of long-lived assets 
 In
        August 2001, the
        FASB issued Statement No. 144, *“Accounting for the Impairment or Disposal of
        Long-Lived Assets”* (“FAS 144”). FAS 144 clarifies the accounting for the
        impairment of long-lived assets and for long-lived assets to be disposed
        of,
        including the disposal of business segments and major lines of business.
        The
        Company has implemented FAS 144. Long-lived assets are reviewed when facts
        and
        circumstances indicate that the carrying value of the asset may not be
        recoverable. When necessary, impaired assets are written down to estimate
        fair
        value based on the best information available. Estimated fair value is generally
        based on either appraised value or measured by discounting estimated future
        cash
        flows. Considerable management judgment is necessary to estimate discounted
        future cash flows. Accordingly, actual results could vary significantly from
        such estimates.
 
 (g)
            Use
                of
                estimates 
 The
        preparation of
        financial statements in conformity with US generally accepted accounting
        principles requires management to make estimates and assumptions that affect
        the
        reported amounts of assets and liabilities and disclosures of contingent
        assets
        and liabilities at the date of the financial statements and the reported
        amounts
        of revenues and expenses during the reporting period. Actual results could
        differ from those estimates and would impact future results of operations
        and
        cash flows.


8
 Table
          of Contents




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


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


(h)
            Consideration
                of other comprehensive income items





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





(i)
            Stock-based
                compensation





Prior
        to March 1,
        2004, the Company accounted for stock-based awards under the recognition
        and
        measurement provisions of Accounting Principles Board Opinion (“APB”) No. 25,
“Accounting for Stock Issued to Employees” using the intrinsic value method of
        accounting, under which compensation expense was only recognized if the exercise
        price of the Company’s employee stock options was less than the market price of
        the underlying common stock on the date of grant.
  Effective
          year
          ending February 28, 2005, the Company adopted the fair value recognition
          provisions of SFAS No. 123R “Share Based Payments”, using the modified
          prospective transition method. Under that transition method, compensation
          cost
          is recognized for all share-based payments granted prior to, but not yet
          vested
          as of March 1, 2004, based on the grant date fair value estimated in accordance
          with the original provisions of SFAS No. 123, and compensation cost for
          all
          share-based payments granted subsequent to March 1, 2004, based on the
          grant-date fair value estimated in accordance with the provisions of SFAS
          123R.
          Results for prior periods have not been restated. As of March 1, 2004,
          there
          were no unvested options; and therefore, there was no effect on the Company’s
          reported loss from operations, cash flows or loss per share as a result
          of
          adopting SFAS No. 123R.
  All
        transactions in
        which goods or services are the consideration received for the issuance of
        equity instruments are accounted for based on the fair value of the
        consideration received or the fair value of the equity instrument issued,
        whichever is more reliably measurable. Equity instruments issued to employees
        and the cost of the services received as consideration are measured and
        recognized based on the fair value of the equity instruments issued (see
        note
        11).





(j)
            Income
                taxes





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





9
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          of Contents




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


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


(k)
            Foreign
                currency translation





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





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





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





(l)
            Recent
                accounting pronouncements





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





(ii)
            In
                December
                2004, the FASB issued SFAS Statement No. 153, “Exchanges of Non-Monetary
                Assets.” The statement is an amendment of APB Opinion No. 29 to eliminate
                the exception for non-monetary exchanges of similar productive assets
                and
                replaces it with a general exception for exchanges of non-monetary
                assets
                that do not have commercial substance. The Company believes that
                the
                adoption of this standard will have no material impact on its financial
                statements. The Company accounts for income taxes in accordance with
                SFAS
                No. 109 - *“Accounting for Income Taxes”*. Deferred tax assets and
                liabilities are recognized with respect to the tax consequences
                attributable to differences between the financial statement carrying
                values and tax basis of existing assets and
                liabilities





(iii)
            In
                March
                2005, FASB issued Interpretation No. 47 (“FIN 47”), *“Accounting for
                Conditional Asset Retirement Obligations”*. FIN 47 clarifies that the
                term “conditional asset retirement obligation” as used in FASB Statement
                No. 143, *“Accounting for Asset Retirement Obligation”*, refers to
                a legal obligation to perform an asset retirement activity in which
                the
                timing and/or method of settlement are conditional on a future event
                that
                may or may not be within the control of the entity. Accordingly,
                an entity
                is required to recognize a liability for the fair value of a conditional
                asset retirement obligation if the fair value of the liability can
                be
                reasonably estimated. FIN 47 is effective no later than the end of
                fiscal
                years ending after December 15, 2005. This pronouncement does not
                impact the Company for the current
                year.




10
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          of Contents




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


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


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





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





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




11
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          of Contents


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


**4.**
              **GOING-CONCERN**


The
        accompanying
        financial statements have been prepared on a going-concern basis. The Company
        has a history of operating losses and will need to raise additional capital
        to
        fund its planned operations. As at November 30, 2006, the Company had working
        capital of $915,475 (February 28, 2006 - $45,944) and a cumulative loss during
        the exploration stage of $26,170,128 (February 28, 2006 - $21,749,123). These
        conditions raise substantial doubt about the Company’s ability to continue as a
        going-concern.





**5.**
            **EQUIPMENT**




**November
                30, 2006**
            
            **February
                28, 2006**AccumulatedCost
            
            Depreciation
            
            Net
            
            NetOffice
                equipment
            $
            16,660
            $
            (375)
            $
            16,285
            $
            880Vehicles
            
            103,115
            
            (9,963)
            
            93,152
            
            -Software
            
            16,205
            
            (4,051)
            
            12,153Computers
            
            14,557
            
            (803)
            
            13,755
            
            -$
            150,537
            $
            15,192
            $
            135,345
            $
            880


**6.**
            **MINERAL
              PROPERTIES**




On
        May 3, 2004, the
        Company entered into a share exchange agreement with the shareholders of
        Sierra
        Minerals. Pursuant to the terms of the share exchange agreement, the Company
        issued 860,000 shares of its common stock (43,000,000 pre-split) in exchange
        for
        all of the outstanding shares of Sierra Minerals. As a result, Sierra Minerals
        became a wholly-owned subsidiary of the Company. After re-statements (see
        note 2), the issued common stock was valued at $12.75 per share ($0.255
        pre-split) or $10,965,000; which represents the fair value based on the date
        of
        the share exchange agreement (May 3, 2004). Finders’ fees of 120,000
        options (6,000,000 pre-split) to purchase the same number of shares of the
        Company’s common stock at $0.50 per share ($0.01 pre-split) were issued to
        non-related parties in connection with this share exchange. After re-statements
        (see note 2), the fair value of these options was $1,523,000; this amount
        was
        determined using the Black-Scholes formula with a 5-year expected life, a
        volatility factor of 191%, a risk-free rate of 5% and no assumed dividend
        rate.
        Due to the uncertainty of the future revenue to be generated from this property,
        the cost of the acquisition of $10,965.000, compensation expense of $1,523,000,
        and advances totalling $507,500 were charged to operations in the year ended
        February 28, 2005.
 
 Sierra
        Minerals was
        a party to a joint venture agreement, dated April 26, 2004 and amended on
        June
        1, 2004, by and between Sierra Minerals and MRT, which had interests in
        exploration properties.




12
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          of Contents





**MEXORO
            MINERALS LTD.**
 **(Formerly
            Sunburst Acquisitions IV, Inc.)**
 **(An
            Exploration Stage Company)**
 **Notes
            to
            Consolidated Financial Statements**
 Nine Months
            Ended November 30, 2006
 **(Unaudited)
            (U.S. Dollars)**
 **6.**
                  **MINERAL
                    PROPERTIES
                    (Continued)**





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





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





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





The
      following are
      additional material terms of the New Agreement:





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





(b)
            The
                Company
                granted MRT the option to buy all of the outstanding shares of Sunburst
                de
                Mexico for $100 if the Company failed to transfer $1,500,000 to Sunburst
                de Mexico by April 30, 2006. However, in April 2006, the parties
                amended
                the New Agreement to delete both the required transfer of $1,500,000
                to
                Sunburst de Mexico and MRT’s option to purchase shares of Sunburst de
                Mexico;





(c)
            The
                Property
                Agreements were modified to change the net smelter rate to a maximum
                of
                2.5% for all properties covered by the agreements;





(d)
            The
                Company
                agreed to issue 2,000,000 shares of the Company’s common stock to MRT
                within four months of the date of the signing of the New Agreement.
                 These shares were issued to MRT and its assignee at the market value
                of $1.05 per share on February 23, 2006. This issuance fulfilled the
                Company’s payment obligations under the previous Property Agreements; and





(e)
            The
                Company
                agreed to issue 1,000,000 additional shares of the Company’s common stock
                to MRT if and when the Cieneguita Property is put into production
                and
                reaches 85% of production capacity over a 90-day period, as defined
                in the
                New Agreement.




13
 Table
          of Contents




**MEXORO
            MINERALS LTD.**
 **(Formerly
            Sunburst Acquisitions IV, Inc.)**
 **(An
            Exploration Stage Company)**
 **Notes
            to
            Consolidated Financial Statements**
 Nine Months
            Ended November 30, 2006
 **(Unaudited)
            (U.S. Dollars)**
 **7.**
                  **PROMISSORY
                    NOTES**




As
        at November 30,
        2006 the Company had $nil (February 28, 2006 - $412,800) of promissory notes
        outstanding and $nil (February 28, 2006 - $7,259) of accrued interest
        outstanding on the promissory notes.
 
 On
        March 4, 2006,
        the Company agreed to issue 1,651,200 common shares at a price of $0.25 per
        share to settle $412,800 in promissory notes payable. As a condition to this
        arrangement the promissory note holders waived all accrued interest payable
        on
        the notes. On April 6, 2006, these shares were issued (note 10) and the Company
        recorded a $7,259 gain on settlement of debt.


**8.**
            **CONVERTIBLE
              DEBENTURES**




On
        August 25, 2004,
        the Company entered into a securities purchase agreement (the “Agreement”), with
        Bristol Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP (the
“Purchasers”). Pursuant to the Agreement, the Purchasers agreed to purchase up
        to $1,350,000 in face amount of secured convertible debentures (the
“Debentures”) from the Company. The Debentures did not bear interest but were to
        be issued at a 26% discount to the face amount. Accordingly, the cash purchase
        price for the full $1,350,000 face amount of the Debentures was $1,000,000.
        The
        Debentures were due and payable in full one year from the date of issuance.
 
 The
        Purchasers also
        had the right to convert the full-face amount of the Debentures to common
        stock
        of the Company at a price of $5.00 per share ($0.10 pre-split). Under the
        Agreement, the Purchasers were also to receive warrants and additional
        investment rights to purchase shares of the Company’s common stock, where the
        warrants were exercisable at a price of $6.00 per share ($0.12 pre-split)
        for a
        period of five years and additional investment rights were exercisable at
        a
        price of $5.00 per share ($0.10 pre-split).
 
 The
        Purchasers
        purchased a total of $675,000 in face amount for cash proceeds of $500,000
        and
        the $175,000 discount was charged as interest over the term of the debenture;
        $87,500 in the year ending February 28, 2005 and the $87,500 in the year
        ending
        February 28, 2006. The Company paid $20,000 in legal fees and $50,000
        administration fees.
 
 A
        beneficial
        conversion feature expense of $500,000 resulting from the anticipated conversion
        of the debentures, and the exercise of the associated warrants and additional
        investment rights of the above debentures was recorded as interest expense
        for
        the year ending February 28, 2005.
 
 On
        August 10, 2005,
        the Company and the Purchasers agreed to retire the Debentures including
        all
        associated principal, terms, warrants and rights for the amount of $500,000
        plus
        8% interest. On September 21, 2005, the Company repaid in full $500,000 plus
        interest charges of $41,815 to the Purchasers. As a result of this payment,
        the
        Debentures were terminated and the associated warrants and additional investment
        rights were cancelled. A gain of $133,185 was recorded for settlement of
        this
        debt.
 
 Another
        convertible
        debenture in the amount of $30,000 was issued on January 15, 2004. The
        conversion of principal and accrued interest (8% per year) was at the rate
        of
        $1.00 ($0.02 pre-split) per share of common stock. On December 21, 2005,
        the
        Company repaid the $30,000 convertible debenture plus accrued interest of
        $4,645.




14
 Table
          of Contents




**MEXORO
            MINERALS LTD.**
 **(Formerly
            Sunburst Acquisitions IV, Inc.)**
 **(An
            Exploration Stage Company)**
 **Notes
            to
            Consolidated Financial Statements**
 Nine Months
            Ended November 30, 2006
 **(Unaudited)
            (U.S. Dollars)**
 **8.**
                  **CONVERTIBLE
                    DEBENTURES
                    (Continued)**




In
        December 2005,
        the Company issued $300,000 in convertible debentures to three lenders with
        a
        maturity date of December 8, 2006, accrued interest at 7% per year, and
        convertible at the option of the holder into shares of common stock at $0.15
        per
        share. On January 6, 2006, these debentures were converted and the Company
        issued 2,000,000 common shares (100,000,000 pre-split). A beneficial conversion
        feature of $300,000 was recorded in interest expense as to the anticipated
        conversion of these debentures, with a corresponding increase in additional
        paid
        in capital.
 
 In
        January and
        February 2006, the Company issued convertible debentures, with principal
        and
        accrued interest at 7% per year, convertible into units at the option of
        the
        holder. Each unit consists of a warrant to purchase 25,000 common shares
        at
        $1.00 per share and $25,000 of debt, which at the option of the holder, may
        be
        converted to common shares at $0.50 per share until April 30, 2008. As at
        February 28, 2006, the Company had issued convertible debentures in the amount
        of $652,000
 
 A
        beneficial
        conversion feature of $489,000 was recorded in interest expense as to the
        anticipated conversion of these debentures. Also included in interest expense
        was $163,000 representing the relative fair value of the warrants (immediately
        exercisable) in relation to the convertible debt.
 
 During
        the quarter
        ended May 31, 2006, the Company issued an additional $2,265,500 of convertible
        debentures, with principal and accrued interest at 7% per year, convertible
        into
        units at the option of the holder. Each unit consisted of a warrant to
        purchase 25,000 common shares at $1.00 per share and $25,000 of debt, which
        at
        the option of the holder, may be converted to common shares at $0.50 per
        share
        until April 30, 2008. A beneficial conversion feature of $1,359,300 was recorded
        in interest expense as to the anticipated conversion of these debentures,
        and
        interest expense of $906,200 was recorded representing the relative fair
        value
        of the warrants (immediately exercisable) in relation to the convertible
        debt,
        and as a result, the aggregate sum of $2,265,500 was offset as additional
        paid
        in capital. As at May 31, 2006 there was $2,917,500 of convertible debentures
        outstanding.
 
 During
        the quarter
        ended August 31, 2006, all of the $2,917,500 convertible debentures were
        converted into 5,835,000 shares of the Company’s common stock at $0.50 per
        share. As at August 31, 2006 there were no convertible debentures
        outstanding.
 
 The
        fair value of
        the warrants attached to the convertible debentures as discussed above was
        estimated at the date of grant using the Black-Scholes option pricing model
        using the following weighted average assumptions:




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




15
 Table
          of Contents




**MEXORO
            MINERALS LTD.**
 **(Formerly
            Sunburst Acquisitions IV, Inc.)**
 **(An
            Exploration Stage Company)**
 **Notes
            to
            Consolidated Financial Statements**
 Nine Months
            Ended November 30, 2006
 **(Unaudited)
            (U.S. Dollars)**
 **9.**
                  **PREFERRED
                    STOCK**





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


**10.**
            **COMMON
              STOCK**





**Number**
              **of
                Shares**
            **Amount**Balance,
                February 28, 2006
            12,799,902
            $15,573,977Issued
                pursuant to private placement
            550,000
            275,000Issued
                pursuant to settlement of promissory notes
            1,651,200
            412,800Issued
                pursuant to private placement
            200,000
            100,000Issued
                pursuant to exercise of convertible debt
            5,835,000
            2,917,500Issued
                pursuant to exercise of warrants
            50,000
            50,000Shares
                returned to treasury
            (50,000)
            (25,000)Balance,
                November 30, 2006
            21,036,102
            $19,304,277





On
        April 3, 2006
        and May 31, 2006 the Company issued 550,000 and 200,000 common shares
        respectively pursuant to a private placement unit offering. Units consisted
        of
        one share of common stock and one-half of one warrant. Each full warrant
        entitles the investor to purchase an additional share of the Company’s common
        stock at a price of $1.00 per share and is exercisable until April 30,
        2008.
 
 On
        March 4, 2006,
        the Company agreed to issue 1,651,200 common shares at a price of $0.25 per
        share to settle $412,800 in promissory notes payable (note 7). On April 6,
        2006,
        these shares were issued.
 
 On
        July 5, 2006,
        the Company issued 5,835,000 common shares on the exercise of $2,917,500
        of
        convertible debt at a price of $0.50 per share.
 
 On
        August 10, 2006,
        the Company issued 50,000 common shares on the exercise of 50,000 warrants
        where
        each warrants was exercisable into common shares at a price of $1.00 per
        share.
 
 On
        August 15, 2006,
        the Company returned to treasury 50,000 common shares that were issued but
        not
        delivered pending payment with respect to the convertible debt converted
        into
        common shares on July 5, 2006.




16
 Table
          of Contents




**MEXORO
            MINERALS LTD.**
 **(Formerly
            Sunburst Acquisitions IV, Inc.)**
 **(An
            Exploration Stage Company)**
 **Notes
            to
            Consolidated Financial Statements**
 Nine Months
            Ended November 30, 2006
 **(Unaudited)
            (U.S. Dollars)**
 **11.**
                  **STOCK
                    COMPENSATION
                    PROGRAM**





On
        December 9,
        2005, the Company’s board of directors approved a stock compensation program,
        which was subsequently ratified at an extraordinary meeting of shareholders
        held
        on February 13, 2006. In order to maintain flexibility in the award of stock
        benefits, the program constitutes a single “omnibus” plan, but is composed of
        three parts. The first part is the qualified incentive stock option plan
        (the
“ISO Plan”), which provides grants of qualified incentive stock options
        (“ISOs”). The second part is the non-qualified stock option plan (“NQSO Plan”),
        which provides grants of nonqualified stock options (“NQSOs”). The third part is
        the restricted shares plan (“Restricted Shares Plan”), which provides grants of
        restricted shares of the Company’s common stock (“Restricted Shares”). The
        maximum number of common shares that may be purchased under the plan is
        6,000,000. Options granted under the plan include incentive and non-qualified
        stock options as well as actual shares of common stock, with vesting determined
        on the grant date, not to exceed 10 years, and are exercisable over a 10-year
        maximum period at a price to approximate the fair market value of the common
        stock at the date of grant.
 
 On
        February 27,
        2006, the Company granted 800,000 ISOs under the ISO Plan to directors and
        officers (600,000 stock options) and consultants (200,000 stock options)
        at a
        price of $0.50 per common stock for a period of ten years. The ISOs vest
        in four
        equal instalments, at the time of the grant and then every six months
        thereafter. Compensation cost, being the fair value of the options, is
        calculated to be $992,000 of which $248,000 is expensed on the date of issue
        and
        as the remainder vest.
 
 The
        fair value of
        the 800,000 options was determined using the Black-Scholes option pricing
        model
        using a ten-year expected life of the option, a volatility factor of 152%,
        a
        risk-free rate of 5% and no assumed dividend rate.
 
 On
        August 15, 2006,
        the Company granted 150,000 stock options to an employee at $1.04 (a 10%
        discount to market price on the day of acceptance), which vest over a three
        year
        period at a rate of 25,000 every six months.
 
 The
        options are
        summarized as follows:





Options
            Weighted
              Average
              Exercise
              PriceOutstanding
                at February 28, 2006
            930,000
            $
                0.54Granted
            150,000
            1.04Outstanding
                at November 30, 2006
            1,080,000
            $0.59




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**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to
          Consolidated Financial Statements**
 Nine Months
          Ended November 30, 2006
 **(Unaudited)
          (U.S. Dollars)**
 **11.**
                **STOCK
                  COMPENSATION PROGRAM
                  **(Continued)****




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





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





The
        Company has
        reserved 1,080,000 common shares in the event that these options are
        exercised.
 
 For
        the quarter
        ended August 31, 2006, stock-based compensation expense totalled $248,000
        (2005
        - $nil) with an offsetting amount to additional paid in capital.
 
 For
        the quarter
        ended November 30 2006, there was no stock-based compensation
        expense.


**12.**
            **WARRANTS**





As
        at November 30,
        2006, the Company had a total of 8,217,500 (February 28, 2006 - 5,652,000)
        warrants outstanding to purchase common stock. Each warrant entitles the
        holder
        to purchase one share of the Company’s common stock. The Company has reserved
        8,217,500 common shares in the event that these warrants are
        exercised.
 
 The
        warrants
        include 1,000,000 Series A Warrants exercisable at $0.50 per share, 1,000,000
        Series B Warrants exercisable at $0.75 per share, 1,000,000 Series C Warrants
        exercisable at $1.00 per share, 1,000,000 Series D Warrants exercisable at
        $1.25
        per share, and 1,000,000 Series E Warrants exercisable at $1.50 per share;
        of
        which all are exercisable at the option of the holder, have no redemption
        features, and are settled on a physical basis.. The Series A Warrants were
        fully
        vested upon issuance. They are exercisable at any time following their issuance
        but will expire on June 30, 2007 to the extent they are not exercised. The
        remaining series of Warrants will each vest and become exercisable only at
        the
        time that the immediately preceding series has been fully exercised.
 
 Unless
        terminated
        earlier as a result of failure to vest, the Series B and Series C Warrants
        will
        each expire on December 31, 2007, and the Series D and Series E Warrants
        will
        each expire on December 31, 2008. Stock-based compensation of $3,898,000
        was
        recorded on these warrants at February 28, 2006.
 
 The
        Company has
        also issued 2,917,500 warrants exercisable at $1.00 each pursuant to the
        issuance of convertible debentures (note 8). These warrants expire on April
        30,
        2008, and are redeemable by the Company, at $.01 per share, in the event
        the
        Company’s Common Stock closes with a bid price, on average, over $3.00 per share
        for a consecutive 20 day period. On August 10, 2006, 50,000 warrants were
        exercised into 50,000 common shares at a price of $1.00 per share. On August
        15,
        2006, 25,000 warrants were cancelled due to non-payment of funds with respect
        to
        a convertible debt subscription in the amount of $25,000 (note
        10).




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**MEXORO
            MINERALS LTD.**
 **(Formerly
            Sunburst Acquisitions IV, Inc.)**
 **(An
            Exploration Stage Company)**
 **Notes
            to
            Consolidated Financial Statements**
 Nine Months
            Ended November 30, 2006
 **(Unaudited)
            (U.S. Dollars)**
 **12.**
                  **WARRANTS
                    (Continued)**


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




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




The
        Company has
        also issued 375,000 warrants exercisable at $1.00 each pursuant to a private
        placement unit offering from shares issued on April 3, 2006 and May 31, 2006.
        Each warrant entitles the investor to purchase an additional share of the
        Company’s common stock at a price of $1.00 per share and is exercisable until
        April 30, 2008.




**13.**
            **RELATED
              PARTY TRANSACTIONS**




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




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


**14.**
            **CONTINGENT
              LIABILITY**





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




**15.**
            **SUBSEQUENT
              EVENT**




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




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





**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**





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





**OVERVIEW**
 
 We
        are a start-up,
        exploration Stage Company and have not yet generated or realized any revenues
        from our exploration projects, which we commenced in March 2004. We have
        sufficient cash to maintain our operations until April 2007, unless our
        exploration is successful, of which there is no guarantee. If our exploration
        is
        successful, we will need to raise additional funds to meet our needs for
        additional exploration and/or production.
 
 Our
        continued
        existence and plans for future growth depend on our ability to obtain the
        additional capital necessary to operate either through the generation of
        revenue
        or the issuance of additional debt or equity. While we believe that we raised
        sufficient funds in our recent private placement offerings to allow us to
        continue in business until April 2007, we may not be able to continue in
        business beyond that date unless we obtain additional capital. We have not
        generated any revenues, and no revenues are anticipated unless and until
        mineralized material is discovered on the properties in which we have an
        interest.
 
 For
        the twelve
        month period from May 2007 to April 2008, we will need to raise additional
        capital to maintain operations. To maintain basic operations, pay our taxes
        and
        property obligations, and to continue with our basic exploration plans, we
        will
        need to raise a minimum of $1,000,000 in additional capital. If our exploration
        during that time period is successful, we may need to raise additional capital
        to fund those exploration programs. At this time, we cannot assess with any
        accuracy our total capital needs to fund an expanded exploration program
        beyond
        our basic program. We also anticipate that we will need to raise an additional
        $2,200,000 for the purchase of milling equipment and to build the plant site
        for
        our Cieneguita property. We would anticipate raising the additional capital
        to
        maintain operations and to put the Cieneguita property into production through
        the sale of our common stock or through debt financing. At this time, we
        do not
        have any sources of additional capital to fund our operations beyond April
        2007.
        We also believe that we will not generate any revenues that would allow us
        to
        continue operations. If we are unable to raise additional capital through
        debt
        or equity beyond April 2007, it is most likely that we would need to cease
        operations and forfeit our properties as we would be unable to make the
        necessary property payments.
 
 We
        are planning to
        buy a plant or significant equipment in the next six months. We anticipate
        spending approximately $2,200,000 on equipment and building a plant to put
        the
        Cieneguita property into production. The ability for us to buy such equipment
        is
        dependent upon our cash position at that time and our ability to raise
        additional capital. We currently do not have sufficient working capital to
        purchase all of the needed equipment. If we should fail to raise additional
        capital through the sale of equity or debt, we will not be able to purchase
        the
        desired equipment and we will not be able to construct a production facility
        to
        process the ore. Currently we do not have any sources for such capital to
        purchase the mining equipment. Furthermore, the Cieneguita Property has no
        known
        ore reserves.
 
 **Plan
        of
        Operation**


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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. We believe that we have sufficient funds to fund our current
        exploration plans and meet our monthly general and administrative costs until
        April 2007 without the need to raise additional funds. In the event that
        our
        exploration program should find exploration targets that warrant additional
        exploration work, including exploration by drilling, we may not have enough
        cash
        available to fund an expanded program. If we do plan to expand our exploration,
        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.
 
 In
        the event that
        our exploration program should find 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. As we are
        in the
        exploration phase, we have paid a deposit towards the purchase of milling
        equipment and anticipate building a processing plant at our Cieneguita property
        over the next 6 months. We have no known reserves on this property but there
        is
        a high demand for mining and milling resources in the market place and in
        anticipation of favourable results from our exploration activities we are
        forward planning to be prepared to put the property into production. At this
        time though, we have no known ore reserves on the Cieneguita property. In
        the
        event we purchase milling equipment and do not find any ore reserves on the
        Cieneguita property we may lose all of our capital investment. We would try
        to
        re-sell the equipment we purchased but no assurances may be given that we
        would
        be able to sell the equipment or sell it at a price to reasonably recoup
        our
        original investment.
 
 In
        the event that
        we did discover a mineral deposit on one of our other properties other than
        Cieneguita, 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 we
        do not have any exploitable ore reserves and with the current stage of
        exploration on the properties have no way to determine such expenditures.
        Such
        expenditures are dependent upon the size of the ore body, the grade of the
        ore
        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 expenditures 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
        recently hired a
        Vice President of Exploration to conduct our exploration programs and a
        geologist to assist him. In November 2006, the VP of Exploration resigned
        his
        position with the Company. We plan to hire a new Vice President of Exploration
        by the end of January 2007. We also have hired an office administrator in
        our
        office in Chihuahua. We plan to hire one more geologist by the end
        of January to work on our exploration programs. Other than the one
        additional geologist, we do not expect any significant change in additional
        contractors to conduct exploration over the next 12 months. Other than the
        VP of
        Exploration, all of the employees we hire, including those involved in the
        exploration work we are conducting, are contracted from third parties
        specializing in providing employees for Mexican companies. In using such
        a firm,
        we minimize our exposure to Mexican employment law. Such liabilities are
        undertaken by the third party providing the services. We pay a flat rate
        to the
        third party for their services.
 
 In
        the event that
        we should find a mineable reserve, it is management’s intention to contract the
        mining of any ore reserves out to third parties. The milling of the ore will
        be
        done by hiring employees for the Company and not through a third party provider
        of such services. In the event we should put the Cieneguita property into
        production in the next 12 months, we would anticipate hiring 2 mine managers
        and
        4 additional employees to work on the milling of the ore. We do not have
        any
        known reserves at this time.
  ***Cieneguita
        Property***


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Because
        we already
        have data from the previous exploration programs and mining records from
        Glamis
        Gold, our exploration program on the Cieneguita Property will focus mainly
        on
        identifying mineralized zones of economic grade to allow for the property
        to be
        put into production as an open pit heap leach mine. We expected the exploration
        cost to be approximately $200,000. From January 2006 to November 2006, we
        have
        spent approximately $400,000, double the budget, on the exploration of this
        project. The funds that were expended came from our general working
        capital. This exploration program included the review of available data to
        create a structural mineralization framework, detailed soil and rock sampling,
        resampling existing trenches, the extension of existing trenches, and the
        creation of new trenches. In April 2006, we completed a sampling of the property
        that included more than 500 meters of deep trenches from which we took
        comprehensive channel sampling. The trenches were comprised of 8 trenches
        approximately 200 meters long and 2 to 10 meters deep spaced equally along
        the
        1,000 meters strike length of the property. From the walls of these trenches,
        we
        took approximately 550 rock samples for a total weight of 20 tonnes. One
        half of
        these samples were sent to ALS Chemex’s laboratory in Chihuahua for assaying.
        The sampling protocol followed the best mining practices. The purpose of
        the
        sampling was to further define the ore grade and potential of the property.
        We
        have received the results of the sampling program and we have determined
        that it
        is warranted to continue exploration on the property to determine if it is
        suitable for a heap leach open pit mining operation.
 We
        plan to commence
        phase 2 of our exploration program in January 2007 by implementing a drill
        program consisting of 1,000 meters of reverse circulation drilling. We
        anticipate the drilling program will take approximately 1 month with assay
        results available 1 month later. The cost of this drilling program will be
        approximately $100,000, with assaying and supervision included. The funds
        for
        this drilling program will come from general working capital on hand. The
        majority of the drill holes will be 25 meters deep and drilled on 25 meter
        spacing. This pattern of drilling should help to better delineate the
        mineralization of the oxide zone and with a goal of providing an ore reserve
        calculation usable in a feasibility study for the property. Six of the drill
        holes will be drilled to a depth of 200 meters to test the sulphide potential
        of
        the mineral system. Our onsite geologist will determine where the holes will
        be
        drilled based on our earlier exploration and mapping of the property. We
        are
        currently negotiating with several contractors to secure the use of a drill
        to
        undertake our drill program. To date, we have not found a contractor able
        to
        supply drills to meet our time schedule. The unavailability of such drill
        rigs
        could hamper our exploration plans. In the event we cannot secure a drill
        rig,
        we may continue to explore the property through the trenching method we have
        used to date. Such a method may not be able to produce a reliable method
        to
        calculate ore reserves, if such ore is found, but management believes that
        it
        will be sufficient information to be able to make a decision on whether to
        put
        the property into production or not. We have not determined any known reserves
        on this property to date and our program is still exploratory.
 
 The
        other half of
        the 20 tonnes sample was used to complete column tests to determine the
        leachability of the precious metals from the rock. In this test, the ore
        was
        placed in 3 PVC tubes, 500 centimeters in diameter and 3 meters high. Different
        mixtures of a cyanide solution were dripped over the top of the columns at
        different flow rates. The tests are complete and were done by qualified
        geologists employed by MRT as part of our office package costs. The tests
        were
        scientifically conducted and monitored for quality control and efficacy.
        These
        tests were done to ensure that the metallurgy of the minerals allows for
        economic recovery of the precious metals using a cyanide heap leach process.
        The
        results of the column test indicate that up to 98% of the gold contained
        in the
        ore samples could be recovered from the ore if the ore is leached long enough.
        Under actual mining production conditions in the field, though, we would
        anticipate that the economic recovery levels of the ore would be approximately
        80% to 85% recovery of gold from the ore. The cost of the cyanide needed
        to
        produce the additional gold above the 85% level outweighs the value of the
        gold
        recovered. We cannot guarantee that we would be able to achieve this level
        of
        recovery and we cannot estimate the level of reserves on the property. This
        is
        not an estimate of reserves on the property. Additional tests will be needed
        to
        determine the most effective crush size of the ore, the most cost effective
        flow
        rates of the cyanide and most economical leaching time to be undertaken if
        we
        should ever put the property into production. We anticipate these additional
        tests will begin in January 2007 and the tests should be completed approximately
        90 days thereafter. These tests have the goal of optimizing the potential
        for
        extracting precious metals from the ore for the mining operation. The estimated
        cost for these additional tests will be approximately $50,000. The funds
        required for these additional tests will come from general working
        capital.
 
 The
        Cieneguita
        Property is without known reserves. Our proposed programs are exploratory
        in
        nature.





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Because
        management
        determined that the results of our phase 1 exploration completed in November
        2006 warranted further exploration, we have initiated additional exploration
        work which began in November 2006. This phase 2 of exploration is budgeted
        for
        an expenditure of $200,000, of which $100,000 will be used for the drilling
        program described above. These funds will come from general working capital.
        We
        originally had planned to do additional exploration with the use of ground-based
        geophysics to measure the conductivity of underground rocks. Ground-based
        geophysics is a technique for exploring for minerals using electromagnetic
        impulses and the various resistances of the rocks to the conduction of the
        electromagnetic signals generated by the equipment. The conductivity of the
        rocks is compared to known rock formations to help indicate the types of
        rock
        that may be found underground where the geophysical work is done. However,
        based
        on the results we received from our first phase of exploration and a
        recommendation from our former VP of Exploration, we do not believe that
        ground-based geophysical exploration will add any additional information
        about
        the structure of the mineralized ore body. In addition to the proposed drilling
        program, we will continue our exploration through trenching and sampling
        from
        the trenches starting in January 2007. We estimate that this exploration
        will
        end in February 2007. As stated above, we estimate that this additional
        exploration will cost us approximately $200,000 to complete. The trenching
        program will entail using a bulldozer to dig trenches the width of the
        bulldozer’s blade down to a depth between 5 and 10 meters deep and 200 meters
        long. Our on-site geologist will direct the bulldozer operator as where to
        dig
        the trenches. The geologist will base his decision on where to dig on the
        results of our previous exploration work. Once the trenches are dug, the
        geologist will lay large tarps in the bottom of the pits. He will then take
        samples of rock from all levels of the walls of the trench as if it were
        rock
        from a drill core and will let the rocks from this vertical sample fall onto
        the
        tarp. The rock on the tarp will then be gathered up and marked from which
        part
        of the trench it came from. The ore is pulverized and shipped out for assays.
        The results from these assays are expected to be completed and mapped by
        April
        2007 and will help us to further delineate the prospects of the property.
 
 Even
        though the
        rock is fractured, we now believe that a drill program will provide us with
        accurate enough information to make a determination of the grade of the ore
        or
        the size of the mineralized zones. We believe that our method of trenching
        and
        obtaining large quantities of rock samples for assaying will also provide
        us
        with the necessary information to allow us to make a determination whether
        the
        property should be put into production. We do not have any mineable ore reserves
        at this time on the Cieneguita Property. The goal of this phase of exploration
        is to delineate the mineralized ore body and map the grade of the mineralization
        that will allow us to formulate a plan to put the property into production,
        if
        warranted. If the exploration program does not provide us with the results
        we
        deem necessary to continue exploration, then, on a recommendation from our
        senior geologist and managements’ concurrence on his findings, we will cease
        exploration on the property. If no further exploration is warranted, then
        we
        will discontinue any payments to the concession holders and allow our option
        to
        lapse. If we allow the option to lapse we will be obligated to complete some
        reclamation work on the property of approximately $50,000. These funds would
        come from the bond we have already paid to the government in the amount of
        $67,000. Any funds not expended on reclamation would be returned to us by
        the
        Government. All of the money that we had invested in the exploration of the
        Cieneguita Property would be lost.
 
 We
        have one
        geologist on the Cieneguita Property working full time, and he will continue
        to
        do so through April 2007 if the exploration results warrant the expenditure.
        If
        the results do not warrant further work, we plan to move this geologist to
        one
        of our other properties to continue exploration work on those properties.
 
 The
        results of this
        additional exploration as described above commencing in January 2007 will
        help
        us determine whether or not to put the Cieneguita Property into production.
        If,
        after the second phase of exploration is completed, our senior geologist
        continues to recommend the property as a viable exploration target, we will
        implement our plan to put the Cieneguita Property into production. If further
        exploration is not warranted we will discontinue work on the property and
        not
        make any further concession payments thereby losing the property. Coinciding
        with our exploration, we have implemented a feasibility study and mine design
        to
        determine how to put the Cieneguita Property into production. The feasibility
        study and mine design has been commissioned to a third party contractor with
        expertise in heap leach mining. This engineering firm is reviewing all of
        the
        data that we have accumulated from previous exploration from Glamis Gold
        and
        from the trenching and sampling we have completed on the property. All of
        this
        information is put on a map laying out the structure of the mineralized zone
        on
        our property to assist in mining the ore. The key factor from this map will
        help
        enable our geologist on site to monitor grade control if the property is
        ever
        put into production. Additionally, from the information accumulated so far
        on
        the Cieneguita Property, the mining engineer has designed a heap leach mining
        operation best suited to the tonnage, grade of the ore and availability of
        land
        to


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build
        leaching
        pads. The initial design will consist of 4 heap leach pads. Each pad will
        hold
        approximately 30,000 tonnes of ore. If we should ever decide to put the property
        into production the mine is designed to be initially run as a 1,000 tonne
        per
        day operation as follows:
 
 As
        the rock is
        quite fractured, it is anticipated that a D-6 bulldozer or equivalent will
        be
        used with a large ripper blade to loosen the rock. A front end loader will
        load
        the rock torn up by the bulldozer into 1 of 6 dump trucks. As the 6 trucks
        are
        loaded they will then haul the rock approximately 1 kilometer to the mine
        site.
        The rock will be dumped into a crusher. This first stage of the mining operation
        will be run by a third party contractor and they will charge the Company
        a flat
        fee per tonne of rock that is moved. It is estimated by the engineer designing
        the mine that the cost per tonne of rock moved from the property to the mill
        site will be approximately $1.30 per tonne of rock. This fee is only an estimate
        as no contractor at this time has been engaged to mine the mineralized ore
        nor
        provided us with a firm quote on the cost of mining. The actual cost of mining
        the ore may be much higher and no assurance can be given as to the actual
        cost
        at this time. One of the key jobs at this stage of the mining operation will
        be
        grade control. As our sampling has shown that the gold mineralization is
        not
        consistent through out the ore it will be imperative that our geologist on
        site
        directs the contractors on where to mine the ore. Our exploration to date
        of the
        property and mapping by the geologists have allowed for a general plan of
        where
        the mineable grades of ore are located using a cut off grade of 1.5 grams
        per
        tonne. The geologist will need to work daily using the interpretation from
        the
        results of our drilling program and on taking samples of the rock and assaying
        them on site to determine where the contract should extract ore for the next
        day. The proper grade of ore shipped to the milling site is imperative to
        ensure
        a profitable operation. If the head grade is too low, we will not recover
        enough
        gold from the rock to maintain a profitable operation. Conversely, a head
        grade
        of ore that is too high will shorten the life of the mine. We have determined
        through our exploration and mine design that the economic cut off grade for
        ore
        at current gold prices will be 1.5 grams per tonne. If the price of gold
        fluctuates up or down, we may have to adjust our cut off grade which will
        affect
        the over all life of the mine assuming it has been put into production.
 
 As
        the mining of
        the rock will be done by third party contractors, the milling of the ore
        at the
        mine site will be completed by us. Once the contractor has dumped the ore
        from
        the trucks into the crusher they will no longer have any responsibility of
        the
        ore from that point on. The ore at this stage is crushed to a size of -3
        (less
        than 3 inches in diameter). We have identified and negotiated the purchase
        of a
        second hand crusher suitable for our type of operation. The rock is deposited
        onto a conveyor belt after it comes out of the crusher and is moved into
        the
        agglomorator. We are in the process of negotiating the construction of the
        conveyor belts we will need for all the phases of the milling operation.
        The
        conveyor belts will be manufactured in Chihuahua and assembled at the mine
        site
        of Cieneguita. We have also identified and negotiated the purchase of a second
        hand agglomorator. When the ore is deposited into the agglomorator, it is
        mixed
        with lime and some cyanide. The purpose of mixing the ore with the other
        chemicals is to facilitate the leaching of the precious metals from the ore
        when
        the cyanide is irrigated onto the ore on the heap leach pads. The mixture
        we
        will use has been predetermined from the results of our column tests conducted
        earlier this year. This mixture of rock and lime is then moved onto the next
        conveyor belt system. The rock is deposited onto the first heap leech pad
        by
        using a stacker. A stacker is a moveable conveyor belt that oscillates back
        and
        forth distributing the rock equally on to the pad. We have identified and
        negotiated the purchase of a used stacker suitable for this type of operation.
        Once the first pad is loaded with 30,000 tonnes of rock, the stacker is moved
        to
        the second pad where it starts to load that pad at the rate of 1,000 tonnes
        per
        day.
 
 Sprinklers
        are then
        put onto the top of the first pad and the rock is sprinkled with a cyanide
        mixture at the flow rate of 30 liters of solution per square meter per hour.
        The
        rock is continuously sprinkled with the cyanide at the flow rate above, as
        determined by column tests discussed earlier. The cyanide percolates down
        through the rock and as it does, it leaches the precious metals out of the
        host
        rock. The fluid containing the precious metals is collected on the pads under
        the pile of ore. This fluid is then pumped through the carbon filters using
        150
        hp pumps. We have negotiated a purchase price for used carbon filters and
        pumps
        to be used for this stage of the milling process. The sprinkling process
        takes
        approximately 30 days to complete. Once completed, the stacker is moved to
        the
        third heap leach pad and the sprinklers are moved to the second pad to leach
        the
        precious metals from that pile.
 
 After
        the ore has
        been leached then the rock is washed with fresh water and chemicals to
        neutralize the cyanide contained in the rock. The washing period takes
        approximately 30 days to complete. Once the rock has been washed and the
        cyanide
        has been neutralized the final stage of unloading the first pad takes place.
        At
        this time, the fourth pad is being loaded with ore with the stacker, the
        third
        pad is being sprinkled with


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cyanide,
        the second
        pad is being washed and the first pad is unloaded and prepared for the loading
        again with fresh ore. The complete cycle takes approximately 4 months for
        each
        pad (loading 30 days, leaching 30 days, washing 30 days and unloading and
        preparing 30 days). The waste rock is dumped on site into a ravine within
        200
        meters of the leach pads, as per our permits when issued. The waste rock
        is
        completely free of any harmful chemicals and is restored to the original
        ph it
        had prior to mining.
 
 After
        the ore has
        been leached, the solution containing the precious metal is collected on
        the
        pads underneath the pile of ore. That liquid is then pumped through carbon
        filters and all of the particulate is extracted from the liquid. The cleaned
        liquid is then pumped back into the holding ponds to be mixed with cyanide
        and
        used again to be sprinkled onto the new ore being leached.
 
 The
        carbon filters
        are then shipped to a third party for the extraction of the precious metals
        and
        the minting of ore bars. At this time, we do not know the cost associated
        with
        this process. If our head grade has not been accurate or the heap leach process
        not effective we may not extract enough gold from the carbon filters to pay
        for
        this complete operation and we would lose money from the mining operation.
        If we
        lost money on the mining and milling operation, we may not be able to stay
        in
        business as we would expect the cash flow from operations to cover, at the
        minimum the mining and milling operation. Furthermore, we do not have any
        proven
        reserves on our property and the ability to find enough ore could severely
        hinder any mining operations.
 
 We
        have engaged an
        independent third part consultant to review the work of the engineering firm
        to
        verify and agree with the results of the mine design. The independent third
        party engineers are working with the mining engineering firm to agree on
        a final
        design. The mine design has been completed and cost approximately $50,000.
        We
        paid for the work from our general working capital. The milling equipment
        and
        cost of building the plant will be approximately $2,200,000. The first 4
        months
        of working capital needs has been estimated at approximately $1,100,000.
        There
        can be no assurance given that if the property is put into production that
        after
        four months of operation we will have recovered any precious metals from
        the
        milling process. We will need to continue to fund working capital if the
        precious metals are not in the ore as predicted. We will need to raise
        additional capital to put the property into production and to fund at least
        the
        first four months of working capital. The funds would be raised through the
        sale
        of debt or equity. We have not identified any additional sources of capital
        at
        this time. Furthermore, once we have commenced production we can give no
        assurance that we will be profitable or for that matter recover any gold.
        Furthermore, there are no known ore reserves on our property.
 
 We
        also do not have
        a joint venture partner at this time that is interested in the Cieneguita
        Property. We can give no assurance that we would be able to find such a joint
        venture partner to put this property into production if the feasibility study
        warranted such a plan.
 
 ***Guazapares
        Property***
  Concurrently
        with
        the exploration of the Cieneguita Property, we have budgeted approximately
        $350,000 of our general working capital for exploration on our Guazapares
        Property until April 2007. Of this amount, we have spent approximately $100,000
        since March 2006 through the end of November 2006 in our first phase of
        exploration. These funds came from our general working capital. We have one
        full
        time geologist working on the Guazapares Property collecting rock samples
        and
        mapping the property. Mapping on the property is being completed at a scale
        of
        1:5,000 with individual veins being mapped at a scale of 1:1,000. The rock
        samples have been sent to Chemex ALS in Chihuahua for chemical analysis and
        assaying. By the end of September 2006, we plan to add one additional geologist
        to the property to continue sampling and mapping. The goal of the first phase
        of
        the exploration program was to determine whether subsequent exploration is
        warranted and if a drill program should be commenced. This current work has
        included reviewing available data to create a structural mineralization
        framework. We have also mapped the topography and sampled the entire underground
        workings along the main level of the San Antonio mine. The distribution of
        the
        veins, lithology and alteration was also mapped. At this time sampled results
        are pending and are expected to be returned to us by January 2007. The
        underground workings of this mine are focused on a sub-vertical vein that
        our
        geologists believe strikes 110 degrees, averages 0.5 - 1.0 meter in width
        and
        has a strike length of approximately 100 meters. The conclusion from the
        first
        phase of exploration, as recommended by our former vice president of exploration
        and accepted by management is to enter into the second phase of
        exploration.




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The
        second phase of
        the exploration program using two geologists, which will commence in January
        2007, will include more detailed soil and rock sampling, ground-based geophysics
        measurements and mapping. At this time, though, we do not have enough
        information to implement a drill program. The ground based geophysical
        exploration will concentrate mainly on the area around the San Antonio mine.
        We
        also plan to map the topography and sampled the surface trenches in the San
        Francisco area. The main purpose of this phase of exploration will be to
        define
        the structural mainframe of the mineralized zone to facilitate the placing
        of
        drill holes. The second phase of exploration has been budgeted for $200,000
        from
        the total exploration budget of $350,000. These funds will come from general
        working capital of the Company. Once this information is obtained from phase
        two
        of the exploration project (which is expected to be finished by April 2007),
        our
        senior geologist will review all of the data collected and make a recommendation
        to management. Management, at that time, will review the exploration data
        collected and the recommendations of the senior geologist and make a
        determination whether additional work is advisable. If the management determines
        that additional exploration is not warranted, then we will likely discontinue
        exploration and make no further property payments, dropping the
        concessions.
 
 We
        believe that
        most of the mining concessions being explored in the Guazapares area are
        epithermal silver deposits similar to the Cieneguita Property. The geology
        from
        other properties in that area will serve as a guide when exploring the
        Guazapares Property. Because we do not have the same amount of detailed
        information on Guazapares as we do on Cieneguita, the exploration program
        will
        cost more than the exploration program on Cieneguita.
 
 From
        phase 2 of the
        exploration, we should have the results of exploration by April 2007. At
        that
        point, we will make a decision as to whether to implement an initial drill
        program based on the recommendations of our head geologist working on the
        Guazapares Property. If the geologist does not recommend a drilling program,
        we
        may abandon the property. If we abandon the Guazapares Property, we will
        not
        have to make any further property payments as per our property purchase
        agreements.
 
 If
        a drill program
        is warranted and implemented, we will need to raise additional capital through
        the sale of equity or debt to fund a complete drilling program, as only a
        small
        portion of the budget will be left to initiate the program. We do not have
        enough information at this time to determine how the drilling phase of the
        exploration program would be implemented, how many holes would need to be
        drilled and to what depth the holes would be drilled. We will only be able
        to
        make this determination once we have all of the information back from the
        second
        phase of exploration. Also, we have not identified any sources of funds to
        implement such a program. If we were unable to raise the necessary capital,
        we
        would either have to enter into a joint venture in relation to the project
        or
        abandon the project. We do not have any joint venture partners identified
        at
        this time and no assurance could be given that we could find such a partner.
        If
        the recommendation is to drill the property, if sufficient funds can be
        generated to pay for the drilling, and assuming drill rigs are available
        in the
        area, we could commence this program in April 2007 and it would last
        approximately 60 days. The results of this drill program would take
        approximately 90 days to be assayed and interpreted. Once those result are
        known, we would consult with our lead exploration geologists to determine
        whether to abandon the Guazapares Property or continue with further drilling
        exploration. If management decides to continue with further drilling, we
        would
        need to raise additional funding through the sale of debt or equity because
        we
        do not have sufficient capital to continue an exploration program beyond
        our
        original budget. Additional drilling would cost a significant amount of money,
        and there is no assurance that we would be able to raise such additional
        amounts
        of money. If we could not obtain additional financing, we could seek a joint
        venture partner if the results warranted it. We do not have any joint venture
        partners at this time and can give no assurance that we would be able to
        find
        one if the Guazapares Property warranted such a joint venture.
 
 The
        Guazapares
        Property is without known reserves. Our proposed programs are exploratory
        in
        nature.
 
 ***Encino
        Gordo Property***
  We
        have also planned an exploration program, budgeted at approximately $200,000
        from general working capital through April 2007, on our Encino Gordo Property.
        We currently have one geologist taking geochemical sampling and mapping this
        property. Mapping on the property is being completed at a scale of 1:5,000
        with
        individual veins being mapped at a scale of 1:1,000. The rock samples have
        been
        sent to Chemex ALS in Chihuahua for chemical analysis and assaying. We have
        expended approximately $40,000 of our budget from our general working capital
        through the end of September 2006. The Encino Gordo Property comprises four




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mining
        concessions
        that total 1,042 hectares (approximately 2,575 acres). We have limited
        information available to us about this property from previous exploration,
        and
        therefore we have not yet developed a concise exploration plan for these
        concessions. The previous geochemical sampling that was done suggests a presence
        of mineralized structures. These structures will be investigated by geochemical
        sampling to determine if further exploration is warranted and to help refine
        the
        best exploration plan for the concessions. During the month of October, mapping
        continued along the extension of the structures hosting the Elyca vein located
        along the eastern edge of the Encino Gordo claims. In addition, a list of
        preliminary drill hole locations was prepared to accompany the “SAMARNAT” work
        permit. The work permit is scheduled to be filed by the end of December 2006,
        with approval from SAMARNAT to be returned by the end of February 2007. Once
        the
        work permit is approved, we plan to drill on the identified targets as
        recommended by our geologist on the project. We will start negotiations in
        December 2006 to secure a drill rig for the commencement of drilling on this
        property in March 2007. The actual drill hole locations are likely to change
        from those submitted with the working plan permit as drill targets are reviewed.
        This change of targets will not affect the working permit as such a movement
        of
        locations is anticipated in the issuing of the permits.
 
 Samples
        have been
        taken on this property within zones containing quartz veins, veinletts and
        stockwork accompanied by calcite-pyorite-chlorite (of relatively small
        dimensions). In the central sector, the results of the samples generally
        contain
        less than 0.09 parts per million (“ppm”) of gold and less than 9 ppm of silver.
        In the western sector, the results indicate two anomalous zones in structures
        containing quartz. The first one contains an average of 0.46grams/tonne of
        gold
        (2.0 meter wide samples), and the second contains an average of 0.358grams/tonne
        of gold (2.0 meter wide samples). In the southeastern sector, the samples
        consist of quartz healed structures 10.0m wide and averaging 0.33 grams/tonne
        of
        gold. Two samples defined an anomalous zone 70.0 meters wide containing up
        to
        0.359 grams/tonne of gold. In the north sector, samples represented
        veinletts/breccia of calcite-chlorite-pyorite. These samples were not anomalous
        in gold and silver but do contain elevated lead-zinc.
 
 A
        total of 43
        stream sediment samples were collected from the various arroyos cutting the
        property. Samples of greater than 1 kilogram were collected with material
        crushed to less than 1 mm size. Samples of this rock will be analyzed by
        Chemex
        ALS for gold content plus 27 other mineral elements associated with the
        rock.******To date, three samples returned anomalous
        results of gold which require follow-up to verify source areas. We would
        expect
        the balance of the samples to be returned by January 2007.
 
 Our
        goal is to have
        this further exploration completed by the end of December 2006, and a geological
        report prepared by our senior geologist on the Encino Gordo Property should
        be
        available 60 days thereafter. Depending on the results of the report, as
        determined by management, we intend to either abandon the Encino Gordo Property,
        in which case no further payments would be made or would be due under our
        agreements to acquire these concessions, or to make additional expenditures
        to
        determine potential drill targets. The amount and source of the capital needed
        for additional expenditures will be determined at that time. If a drill program
        is recommended, we do not have sufficient information at this time to estimate
        what that program would entail. We need extensive information to determine
        the
        number of drill holes to drill, where they would be located and to what depth
        they would be drilled. We do not have enough information to estimate the
        cost of
        this drill program. Regardless, if a drill plan of any size is recommended,
        we
        do not have sufficient capital on hand to complete such a program because
        it
        would most likely require the expenditure of significant amounts of money.
        We
        would need to raise additional capital through the sale of debt or equity.
        We
        can give no assurance that we would be able to raise such capital, as we
        have
        not identified any source of capital for such a program at this time. If
        we
        could not raise additional funds, we would consider seeking a joint venture
        partner if the results warranted it. We do not have any joint venture partners
        at this time and can give no assurance that we would be able to find one
        if the
        Encino Gordo Property warranted such a joint venture.
 
 The
        Encino Gordo
        Property is without known reserves. Our proposed programs are exploratory
        in
        nature.
 
 ***Sahauyacan
        Property***
  The
        Sahauyacan
        property is located near the Chihuahua-Sonora state boarder approximately
        275
        kilometers east-southeast of the city of Chihuahua and 50 kilometers
        south-southwest of the town of Mycoba in the state of Chihuahua,
        Mexico.


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We
        have just
        recently acquired the Sahauyacan Property, and our exploration program has
        not
        been clearly defined at this time. We have not yet prepared a detailed budget
        or
        exploration plan for this property. Prior to optioning the property, we had
        conducted some preliminary work on the property to verify certain data. Though
        there is no definitive plan in place at the moment for the exploration of
        the
        property we would expect to budget approximately $150,000 from general working
        capital through April 2007, to work on the Sahauyacan Property. We currently
        have one geologist taking geochemical sampling and mapping this property
        so that
        we can get a better understanding of the geology of the property. Once we
        have a
        better understanding of the geology of the property, we will be able to prepare
        a definitive exploration plan and exploration budget for this property. Mapping
        on the property is being completed at a scale of 1:5,000 with individual
        veins
        being mapped at a scale of 1:1,000. The rock samples have been sent to Chemex
        ALS in Chihuahua for chemical analysis and assaying. We have expended
        approximately $20,000 from our general working capital to the end of November
        2006 to complete some initial work. The Sahauyacan Property comprises 14
        mineral
        concessions that total 649 hectares (approximately 2,575 acres). We have
        limited
        information available to us about this property from previous exploration.
 
 The
        main vein in
        the area, the “Santo Nino Vein”, was the focus of a small scale underground gold
        mining operation in the late 1800’s and early 1900’s with at least 3 main
        underground mine access drifts supplying feed to a centrally located mill
        which
        is still present. The mine was closed at the time of the Mexican revolution
        and
        the Santo Nino Vein has never been evaluated using modern techniques and
        has not
        been explored by drilling. This area will most likely be the main focus of
        our
        exploration program once we have a definitive plan in place. We would expect
        to
        have our exploration plan in place by January 2007.
  As
        part of our due
        diligence on acquiring the properties we have had a surface geological mapping
        and sampling crew evaluating the property since September 2006 with the mapping
        program scheduled to be complete in December 2006. Mapping on the property
        is
        being completed at a scale of 1:5,000 with individual veins being mapped
        at a
        scale of 1:1,000. To date a total of 309 samples have been taken from taken
        the
        property including 101 rock chip and channel samples, 41 stream sediment
        samples
        and, 158 soil samples. We would expect to receive the results back from our
        sampling by January 2007. The underground work is being evaluated for safe
        entry
        and will be mapped and sampled if deemed safe. The source of funds for this
        initial work done on the property has been from general working capital.
        There
        are no known reserves on this property and all work to be done will be
        exploratory in nature.
 
 The
        Sahauyacan
        Property is without known reserves. Our proposed programs are exploratory
        in
        nature.
 
 Although
        three of
        our properties have been mined in the past, we are presently in the exploration
        stage and there is no assurance that a commercially viable mineral deposit
        exists in any of our properties. We do not have any proven or probable reserves
        on our properties.
 
 We
        have made a
        business decision to place a higher priority on the Cieneguita exploration
        program to define mineralized ore. However, we intend to proceed with
        exploration on all four properties simultaneously. If our exploration programs
        warrant drilling programs on the properties, we anticipate contracting two
        geologists and four assistants for supervising the drilling work and taking
        splits for the drilling samples.
 
 Once
        we receive
        results from these exploration programs, our management will assess whether
        to
        proceed to any further exploration phases. In making this determination,
        we will
        make an assessment as to whether the results are sufficiently positive to
        enable
        us to obtain the financing necessary to proceed. The decision will be based
        mainly on the recommendations of our senior geologist. Other factors that
        will
        influence the production decision will be the current price of gold bullion,
        availability of mining equipment and a mining feasibility study.
 
 **Results
        of
        Operations**
 
 Revenues
 
 We
        did not earn revenues during the three and nine months ended November 30,
        2006
        or 2005 because we did not have commercial production of any of our properties.
        We do not anticipate earning revenues until such time as we have entered
        into
        commercial production of our mineral properties, if ever. We are presently
        in
        the exploration stage of our business. We can provide no assurance that we
        will
        discover commercially exploitable levels of mineral resources on our properties
        or, if such resources are discovered, that we will enter into
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commercial
        production of our mineral properties. Interest income is recorded under Other
        Income in the Statement of Operations in the financial statements.
 
 Operating
        Costs
 
 We
        did not incur
        any operating costs during the three and nine months ended 2006 and 2005
        due to
        the fact that we did not achieve production from exploration activities during
        either year.
 
 Expenses
 
 Our
        expenses during
        the three and nine months ended November 30, 2006 were $160,000 and $958,000
        respectively, compared to $149,000 and $232,000 respectively, for the three
        and
        nine months ended November 30, 2005. The increase is primarily attributable
        to
        higher General and administrative expenses as there were no stock based
        compensation expense and developing exploration program in comparative periods
        in 2005.
 
 The
        following table
        presents the general and administrative, stock-based compensation and mineral
        exploration expenses:
 
 Three
                  months
                  ended November 30
              
              Nine
                  months
                  ended November 302006
              
              2005
              
              2006
              
              2005General
                  and
                  administrative
              160,496
              
              148,594
              
              958,256
              
              232,458Stock-based
                  compensation
              -
              
              -
              
              248,000
              
              -Mineral
                  exploration
              333,050
              
              -
              
              937,548
              
              -Acquisition
                  of resource properties
              -
              
              -
              
              -
              
              150,000
 
 The
        increase in
        general and administrative cash expenses relates to higher management fees
        of
        $146,000 and $342,000 in the three and nine months ended November 30, 2006
        respectively, from $66,000 and $98,000 in the three and nine months ended
        November 30, 2005. Finders’ fees increased to $285,000 in the nine months ended
        November 30, 2006 from $nil in the nine months ended November 30, 2005. The
        increase was attributable to two private placements; a unit offering and
        convertible debentures. Accounting and legal fees increased to $84,000 and
        $177,000 in the three and nine months ended November 30, 2006 respectively,
        from
        $32,000 and $77,000 in the three and nine months ended November 30, 2005.
        The
        increase in fees was primarily attributable to higher auditing costs and
        the
        cost of regulatory filings with the SEC.
 
 Stock-based
        compensation expenses were $nil and $248,000 in the three and nine months
        ended
        November 30, 2006 compared to $nil in the three and nine months ended November
        30, 2005. The $248,000 relates to 25% vesting amount of the 800,000 stock
        options granted in February 2006 at a price of $0.50 per share. As at November
        30, 2006, 50% of these stock options have vested.
 
 Mineral
        exploration
        in the three and nine months ended November 30, 2006 increased to $333,050
        and
        $938,000 respectively, compared to $nil for the nine months ended November
        30,
        2005. The Company was not in a developing exploration program during the
        nine
        months ended November 30, 2005. We anticipate that exploration expenditures
        will
        increase in fiscal 2007 as a result of exploration activities on our Mexican
        mineral properties.
 
 Acquisition
        of
        resource properties was $nil in the nine months ended November 30, 2006 compared
        to $150,000 for the nine months ended November 30, 2005.
 
 Loss
 
 Our
        net loss
        increased to $481,000 and $4,421,000 for the three and nine months ended
        November 30, 2006 respectively, compared to $17,000 and $252,000 for the
        three
        and nine months ended November 30, 2005. The higher losses are attributed
        to
        increased expenses as stated above and expensing of $2,266,000 relating to
        the
        beneficial conversion feature on $2,266,000 of convertible debentures issued
        between March and May




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2006.
        We anticipate
        that we will continue to incur losses until such time as we can commence
        the
        development stage of our operations and achieve significant revenues from
        sales
        of gold recovered from our Mexican mineral properties. There is no assurance
        that we will be able to commence the development stage of our operations
        at any
        of our Mexican mineral properties or achieve revenues.
 
 **Liquidity
        and Capital Resources**
 
 Since
        inception, we
        have undergone two unsuccessful business combinations, which have caused
        us to
        incur significant liabilities and have resulted in the accumulation of a
        substantial deficit during the exploration stage.  As of November 30, 2006,
        we have total assets of $1,170,000, total liabilities of $119,000 and a deficit
        of $26,170,000 accumulated during the exploration stage.
 
 Cash
        and Working
        Capital
  We
        had cash of
        $843,000 as of November 30, 2006, compared to cash of $1,534,000 as of August
        31, 2006 and $1,580 as of November 30, 2005. We had working capital of $915,000
        as of November 30, 2006, compared to working capital of $1,450,000 as of
        August
        31, 2006, and a working capital deficiency of $833,000 as of November 30,
        2005.
 
 Under
        our current
        business plan, we will not require additional financing this fiscal year.
        However, we will require additional financing during the current fiscal year
        if
        our planned exploration activities increase. We plan to spend approximately
        $3,200,000 in the next twelve months to carry out exploration and administration
        activities on our Mexican mineral properties, and in the event that our
        exploration is successful on our Cieneguita Property, we anticipate spending
        a
        further $2,200,000 on equipment and building a plant to put that property
        into
        production. We anticipate spending approximately $480,000 during the next
        twelve
        months on general and administrative costs.
 
 We
        presently do not
        have sufficient financing to enable us to complete these plans and will require
        additional financing to perform future exploration work on our Mexican mineral
        properties. Our actual expenditures on these activities will depend on the
        amount of funds we have available as a result of our financing efforts. There
        is
        no assurance that we will be able to raise the necessary financing.
 
 Cash
        Used in
        Operating Activities
 
 Cash
        used in
        operating activities increased to $1,986,000 for the nine months ended November
        30, 2006 respectively, compared to $68,000 for nine months ended November
        30,
        2005. The cash used in operating activities came primarily from convertible
        debt
        and equity sales of our common shares. It was primarily used for general
        and
        administrative costs and for the exploration program.
 
 Investing
        Activities
 
 Cash
        used in
        investing activities increased to $150,000 for the nine months ended November
        30, 2006 respectively, compared to $nil for the nine months ended November
        30,
        2005. Cash used in investing activities was used to acquire vehicles, office
        equipment, and computer equipment for our office in Mexico.
 
 Financing
        Activities
 
 Cash
        provided by
        financing activities amounted to $2,496,000 for the nine months ended November
        30, 2006 respectively, compared to $35,000 for the nine months ended November
        30, 2005, respectively. All cash provided by financing activities in the
        nine
        months ended November 30, 2006 was provided by convertible debt, share issuances
        and the exercise of warrants. Cash provided by financing activities was used
        to
        fund our operating and investing activities. We anticipate continuing to
        rely on
        equity sales of our common stock or issuance of debt in order to continue
        to
        fund our business operations. Issuances of additional shares will result
        in
        dilution to our existing shareholders.
 
 On
        April 3, 2006 and May 31, 2006 the Company issued 550,000 and 200,000 common
        shares respectively pursuant to a private placement unit offering. Units
        consisted of one share of common stock and one-half of




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one
        warrant. Each
        full warrant entitles the investor to purchase an additional share of the
        Company’s common stock at a price of $1.00 per share and is exercisable until
        April 30, 2008.
 
 On
        March 4, 2006,
        the Company agreed to issue 1,651,200 common shares at a price of $0.25 per
        share to settle $412,800 in promissory notes payable (note 7). On April 6,
        2006,
        these shares were issued.
 
 On
        July 5, 2006,
        the Company issued 5,835,000 common shares on the exercise of $2,917,500
        of
        convertible debt at a price of $0.50 per share.
 
 On
        August 10, 2006,
        the Company issued 50,000 common shares on the exercise of 50,000 warrants,
        where each warrant was exercisable into common shares at a price of $1.00
        per
        share.
 
 On
        August 15, 2006,
        the Company returned to treasury 50,000 common shares due to non-payment
        of
        funds with respect to the convertible debt converted into common shares on
        July
        5, 2006.
 
 The
        amount of our
        convertible debt outstanding at November 30, 2006 was $nil compared to $30,000
        at November 30, 2005.
 
 In
        June 2006, all
        of the holders of the $2,917,500 convertible debentures converted to common
        shares at $0.50 per share. The Company issued 5,835,000 common shares to
        debenture holders upon the conversion. We have paid to the convertible debenture
        holders a total of $59,325, which is their accumulated interest on the
        debentures.
 
 Going
        Concern
 
 Our
        consolidated
        financial statements have been prepared on a going concern basis, which assumes
        the realization of assets and settlement of liabilities in the normal course
        of
        business. Our ability to continue as a going concern is dependent upon our
        ability to generate profitable operations in the future and/ or to obtain
        the
        necessary financing to meet our obligations and repay our liabilities arising
        from normal business operations when they become due. The outcome of these
        matters cannot be predicted with any certainty at this time and raise
        substantial doubt that we will be able to continue as a going concern. Our
        consolidated financial statements do not include any adjustments to the amount
        and classification of assets and liabilities that may be necessary should
        we be
        unable to continue as a going concern.
 
 The
        Company has a
        history of operating losses and will need to raise additional capital to
        fund
        its planned operations. The Company had working capital of $915,000 as of
        November 30, 2006, and an accumulated deficit during the exploration stage
        of
        $26,170,000. These conditions raise substantial doubt about the Company’s
        ability to continue as a going concern.
 
 The
        Company intends
        to reduce its cumulative loss through the attainment of profitable operations
        from its investment in a Mexican mining venture. There is no assurance that
        these operations will be profitable. In addition, the Company has conducted
        private placements of convertible debt and common stock, which have generated
        a
        portion of the initial cash requirements of its planned Mexican mining
        ventures.
 
 **Off-Balance
        Sheet Arrangements**
 
 We
        currently do not
        have any off-balance sheet arrangements which have or are reasonably likely
        to
        have a current or future effect on our financial condition, changes in financial
        condition, revenues or expenses, results of operations, liquidity, capital
        expenditures or capital resources that are material to our investors.
  32
 Table
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  **ITEM
          3.** **CONTROLS AND PROCEDURES**
 
 **Evaluation
          of Disclosure Controls and Procedures:**
 
 Disclosure
          controls
          and procedures are designed to ensure that information required to be disclosed
          in the reports filed or submitted under the Exchange Act is recorded, processed,
          summarized and reported, within the time period specified in the SEC's
          rules and
          forms. Disclosure controls and procedures include, without limitation,
          controls
          and procedures designed to ensure that information required to be disclosed
          in
          the reports filed under the Exchange Act is accumulated and communicated
          to
          management, including the chief executive officer and chief financial officer,
          as appropriate, to allow timely decisions regarding required disclosure.
          As of
          the end of the period covered by this report, we carried out an evaluation,
          under the supervision and with the participation of our management, including
          our chief executive officer and chief financial officer, of the effectiveness
          of
          the design and operation of our disclosure controls and procedures. Based
          upon
          and as of the date of that evaluation, the chief executive officer and
          chief
          financial officer concluded that our disclosure controls and procedures
          are
          effective in ensuring that information required to be disclosed in the
          reports
          submitted under the Exchange Act is recorded, processed, summarized and
          reported
          as and when required.
  **Changes
          in
          Internal Control over Financial Reporting**
 
 There
          were no
          changes in our internal controls or in other factors that could affect
          these
          controls subsequent to the date of their evaluation, including any deficiencies
          or material weaknesses of internal controls that would require corrective
          action.


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 Table
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**PART
      II -
      OTHER INFORMATION**





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





None.




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





The
      following
      exhibits are filed in reference:




2.1
            Securities
                Purchase Agreement dated as of August 25, 2004 among Sunburst Acquisitions
                IV, Inc. (and identified purchasers) (incorporated by reference from
                Current Report on Form 8-K and filed with the Securities and Exchange
                Commission on August 31, 2004).




2.2
            Share
                Exchange Agreement, dated May 3, 2004, by and among Sunburst Acquisitions
                IV, Inc., a Colorado corporation, Sierra Minerals and Mining, Inc.,
                a
                Nevada corporation, and the shareholders of Sierra Minerals & Mining,
                Inc. (incorporated by reference from Current Report on Form 8-K/A
                and
                filed with the Securities and Exchange Commission on August 9,
                2004).




2.3
            Joint
                Venture
                Agreement, dated April 26, 2004 and amended on June 1, 2004, by and
                between Sierra Mining and Minerals, Inc., a Nevada corporation, and
                Minera
                Rio Tinto S.A. de C.V., a Mexican company (incorporated by reference
                from
                Current Report on Form 8-K/A and filed with the Securities and Exchange
                Commission on August 9, 2004).




2.4
            Amendment
                to
                Joint Venture Agreement dated June 1, 2004 (incorporated by reference
                from
                Current Report on Form 8-K/A and filed with the Securities and Exchange
                Commission on August 9, 2004).




3
                (i)
            Articles
                of
                Incorporation (incorporated by reference from Registration Statement
                on
                Form 10-SB/A filed with the Securities and Exchange Commission on
                December
                29, 1997).





3
                (ii)
            Bylaws
                (incorporated by reference from Registration Statement on Form 10-SB/A
                filed with the Securities and Exchange Commission on December 29,
                1997).




4.1
            Specimen
                Common Stock Certificate (incorporated by reference from Registration
                Statement on Form 10-SB/A filed with the Securities and Exchange
                Commission on December 29, 1997).




4.2
            Registration
                Agreement dated April 20, 2004, by and among Sunburst Acquisitions
                IV,
                Inc., a Colorado company, and each of the purchasers in a private
                placement of shares of Sunburst (incorporated by reference from Current
                Report on Form 8-K/A and filed with the Securities and Exchange Commission
                on August 9, 2004).





10.1
            Distribution
                Agreement between EPI and Sunburst Acquisitions IV, Inc. (incorporated
                by
                reference from Form 10-KSB filed with the Securities and Exchange
                Commission on May 20, 2002).




10.2
            Distribution
                Agreement by and between Romlight International, Inc. and Sunburst
                Digital, Inc. (incorporated by reference from Form 10-KSB filed with
                the
                Securities and Exchange Commission on June 11,
                2003).




10.3
            Promissory
                Note between Sunburst Acquisitions IV, Inc. and Minera Rio Tinto
                S.A. de
                C.V. in the amount of $ 57,500 dated January 9, 2004 (incorporated
                by
                reference from Current Report on Form 8-K/A and filed with the Securities
                and Exchange Commission on August 9,
                2004).





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 Table
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10.4
            Promissory
                Note between Sierra Mineral and Mining, Inc. and Minera Rio Tinto
                S.A. de
                C.V. in the amount of $ 167,500, dated May 3, 2004 (incorporated
                by
                reference from Current Report on Form 8-K/A and filed with the Securities
                and Exchange Commission on August 9,
                2004).




10.5
            Funds
                Escrow
                Agreement dated July 2005, among Sunburst Acquisitions IV, Inc.,
                Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP, and Grushko
                & Mittman, P.C. (herein incorporated by reference from the Company’s
                current report on Form 8-K dated July 1, 2005 and filed with the
                Securities and Exchange Commission on August 17,
                2005).





10.6
            Repayment
                Agreement dated July 15, 2005 by and among Sunburst IV, Inc. and
                Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP. (herein
                incorporated by reference from the Company’s current report on Form 8-K
                dated July 1, 2005 and filed with the Securities and Exchange Commission
                on August 17, 2005).





10.7
            Consulting
                Agreement dated July 1, 2005 between Tracy A. Moore and Sunburst
                Acquisitions IV, Inc. (herein incorporated by reference from the
                Company’s
                current report on Form 8-K dated July 1, 2005 and filed with the
                Securities and Exchange Commission on August 17,
                2005).




10.8
            SHARE
                OPTION
                AGREEMENT among Minera Rio Tinto, S.A. de C.V. a corporation duly
                incorporated and validly existing pursuant to the laws of the United
                Mexican States and having an office at Pascual Orozco No. 2117 -
                A
                Chihuahua, State of Chihuahua, Mexico 31310 and Sunburst Acquisitions
                IV,
                Inc., a corporation duly incorporated and validly existing pursuant
                to the
                laws of the State of Colorado, USA and having an office at Suite
                206, 595
                Howe St., Vancouver, B.C. Canada V6C 2T5 (herein incorporated by
                reference
                from the Company’s report on Form 8-K for report date August 22, 2005 and
                filed with the Securities and Exchange Commission on August 25,
                2005).




10.9
            AGREEMENT
                made and entered in the City of Chihuahua, State of Chihuahua as
                of the
                18th day of August, 2005 among COMPAÑÍA MINERA DE NAMIQUIPA, S. A. DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States, and MINERA RIO TINTO, S. A. DE C. V.
                a
                company duly incorporated and validly existing pursuant to the laws
                of the
                United Mexican States, and MARIO HUMBERTO AYUB TOUCHE having a domicile
                at
                San Antonio No. 2036 Chihuahua, Chihuahua and SUNBURST MINING DE
                MÉXICO,
                S. A. DE C. V., a company duly incorporated and validly existing
                pursuant
                to the laws of the United Mexican States (herein incorporated by
                reference
                from the Company’s report on Form 8-K for report date August 22, 2005 and
                filed with the Securities and Exchange Commission on August 25,
                2005).




10.10
            AGREEMENT
                made and entered at the City of Chihuahua, State of Chihuahua on
                this the
                18th day of August of the year 2005, among MINERA RIO TINTO, S. A.
                DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States (herein incorporated by reference from
                the
                Company’s report on Form 8-K for report date August 22, 2005 and filed
                with the Securities and Exchange Commission on August 25,
                2005).




10.11
            OPERATOR’S
              AGREEMENT dated effective as of the 18th day of August, 2005, among
              Minera
              Rio Tinto, S.A. de C.V. a corporation duly incorporated and validly
              existing pursuant to the laws of the United Mexican States and having
              an
              office at Pascual




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 Table
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Orozco
                No.
                2117 - A Chihuahua, State of Chihuahua, Mexico 31310, and Sunburst
                de
                Mexico, S.A. de C.V. a corporation duly incorporated and validly
                existing
                pursuant to the laws of the United Mexican States and having an office
                at
                Suite 5, Avenida del Mar No.1022 Zona Costera, Mazatlan, State of
                Sinaloa,
                Mexico (herein incorporated by reference from the Company’s report on Form
                8-K for report date August 22, 2005 and filed with the Securities
                and
                Exchange Commission on August 25,
                2005).




10.12
            ASSIGNMENT
                OF
                CONTRACT AGREEMENT made and entered in the City of Chihuahua, State
                of
                Chihuahua as of this the 18th day of August, 2005 among MINERA RIO
                TINTO,
                S. A. DE C. V. a company duly incorporated and validly existing pursuant
                to the laws of the United Mexican States, and CORPORATIVO MINERO,
                S.A. DE
                C.V. a company duly incorporated and validly existing pursuant to
                the laws
                of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States (herein incorporated by reference from
                the
                Company’s report on Form 8-K for report date August 22, 2005 and filed
                with the Securities and Exchange Commission on August 25,
                2005).




10.13
            ASSIGNMENT
                OF
                CONTRACT AGREEMENT made and entered in the City of Chihuahua, State
                of
                Chihuahua as of this the 18th day of August, 2005, among MINERA RIO
                TINTO,
                S. A. DE C. V. a company duly incorporated and validly existing pursuant
                to the laws of the United Mexican States, and RAFAEL FERNANDO ASTORGA
                HERNÁNDEZ, having a domicile at Calle República de Uruguay No. 706 of the
                City of Chihuahua, Chih, and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a
                company duly incorporated and validly existing pursuant to the laws
                of the
                United Mexican States (herein incorporated by reference from the
                Company’s
                report on Form 8-K for report date August 22, 2005 and filed with
                the
                Securities and Exchange Commission on August 25,
                2005).




10.14
            ASSIGNMENT
                OF
                CONTRACT AGREEMENT made and entered in the City of Chihuahua, State
                of
                Chihuahua as of this the 18th day of August, 2005 among MINERA RIO
                TINTO,
                S. A. DE C. V. a company duly incorporated and validly existing pursuant
                to the laws of the United Mexican States, having an office at Av.
                Pascual
                Orozco Number 2117- Altos, La Cima, C. P. 31310, Chihuahua, Chihuahua,
                and
                MINERA RACHASA, S.A. DE C.V., a company duly incorporated and validly
                existing pursuant to the laws of the United Mexican States, and having
                an
                office atNiños Héroes No. 410 Colonia Centro, Chihuahua, Chihuahua (RFC
                BMM-900120-8B6), and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a company
                duly incorporated and validly existing pursuant to the laws of the
                United
                Mexican States (herein incorporated by reference from the Company’s report
                on Form 8-K for report date August 22, 2005 and filed with the Securities
                and Exchange Commission on August 25,
                2005).




10.15
            THE
                NEW
                AGREEMENT entered into on December 8, 2005 among the Company, Sunburst
                Mexico, and MRT (herein incorporated by reference from the Company’s
                report on Form 8-K for report date December 8, 2005 and filed with
                the
                Securities and Exchange Commission on December 14,
                2005).





10.16
            CREATION
                OF A
                DIRECT FINANCIAL OBLIGATION AND UNREGISTERED SALES OF SECURITIES
                ON MARCH
                31, 2006 (herein incorporated by reference from the Company’s report on
                Form 8-K for report date March 31, 2006 and filed with the Securities
                and
                Exchange Commission on April 7,
                2006).





10.17
            AMENDMENT
                TO
                AGREEMENT ENTERED INTO ON DECEMBER 8, 2005, entered into on April
                6, 2006
                among Company, Sunburst Mexico, and MRT (herein incorporated by reference
                from the Company’s report on Form 8-K for report date April 6, 2006 and





36
 Table
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filed
              with
              the Securities and Exchange Commission on April 7, 2006).31.1
            Certification
                of Chief Executive Officer of Mexoro
                Minerals Ltd. pursuant to Rule 13a-14(a)/15d-14(a).
                *




31.2
            Certification
                of Chief Financial Officer of Mexoro
                Minerals Ltd. pursuant to Rule 13a-14(a)/15d-14(a).
                *




32.1
            Certification
                of Chief Executive Officer of Mexoro
                Minerals Ltd.. pursuant to 18 U.S.C. Section 1350.
                *




32.2
            Certification
                of Chief Financial Officer of Mexoro
                Minerals Ltd. pursuant to 18 U.S.C. Section 1350.
                *




*filed
      herewith








**SIGNATURE**





In
      accordance with
      the requirements of the Exchange Act, the registrant caused this report to
      be
      signed on its behalf by the undersigned, thereunto duly authorized.








**MEXORO
      MINERALS LTD.**











By:
      /S/ Robert
      Knight


Robert
      Knight,
      President and Director




Date:
      January 16,
      2007




37