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, 2007

_ 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.)

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

Colorado	0-23561	84-1431797
(State or other jurisdiction of incorporation)	Commission file number	(IRS Employer Identification No.)

C. General Retana #706 Col. San Felipe, Chihuahua, Chih., Mexico	C.P. 31203
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number:  (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 ____

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 issuers involved in bankruptcy proceedings during the preceding 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 ___

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: 25,405,502 at January 11, 2008.

Transitional Small Business Disclosure Format (Check one):

Yes __ No X

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in U.S. Dollars)

NOVEMBER 30, 2007

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Consolidated Balance Sheets

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

	November 30,			February 28,
	2007			2007
	(Unaudited)			(Audited)
Assets
Current
Cash and cash equivalents	$	859,394		$	13,148
Accounts receivable		289,375			165,897
Prepaid expenses		166,506			173,857
		1,315,275			352,902
Equipment (note 4)		354,514			351,335
Total assets	$	1,669,789		$	704,237
Liabilities
Current
Accounts payable and accrued liabilities	$	911,650		$	263,145
Current portion of loans payable (note 7)		66,358			25,400
Promissory notes (note 6)		1,072,521			109,337
		2,050,529			397,882
Loans payable (note 7)		36,581			36,863
Total liabilities		2,087,110			434,745
Stockholders’ deficiency
Capital stock
Preferred stock
Authorized: 20,000,000 shares without par value (note 8)
Issued: nil		-			-
Common stock
Authorized: 200,000,000 shares without par value
Issued: 25,380,502 (2007 – 21,036,102) (note 9)		22,978,654			19,304,277
Additional paid-in capital		11,006,077			8,702,096
Stock subscriptions		25,000			-
Accumulated deficit from prior operations		(2,003,427	)		(2,003,427	)
Accumulated deficit during the exploration stage		(32,420,175	)		(25,731,407	)
Other comprehensive income (loss)		(3,450	)		(2,047	)
Total stockholders’ equity (deficiency)		(417,321	)		269,492
Total liabilities and stockholders’ equity (deficiency)	$	1,669,789		$	704,237

Going concern (note 3)

Commitments (notes 5, 10, 11 and 13)

Subsequent events (note 14)

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

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Consolidated Statements of Operations and Deficit

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

													Period from
													Inception of
													Exploration
													Stage
	Three Months Ended						Nine Months Ended						(March 1, 2004)
	November 30,			November 30,			November 30,			November 30,			To November 30,
	2007			2006			2007			2006			2007
Expenses
General and administrative	$	529,511		$	160,496		$	1,821,633		$	958,256		$	3,831,272
Stock-based compensation (note 10)		630,603			487,250			2,303,981			1,709,750			5,571,186
Mineral exploration (note 5)		714,283			-			1,946,918			-			3,036,416
Acquisition of resource properties		580,000			333,050			580,000			937,548			16,145,422
Operating loss		(2,454,397	)		(980,796	)		(6,652,532	)		(3,605,554	)		(28,584,296	)
Other income (expenses)
Foreign exchange		(7,249	)		-			(4,311	)		-			(4,311	)
Interest expense		(28,796	)		-			(31,925	)		(2,320,973	)		(3,972,012	)
Interest income		-			12,395			-			36,513			-
Gain on settlement of debt		-			-			-			7,259			140,444
Net loss		(2,490,442	)		(968,401	)		(6,688,768	)		(5,882,755	)		(32,420,175	)
Accumulated deficit, beginning		(29,929,733	)		(23,252,727	)		(25,731,407	)		(18,338,373	)		-
Accumulated deficit, ending	$	(32,420,175	)	$	(24,221,128	)	$	(32,420,175	)	$	(24,221,128	)	$	(32,420,175	)
Other comprehensive income
Foreign exchange gain (loss) on translation		(12,448	)		26,653			(1,402	)		(4,252	)		(3,450	)
Total comprehensive loss	$	(2,502,890	)	$	(941,748	)	$	(6,690,170	)	$	(5,887,007	)	$	(32,423,625	)
Total loss per share– basic and diluted	$	(0.10	)	$	(0.05	)	$	(0.30	)	$	(0.33	)	$	-
Weighted average number of shares of common stock – basic and diluted		23,935,659			21,036,102			22,484,877			18,015,181			-

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

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

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

							Period from
	Nine Months Ended						Inception of
	November 30,			November 30,			Exploration to
	2007			2006			November 30, 2007
Cash flows from operating activities
Net loss	$	(6,688,769	)	$	(5,882,755	)	$	(32,420,174	)
Adjustments to reconcile net income (loss) to net cash flows
Write off of note receivable		-			-			57,500
Acquisition of resource properties for stock		580,000			-			13,645,000
Issuance of shares for consulting services		-			-			90,000
Depreciation		47,827			15,192			72,756
Discount on convertible debenture		-			-			175,000
Non-cash component of gain on settlement of debt		-			-			(182,259	)
Stock-based compensation		2,303,981			1,709,750			7,094,186
Beneficial conversion feature		-			2,265,500			3,717,500
Prepaid expense		11,293			20,779			(157,661	)
Accounts receivable		(121,643	)		(154,132	)		(277,759	)
Customer deposits		-			-			(44,809	)
Notes payable		-			-			109,337
Accounts payable and accrued liabilities		1,087,507			39,834			1,335,718
Cash used in operating activities		(2,779,803	)		(1,985,832	)		(6,785,665	)
Investing activity
Purchase of property and equipment		(44,011	)		(149,657	)		(420,275	)
Cash used in investing activity		(44,011	)		(149,657	)		(420,275	)
Financing activities
Proceeds from loans payable		39,404			-			114,752
Proceeds from notes payable		518,392			-			1,081,192
Proceeds from convertible debentures		-			2,240,500			3,692,500
Proceeds from exercise of options		-			-			78,000
Proceeds from exercise of warrants		3,094,377			50,000			3,144,377
Repayment of loans payable		-			-			(13,085	)
Repayment of notes payable		-			-			(178,500	)
Repayment of convertible debentures		-			-			(530,000	)
Stock subscriptions		25,000			(170,000	)		195,000
Issuance of common stock		-			375,000			477,109
Cash provided by financing activities		3,677,173			2,495,500			8,061,345
Net change in cash		853,359			360,011			855,405
Effect of foreign currency translation on cash		(7,113	)		3,201			(18,088	)
Cash and cash equivalents, beginning		13,148			479,530			22,077
Cash and cash equivalents, ending	$	859,394		$	842,742		$	859,394
Supplemental cash flow information
Interest paid	$	-		$	55,473		$	162,157
Common stock issued on conversion of debt		-			2,917,500			3,217,500
Common stock issued on settlement of notes payable		-			412,800			412,800
Shares issued for services		500,000			-			590,000

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

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

1.   BASIS OF PRESENTATION

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

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

On May 25, 2004, the Company completed a share exchange transaction with Sierra Minerals and Mining, Inc. (“Sierra Minerals”), a Nevada corporation, which caused Sierra Minerals to become a wholly-owned subsidiary of the Company. Sierra Minerals held certain rights to properties in Mexico that the Company now owns or has an option to acquire. Through Sierra Minerals, the Company entered into a joint venture agreement with Minera Rio Tinto, S.A. de C.V. (“MRT”), a company duly incorporated pursuant to the laws of the United Mexican States, which is controlled by an officer of the Company. In August 2005, the Company cancelled the joint venture agreement in order to directly pursue the mineral exploration opportunities through a wholly-owned Mexican subsidiary, Sunburst Mining de Mexico S.A. de C.V. (“Sunburst de Mexico”). On August 25, 2005, Sunburst de Mexico, Mexoro and MRT entered into agreements providing Sunburst de Mexico the right to explore and exploit certain properties in Mexico. In December 2005, the Company and Sunburst de Mexico entered into a new agreement with MRT (note 5). On January 20, 2006, Sierra Minerals was dissolved.

The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information and with the instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended November 30, 2007 are not necessarily indicative of the results that may be expected for the year ending February 29, 2008. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-KSB for the year ended February 28, 2007.

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

2.   SIGNIFICANT ACCOUNTING POLICIES

(a)   Recent accounting pronouncements

(i)   In February 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140” (“SFAS 155”). 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 155 clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement No. 133. It also clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives. SFAS 155 amends Statement No. 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 did not have a material effect on the Company’s results of operations or financial position.

(ii)   In September 2006, the United States Securities and Exchange Commission (“SEC”) released SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108 provides interpretive guidance on the SEC’s views on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The Company adopted SAB 108 during the fourth quarter of 2006. The adoption did not have a material impact on the Company’s financial position, cash flows or results of operations.

(iii)   In September 2006, FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”).  SFAS 157 provides guidance for using fair value to measure assets and liabilities.  It clarifies that for items that are not actively traded, such as certain kinds of derivatives, fair value should reflect the price in a transaction with a market participant, including adjustment for risk, not just the company’s mark-to-model value.  SFAS 157 also requires expanded disclosure of the effect on earnings for items measured using unobservable data.  Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.

-7-

MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a)            Recent accounting pronouncements (continued)

(iv)   In July 2006, FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109.  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, and also 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. FIN 48 is effective for financial statements issued for fiscal years beginning after December 15, 2006.  The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

(v)   On February 15, 2007, the FASB issued SFAS Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). This Statement permits companies and not-for-profit organizations to make a one-time election to carry eligible types of financial assets and liabilities at fair value, even if fair value measurement is not required under US GAAP. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the effect of the adoption of SFAS 159.

3.   GOING-CONCERN

The accompanying consolidated 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, 2007, the Company had working capital deficiency of $735,254 (February 28, 2007 – working capital deficiency of $44,980) and a cumulative loss during the exploration period of $32,420,175 (February 28, 2007 - $25,731,407). 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 planned Mexican mining ventures (note 5).  In addition, the Company has conducted private placements of convertible debt and common stock (note 9), which have generated a portion of the initial cash requirements of its planned Mexican mining ventures (note 5).

-8-

MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

4.   EQUIPMENT

	November 30, 2007			February 28,
				2007
	Cost	Accumulated Depreciation	Net Book	Net Book
			Value	Value
Software	$     23,774	$      14,179	$      9,595	$       15,521
Machinery	204,191	13,877	190,314	213,219
Vehicles	151,144	34,902	116,242	87,747
Computers	29,693	8,179	21,514	19,202
Office equipment	18,821	1,972	16,849	15,646
	$   427,623	$      73,109	$  354,514	$     351,335

5.   MINERAL PROPERTIES

The Company incurred exploration expenses as follows in the nine months ended November 30, 2007:

	Cieneguita	Sahuayacan	Guazapares	San Antonio	San Francisco	Encino Gordo	Total
Drilling and sampling	$  94,476	$336,454	$320,992	$         -	$-	$          -	$  751,922
Geological, geochemical, geophysics	33,585	82,406	34,478	-	-	62,926	213,395
Land use permits	77,109	75,650	8,477	431	30,265	2,078	194,010
Automotive	8,189	65	1,125	-	-	-	9,379
Travel	21,268	15,103	27,567	-	-	6,708	70,646
Consulting	175,335	30,519	106,206	-	-	19,812	331,872
Equipment	80,644	-	18,875	-	-	2,568	102,087
General	157,280	-	115,854	-	-	474	273,608
	$647,886	$  540,197	$  633,574	$   431	$ 30,265	$94,565	$ 1,946,918

-9-

MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

5. MINERAL PROPERTIES (CONTINUED)

The Company incurred exploration expenses as follows in the nine months ended November 30, 2006:

	Cieneguita	Sahuayacan	Guazapares	San Antonio	San Francisco	Encino Gordo	Total
Geological, geochemical, geophysics	$  88,726	$1,039	$1,264	$      -	$        -	$910	$91,939
Land use permits	90,890	46,904	31,409	1,080	22,187	24,369	216,839
Automotive	35,760	3,464	2,562	-	-	-	41,786
Travel	16,623	5,932	9,330	-	-	53	31,938
Consulting	232,139	21,774	39,438	-	-	-	293,351
Equipment	13,827	36,276	6,390	-	-	586	57,079
General	149,691	43,535	10,011	-	-	1,379	204,616
	$627,656	$158,924	$100,404	$1,080	$22,187	$27,297	$937,548

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

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

In August 2005 the parties also entered into an operator’s agreement, that gave MRT the sole and exclusive right and authority to manage the Cieneguita Property, and a share option agreement which granted MRT the exclusive option to acquire up to 100% of all outstanding shares of Sunburst de Mexico if the Company did not comply with the terms of the property agreements. The operating agreement and share option agreement were subsequently cancelled.

-10-

MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

5. MINERAL PROPERTIES (CONTINUED)

The material provisions of the property agreements are as follows:

Cieneguita

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

The Company has the obligation to pay a further $120,000 per year for the next 13 years and the balance of the payments in the 14th year, until the total amount of $2,000,000 is paid. The Company renegotiated the payment due May 6, 2007, to $60,000 payable on November 6, 2007, which was paid and the balance of $60,000 payable on December 14, 2007.

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

Guazapares

MRT assigned to Sunburst de Mexico, with the consent of the Guazapares Property owner Compañía Minera, S.A. de C.V. (“Compañía Minera”), MRT’s rights and obligations concerning the Guazapares Property, including the exclusive option, for a term of four years, to purchase seven of the Guazapares Property concessions upon payment of $810,000. The total payments for the Company to acquire and retain 100% ownership of all eight concessions are as follows: October 31, 2006 - $60,000 (this payment date was extended to February 28, 2007, then to May 31, 2007 and then to August 31, 2007- see below), August 2, 2007 - $140,000 (see below), August 2, 2008 - $110,000 and August 2, 2009 - $500,000.

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

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

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

-11-

MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

5. MINERAL PROPERTIES (CONTINUED)

San Francisco (Guazapares)

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

To maintain the option, Sunburst de Mexico assumed the obligation to pay to the San Francisco owner cumulative annual payments totaling $90,000. The payments are: $20,000 on June 25, 2006 (paid); $30,000 on June 25, 2007 (paid); and $40,000 on June 25, 2008.

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

San Antonio (Guazapares)

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

To maintain the option, Sunburst de Mexico assumed the obligation to pay to the San Antonio owner cumulative annual payments. The remaining payments are: $30,000 on January 15, 2007 (paid), $50,000 on January 15, 2008 and $50,000 on January 15, 2009.

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

Encino Gordo

Sunburst de Mexico purchased two of the Encino Gordo concessions from MRT for a price of 1,000 pesos (approximately U.S. $100), and MRT assigned to Sunburst de Mexico a first right of refusal to acquire three additional Encino Gordo concessions. The total payments to acquire 100% of these three additional concessions are as follows: $10,000 on June 30, 2006 (paid); $25,000 on December 31, 2006 (paid), $50,000 on December 31, 2007, $75,000 on December 31, 2008 and $100,000 on December 31, 2009.

-12-

MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

5. MINERAL PROPERTIES (CONTINUED)

Sahauyacan

On October 24, 2006, Sunburst de Mexico entered into an exploration and sale option agreement of mining concessions with Minera Emilio for mineral concessions of the Sahauyacan Property. Minera Emilio granted the Company the exclusive right to conduct exploration on the Sahauyacan Property and the Company must pay $282,000 in the following manner: $20,000 on date of signing agreement (paid); $10,000 due December 1, 2006 (paid); $2,500 per month effective from August 21, 2006 to July 21, 2007, for a total of $30,000 (paid); $3,500 per month effective from August 21, 2007 to August 21, 2008 for a total of $45,500 (all payments up to date); $5,000 per month effective September 21, 2008 to July 21, 2011 for  a total of $175,000 and $1,500 on August 21, 2011.

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

The following are additional material terms of the New Agreement:

(a)   The share option agreement with MRT was cancelled;

(b)   The Company granted MRT the option to buy all of the outstanding shares of Sunburst de Mexico for $100 if the Company failed to transfer $1,500,000 to Sunburst de Mexico by April 30, 2006. On April 6, 2006, MRT agreed to waive its option to purchase the shares of Sunburst de Mexico and also waived the Company’s obligation to transfer $1,500,000 to Sunburst de Mexico;

(c)   The property agreements were modified to change the NSR to a maximum of 2.5% for all properties covered by the agreements. The property agreements contained NSRs ranging from 0.5% to 7%;

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

(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; and,

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

-13-

MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

6.   PROMISSORY NOTES

As at November 30, 2007, the Company had $1,072,521 (February 28, 2007 - $109,337) of promissory notes outstanding:

During the nine months ended November 30, 2007, the Company converted accounts payable of $452,852 into promissory notes. The interest rate on the notes is 7.5% p.a. payable semi-annually. The principal and interest on the notes become due and payable on April 30, 2008.

Promissory notes in the amount of $619,669 are due to related parties and close associates that bear no interest and have no terms of repayment (see note 12).

7.   LOANS PAYABLE

As at November 30, 2007 there were loans payable in the amount of $102,939 of which $66,358 is a current liability and $36,581 is a long-term liability. The loans are repayable in monthly instalments of $7,630 including interest ranging from 10.24% to 15.6% per annum and are secured by specified automotive equipment.

8.   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.

9.   COMMON STOCK

In the nine months ended November 30, 2007, the Company issued 1,000,000 shares of common stock on the exercise of 1,000,000 warrants where each warrant was exercisable into shares of common stock at the price of $0.50 per share. The warrants were to expire on June 30, 2007.

In the nine months ended November 30, 2007, the Company issued 1,000,000 shares of common stock on the exercise of 1,000,000 warrants where each warrant was exercisable into shares of common stock at the price of $0.75 per share. The warrants were to expire on December 31, 2007.

In the nine months ended November 30, 2007, the Company issued 670,000 shares of common stock on the exercise of 670,000 warrants where each warrant was exercisable into shares of common stock at the price of $1.00 per share. The warrants were to expire on December 31, 2007.

In the nine months ended November 30, 2007, the Company issued 1,174,000 shares of common stock on the exercise of 1,174,400 warrants where each warrant was exercisable into shares of common stock at the price of $1.00 per share. The warrants were to expire on April 30, 2008.

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

9. COMMON STOCK (CONTINUED)

In the nine months ended November 30, 2007, the Company issued 250,000 shares of common stock pursuant to an agreement in consideration of deferral of any and all Guazapares property payments currently outstanding and those arising on or before December 31, 2007. The shares were valued at $1.16 per share, based on the closing quoted market price on September 18, 2007.

In the nine months ended November 30, 2007, the Company issued 250,000 shares of common stock pursuant to Encino Gordo contract. The shares were valued at $1.16 per share, based on the closing quoted market price on September 18, 2007.

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

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

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

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

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

10.   STOCK COMPENSATION PROGRAM

On February 26, 2007 the board of directors approved the granting of stock options according to a Nonqualified Stock Option Plan (“NQSO Plan”). This stock option plan has the purpose (a) to ensure the retention of the services of existing executive personnel, key employees and directors of the Company or its affiliates; (b) to attract and retain competent new executive personnel, key employees, consultants and directors; (c) to provide incentive to all such personnel, employees, consultants and directors to devote their utmost effort and skill to the advancement and betterment of the Company, by permitting them to participate in the ownership of the Company and thereby in the success and increased value of the Company; and (d) allowing vendors, service providers, consultants, business associates, strategic partners, and others, with or that the board of directors anticipates will have an important business relationship with the Company or its affiliates, the opportunity to participate in the ownership of the Company and thereby to have an interest in the success and increased value of the Company.

This plan constitutes a single “omnibus” plan, but is composed of two parts. The first part is the NQSO Plan, which provides grants of nonqualified stock options. The second part is the Restricted Shares Plan (“Restricted Shares Plan”) which provides grants of restricted shares of Company common stock (“Restricted Shares”). The maximum number of shares of common stock that may be purchased under the plan is 6,000,000.

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

10. STOCK COMPENSATION PROGRAM (CONTINUED)

Pursuant to a consulting agreement between the Company and GM Capital Partners Inc. (“GM Capital”), signed January 31, 2006, the Company granted 5,000,000 warrants (Series A to E, see note 11). The consulting agreement provides for the provisions of financial public relations services from December 1, 2005 to November 30, 2007. The fair value of the 5,000,000 warrants totalled $3,898,000 and was determined using the Black-Scholes option pricing model using weighted averages: 2.38 year expected life of the warrants, a volatility factor of 152%, a risk-free rate of 5% and an assumed dividend rate of 0% The weighted average fair value of the warrant was $0.78 per warrant, while the weighted average stock price on the dates granted was $1.00. The fair value will be amortized over the 24-month term of the contract and the Company will record $487,250 as a stock-based compensation expense and an offsetting credit to additional paid-in capital every quarter until November 30, 2007.

In the nine months ended November 30, 2007, the Company awarded 1,890,000 options to purchase common shares (2006 – $nil) and recorded stock-based compensation expense of $825,232 (2006 - $248,000). The weighted average fair value of each option granted for the nine months ended November 30, 2007 was $0.89. The following weighted average assumptions were used for the Black-Scholes option-pricing model used to value stock options granted in 2007 and 2006:

	2007	2006
Expected volatility	67% - 73%	152%
Weighted-average volatility	71%	152%
Expected dividend rate	-	-
Expected life of options in years	3 - 10	10
Risk-free rate	4.60%	5.00%

There were no capitalized stock-based compensation costs at November 30, 2007 or November 30, 2006.

The summary of option activity under the stock option plan as of November 30, 2007, and changes during the period then ended is presented below:

	Weighted-		Number of			Weighted-		Aggregate
	Average		Shares			Average		Intrinsic
	Exercise					Remaining		Value
	Price					Contractual
Options						Term
Balance at February 28, 2007	$	0.54		910,000
Options granted		1.10		1,890,000
Options exercised		-		-
Options cancelled	$	1.23		(291,667	)
Balance at November 30, 2007	$	0.88		2,508,333			8.20	$	605,100
Exercisable at November 30, 2007	$	0.74		1,451,667			8.06	$	552,450

The weighted-average grant-date fair value of options granted during the nine months ended November 30, 2007 and November 30, 2006 was $0.90 and $nil, respectively.

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

10. STOCK COMPENSATION PROGRAM (CONTINUED)

A summary of the status of the Company’s nonvested options as of November 30, 2007, and changes during the nine month period ended November 30, 2007, is presented below:

				Weighted-average
				grant-date
Non-vested options	Shares			fair value
Nonvested at February 28, 2007		200,000		$	1.24
Granted		1,890,000			0.72
Vested		(741,667	)		1.11
Nonvested at November 30, 2007		1,348,333		$	0.86

As of November 30, 2007, there was an estimated $824,651 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the NQSO Plan. That cost is expected to be recognized over a weighted-average period of approximately 1.88 years. The actual amount of future stock-based compensation will be dependent on the Company stock price at future vesting dates.

11.   WARRANTS

As at November 30, 2007, the Company had a total of 4,486,100 (February 28, 2007 – 8,217,500) 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 4,486,100 shares of common stock in the event that these warrants are exercised.

During the nine months ended November 30, 2007, the Company issued 113,000 warrants under a ‘Promissory Note and Warrant Purchase Agreement’, where one warrant is issued for each CHF5.00 of promissory notes issued. The warrants can be exercised at any time beginning on April 1, 2008 and prior to January 31, 2010. The fair value of the 113,000 warrants totalled $64,000 and was determined using the Black-Scholes option pricing model using weighted averages: 1.83 years expected life of the warrants, a volatility factor of 68%, a risk-free rate of 3.66% and an assumed dividend rate of 0% The weighted average fair value of the warrant was $0.57 per warrant, while the weighted average stock price on the date granted was $1.26. Stock-based compensation for these warrants of $64,000 is being amortized over the six month term of the promissory notes starting on October 17, 2007.

During the nine months ended November 30, 2007, there were 3,844,400 warrants exercised for gross proceeds of $3,094,377.

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. All the Warrants were fully vested upon issuance. The series C Warrants are exercisable at any time following their issuance but will expire on December 31, 2007 to the extent they are not exercised. The remaining series of Warrants will become exercisable only at the time that the immediately preceding series has been fully exercised.

Unless terminated earlier as a result of failure to vest, the Series D and Series E Warrants will each expire on December 31, 2008.

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

11. WARRANTS (CONTINUED)

The fair value of the 5,000,000 warrants totalled $3,898,000 and was determined using the Black-Scholes option pricing model using weighted averages: 2.38 year expected life of the warrants, a volatility factor of 152%, a risk-free rate of 5% and an assumed dividend rate of 0% The weighted average fair value of the warrant was $0.78 per warrant, while the weighted average stock price on the dates granted was $1.00. The fair value has been amortized over the 24-month term of the contract and the Company has recorded $487,250 as a stock-based compensation expense and an offsetting credit to additional paid-in capital every quarter until November 30, 2007.

The Company has also issued 2,917,500 warrants exercisable at $1.00 each pursuant to the issuance of convertible debentures. These warrants expire on April 30, 2008, are redeemable by the Company, at $0.01 per share, in the event the Company’s common stock closes with a bid price, on average, over $3.00 per share for a consecutive 20 day period and are settled on a physical basis. On August 10, 2006, 50,000 warrants were exercised into 50,000 shares of common stock at a price of $1.00 per share. On August 15, 2006, 25,000 warrants were cancelled due to non-payment of funds with respect to a convertible debt subscription in the amount of $25,000.

The Company has also issued 375,000 warrants exercisable at $1.00 each pursuant to the issuance of a private placement unit offering (note 9). These warrants expire on April 30, 2008, are redeemable by the Company, at $0.10 per share, in the event the Company’s common stock closes with a bid price, on average, over $3.00 per share for a consecutive 20 day period and are settled on a physical basis.

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

	Number of warrants			Weighted average exercise price ($)
Balance, February 28, 2006		5,652,000			1.00
Issued		2,640,500			1.00
Cancelled		(25,000	)		1.00
Exercised		(50,000	)		1.00
Balance, February 28, 2007		8,217,500			1.00
Issued		113,000			1.00
Cancelled		-			-
Exercised		(3,844,400	)		0.80
Balance November 30, 2007		4,486,100			1.17

As at November 30, 2007, the following share purchase warrants were outstanding:

Number of Warrants	Exercise Price	Expiry Date
330,000	$ 1.00	December 31, 2007
2,043,100	$ 1.00	April 30, 2008
1,000,000	$ 1.25	December 31, 2008
1,000,000	$ 1.50	December 31, 2008
113,000	$ 1.00	January 31, 2010
4,373,100

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MEXORO MINERALS LTD.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Nine Months Ended November 30, 2007

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

12.   RELATED PARTY TRANSACTIONS

For the nine months ended November 30, 2007, the Company paid or accrued management fees of $99,000 (November 30, 2006 - $158,900) to certain officers and directors and to companies controlled by directors. The Company also paid or accrued $64,938 (November 30, 2006 - $38,000) to certain officers and directors and to companies controlled by directors for travel, office and other related expenses.

As at November 30, 2007, accounts payable of $53,580 (November 30, 2006 - $nil) were owing to companies controlled by directors. In addition, promissory notes of $252,669 (November 30, 2006 - $nil) were owed to companies controlled by directors (note 6).

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

13.   COMMITMENTS

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

14.   SUBSEQUENT EVENTS

a)   Change of auditor

Subsequent to November 30, 2007,SmytheRatcliffe Chartered Accountants resigned as the auditor for the Company. On December 7, 2007, the Company’s board of directors appointed the firm of Meyler & Company, LLC, located at One Arin Park, 1715 Highway 35, Middletown, NJ 07748, as the independent auditor of the Company for the fiscal year ending February 28, 2008.

b)   GM Capital warrants

On December 31, 2007, GM Capital indicated intent to exercise the remaining 330,000 Series C warrants at $1.00. These warrants expire on December 31, 2007. The shares will be issued as payment towards a portion of debt.

c)   Consulting Agreement

On December 20, 2007, the Company entered into an agreement (‘Consulting Agreement’) with MCSI Consulting ServicesInc. for corporate financial advisory services. The Consulting Agreement can be terminated by either party by providing seven days written notice.

d)   Options granted

On December 20, 2007, the Company granted 25,000 stock options to Salil Dhaumyaas part of the Consulting Agreement with MCSI Consulting Services Inc. The fair value of the 25,000 stock options amount to $18,000 and is determined using the Black-Scholes option pricing model using weighted averages: 10year expected life of the options, a volatility factor of 69.94%, a risk-free rate of 4.04% and an assumed dividend rate of 0%.

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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 Operations" 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 United States Securities and Exchange Commission (the “SEC”), particularly our annual reports on Form 10-KSB, our quarterly reports on Form 10-QSB and our current reports on Form 8-K.

Overview

We are a start-up exploration stage company and have not yet generated or realized any revenues from our exploration projects, which commenced in May 2004. As of November 30, 2007 we had $859,000 in our bank account and do not have sufficient cash to maintain our operations after January 2008. Currently, officers of the Company are providing the necessary working capital to maintain our current operations. The funds coming from the officers are interest free loans with no terms of repayment and unsecured. The officers are committed to providing the necessary working capital for the Company to keep its operations going until January 2008, but they are not contractually obligated to do so. It is unlikely that the officers of our Company can contribute additional working capital after January 2008. If no additional capital is raised prior to the end of January 2008, we will most likely have to cease operations. Furthermore, 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 have raised sufficient funds in our private placement offering and loans from our officers to allow us to continue in business until January 2008, we may not be able to continue in business beyond that date unless we obtain additional capital. We have not generated any revenues, and no revenues are anticipated unless and until mineralized material is discovered on the properties in which we have an interest. We do not have any arrangements in place at this time to raise additional capital for the Company other than non-binding commitments from the officers of our company to provide working capital as needed.

For the 12 month period from December 2007 to November 2008, we will need to raise additional capital to maintain operations. We will need to raise a minimum of $550,000 for property payments and an additional $1,400,000 for general and administrative costs.This does not include any capital to execute our exploration programs as detailed below. The following table shows our contractual property payments that are due until November 2008:

Name	Date	Payment Type	USD
Encino Gordo Property	December 31, 2007 (paid)	Property payment	$50,000
San Antonio	January 2008	Property payment	$50,000
San Francisco	June 2008	Property payment	$40,000
Sahauyacan Property	August 2008	Property payments	$180,000
Guazapares Property	August 31, 2008*	Property payment	$110,000
* extension agreement1
Cieneguita Property	October 2008	Property payment	$120,000

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Additionally, if our exploration during the 12 month period from December 2007 to November 2008 is successful, we will 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 additional 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. We do not have any sources of additional capital to fund our operations beyond January 2008. We also believe that we will not generate any revenues that would allow us to continue operations. If we are unable to raise additional capital through debt or equity beyond January 2008, it is most likely that we will have to cease operations and forfeit our properties as we would be unable to make the necessary property payments.

We plan to buy a plant or significant equipment within the next six months. To date, we have spent approximately $550,000 of our $2,200,000 budget for equipment and building a plant to put the Cieneguita Property into production. Our ability to buy the remaining 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

Summary

Our business plan is to proceed with the exploration of our Mexican mineral properties to determine whether they contain commercially exploitable reserves of gold, silver or other metals. We do not have sufficient capital to fund our current exploration plans or to meet our monthly general and administrative costs. Our officers have committed to lend additional capital to the Company pursuant to non-interest bearing unsecured loans with no terms of repayment. The officers are under no contractual obligation to provide these funds. The funds should be sufficient to enable the Company to operate until the end of January 2008.  After that time, we will neither have sufficient funds to continue our exploration plans nor funds for general administrative expenses.  As a minimum, we will need to raise additional working capital to maintain basic operations. We would plan to raise those funds through the sale of equity or debt. At this time we do not have any sources to raise additional capital for the company and no assurance can be given that we will be able to find sources to raise additional capital. Failure to raise any additional capital would most likely require us to cease operations and abandon all of our exploration ventures.

In the event that our exploration program finds 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 following the results of our current exploration program.

We are not involved in any research and development on our exploration properties. We have no known reserves on the Cieneguita property, but in anticipation of favourable results, we plan to put the property into production, subject to the availability of funding. As there is a high demand for mining and milling equipment, we paid a deposit of $25,000 towards the purchase of milling equipment on February 28, 2007 and anticipate building a processing plant at our Cieneguita Property over the next six months, assuming we can raise the necessary capital to proceed. We have the necessary permits in place to construct such a plant in the city of Chihuahua, Mexico.

In the event we purchase milling equipment and do not find sufficient ore reserves on the Cieneguita Property, we may lose all of our capital investment. In that event, we would try to re-sell the equipment we purchase, but no assurances can be given that we would be able to sell the equipment at a price to recover close to our original investment, or at all.

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

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

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

In the event that we should find a mineable reserve, it is management’s intention to contract the mining and milling of ore reserves out to third parties. As we plan to put the Cieneguita Property into production in the next six months, we anticipate hiring one mine manager to oversee the work done by the third party contractors. We do not have any known reserves at this time.

Cieneguita Property

Based on the data obtained from the previous exploration programs and mining records from Glamis Gold Ltd. (“Glamis Gold”), our exploration program, planned until the end of March 2008,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. The following steps summarize the exploration we have done to date on the Cieneguita Property, as well as our plans.

1.            Phase 1 Exploration.

Budget: We expected phase 1 of the exploration program to cost approximately $200,000. From January 2006 to February 2007 we spent approximately $400,000, double the budgeted amount, on phase 1 exploration of this project. Of this, $300,000 was spent on the trenching, sampling and assaying on the property. We also spent approximately $50,000 on column testing to determine the leachability of the ore. The balance of the funds was spent in wages, camp costs and general administrative costs. The funds that were expended came from our general working capital. We have recently completed additional column testing to determine the leachability of the ore. The cost for these additional tests was approximately $25,000. The funds required for these additional tests came from general working capital.

Milestones: The milestones for phase 1 of the exploration program included the review of available data to create a structural mineralization framework, detailed soil and rock sampling, resampling existing trenches, the extension of existing trenches and the creation of new trenches. We also conducted cyanide testing on the rock to determine the best method of leaching the precious metals from the rock. We have completed phase 1 of our exploration program.

In April 2006, we completed a sampling of the property that included more than 500 meters of deep trenches from which we took comprehensive channel sampling. The trenches comprised eight trenches approximately 200 meters long and two to 10 meters deep spaced equally along the 1,000 meter strike length of the property. From the walls of these trenches, we took approximately 550 rock samples. One half of these samples were sent to ALS Chemex’s laboratory in Chihuahua for assaying. The sampling protocol followed the best mining practices.The purpose of the sampling was to further define the ore grade and potential of the property. We also completed detailed soil sampling and rock sampling outside of the trenches.

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In December 2006, we completed a detailed mapping of the property using existing information and drill results from previous operators, as well as incorporating our own data. To this end, we have created a structural mineralization framework for the property. We do not have any proven reserves on this property.

The other half of the sample was used to complete column tests to determine the leachability of the precious metals from the rock. In this test, the ore was placed in PVC tubes and different mixtures of a cyanide solution were dripped over the top of the columns at different flow rates. The results from these tests will help determine the most effective solution to be used on the heap leach pads on the property. These tests were done by qualified geologists employed by MRT as part of our former office rental package costs. The tests were scientifically conducted and monitored for quality control and efficacy. These tests were done to ensure that the metallurgy of the minerals allows for economic recovery of the precious metals using a cyanide heap leach process. The results of the column test indicate that up to 98% of the gold contained in the ore samples we took could be recovered from the ore,if the ore is leached for long enough periods. Under actual mining production conditions in the field, though, we would anticipate that the economic recovery levels of the ore would be approximately 70% to 75% recovery of gold from the ore. The cost of the cyanide needed to produce the additional gold above the 85% level outweighs the value of the gold recovered. We cannot guarantee that we would be able to achieve this level of recovery. This is not an estimate of reserves on the property.

Additional tests will be needed to determine the most effective crush size of the ore, the most cost effective flow rates of the cyanide and most economical leaching time to be undertaken if we should ever put the property into production. We hope that these tests will help us optimize the potential for extracting precious metals from the ore for the mining operation.

We have received the results of the sampling programs and after review of the material, including the results of our column tests, management has determined that it is warranted to continue exploration on the property in phase 2 to delineate ore grade material for a heap leach open pit mining operation. We do not intend to implement a feasibility study for the property.

2.            Phase 2 Exploration

Budget: Under the direction of our VP of Exploration, we commenced phase 2 of our exploration program in April 2007, which was completed in July 2007. We budgeted $585,000 for the phase 2 exploration; including $50,000 for an additional geochemical sampling program and $50,000 for general administrative expenses.We have spent a total of $123,000 on this phase of exploration.

Milestones: Phase 2of exploration was designed to identify new veins and/or mineralized zones. The geological mapping and sampling activities carried out within phase 2 of the exploration program at Cieneguita has resulted in the discovery of high grade gold zones in three different locations along Cieneguita’s mineralized body. The three new high grade gold locations have been identified just on the outlined limit of the known mineralized body opening the potential to the southeast in the Pit 1 South area, to the north in the Central area and to the north in the Pit 2 area, respectively.

According to our VP of Exploration, the results from the last mapping and sampling campaign provided evidence that the potential for the discovery of new areas with gold grades still remains open as shown by the discovery of the Pit 1 South, Central and Pit 2 North areas. This exploration program,consisting of detailed mapping and sampling on these three newly discovered zones, was completed in August 2007.

Our lead geologist, in conjunction with management and our VP of Exploration, believes that the sampling results warrant putting the property into production even though we have not conducted any feasibility study on the property. Management believes that the cost of a feasibility study is too expensive to undertake relative to the estimated size of the mineralization. Furthermore, we have determined, based on the results of the sampling, that continued exploration on the property, is warranted to further delineate the mineralization to be used in the heap leach open pit mining operation. We will be concurrently conducting further exploration on the property and beginning the process of putting the mine into production. We have not determined if there are any known reserves on this property to date.

3.            Phase 3 Exploration

Budget: We budgeted $570,000 for the cost of a 3,000 meter drilling program, including assaying and supervision.

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Milestones: The objectives for phase 3 of the exploration plan are to initiate a drill program from phase 2 of the exploration plan in order to further delineate the oxide ore mineralization and define and plan where to mine the ore. We have completed phase 2 of the exploration plan.

At the recommendation of our VP of Exploration, we have initiated a drill program consisting of 3,000 meters of reverse circulation drilling. The drilling program at Cieneguita commenced on December 18, 2007 and we anticipate it to continue until approximately the middle of March 2008. We have a drilling contract in place with GDA Servicios Mineros y de Exploration, a Chilean drilling contractor.

The purpose of this program is to test the sulphide body that has been identified from previous drilling to be underneath the oxide body which runs from surface to a depth of 20 meters. We hope that the results from this program will help us to better delineate the mineralization of the oxide zone, provide an ore reserve calculation and to determine how the gold is distributed through the sulphide ore body and the controls of that ore body. Previous drilling on this property stopped at a 100 meter depth and encountered mineralization of 2,4 g/t Au. Another previous hole stopped in mineralization at a depth of 300 meters and returned values of 170 g/t Ag at that depth.

The drill program is designed to further test new high grade zones that have been found in recent exploration of Pit 1 and Pit 2. These high grade zones include a two meter channel sample located 75 meters to the NE of the known Pit 1 area which has a value of 31.6 g/t Au. This high-grade gold sample is part of the NE Pit 1 area, a 20 meter expose area averaging 5.43 g/t Au.

We do not intend to implement a feasibility study for the property in this phase of exploration. Six of the drill holes will be drilled to a depth of 200 meters to test the sulphide potential of the mineral system.  The use of these deep holes will help us determine if there is an extension to the oxide mineralization in the underlying sulphides. Our on-site geologist will determine where the holes are to be drilled based on our earlier exploration and mapping of the property. Even though the rock is fractured, the objective of the drill program will be to provide us with accurate information to make an ore calculation of the grade of the ore and the size of the mineralized zones. The funds for this drilling program will come from general working capital on hand. We have not determined any known reserves on this property to date.

If the exploration program does not provide us with the results we deem necessary to continue exploration, then, on a recommendation from our senior geologist, or our VP of Exploration and managements’ concurrence on his findings, we will cease exploration on the property and any plans to put the property into production. If no further exploration is warranted, then we will discontinue any payments to the concession holders and allow our option to lapse. We will also then try to sell the mining equipment we recently purchased.  If we allow the option to lapse, we will be obligated, by the Mexican Government, to complete some reclamation work on the property of approximately $50,000. These funds would come from the bond we have already paid to the government in the amount of $67,000. Any funds not expended on reclamation would be returned to us by the Government. All of the money that we had invested in the exploration of the  Property could be lost.

We have two geologists working full time on the Cieneguita Property and they will continue to do so through March 2008,subject to availability of funding and subject to exploration results justifying the expenditure. If the results do not warrant further work, we plan to move the geologists to one of our other properties to continue exploration on those properties.

4.            Cieneguita Mine Design

Budget: We budgeted $50,000 from general working capital to create the mine design for the Cieneguita Property. The mine design has been completed and cost approximately $50,000. We paid for the work from our general working capital.

Milestones: Concurrently, with phase 2 of the exploration plan, we plan to put the Cieneguita Property into production. The mine design will help determine where and how we will mine the Cieneguita Property. We plan to put the mine into production by the end of July 2008.  It will take approximately 120 days to put the mine into production once we have received adequate funds to implement the plan.  Currently, we do not have enough funds on hand to implement the plan.

Coinciding with phase 2 and 3 of our exploration plan, we commissioned a mine design to determine how to put the Cieneguita Property into production. At this time, we do not plan to implement a feasibility study for this

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property but feel we have sufficient information to put the property into production. The mine design was commissioned to a third party contractor with expertise in heap leach mining. This contractor, an engineering firm, reviewed all of the data that we accumulated from Glamis Gold Ltd.’s previous exploration and from the trenching and sampling we completed on the property.  All of this information was tobe put on a map laying out the structure of the mineralized zone on our property to assist in mining the ore. The key purpose of this map is to help enable our on-site geologist to monitor grade control during mining. Additionally, from the information accumulated so far on the Cieneguita Property, the mining engineer designed a heap leach mining operation best suited to the tonnage, grade of the ore and availability of land to build leaching pads.

The mine design calls for the mining operation to be run by a third party contractor, who will charge the company a flat fee per tonne of rock that is moved. It is estimated by the engineer designing the mine that the cost per tonne of rock moved from the property to the mill site will be approximately $1.50 per tonne of rock.  This fee is only an estimate, as no contractor at this time has been engaged to mine the mineralized ore nor provided us with a firm quote on the cost of mining. The actual cost of mining the ore may be much higher, and no assurance can be given as to the actual cost at this time. The engineering firm designing the mine has stated that one of the key objectives at this stage of the mining operation will be grade control. Because our sampling to date has shown that the gold mineralization is not consistent through out the ore, it will be imperative that our on-site geologist directs the contractors where to mine the ore. The geologist will need to work daily using the interpretation from the results of our drilling program and will need to take samples of the rock and assay them on-site to determine where the contractor should extract ore for the next day. The proper grade of ore shipped to the milling site is imperative to ensure a profitable operation. If the head grade is too low, we will not recover enough gold from the rock to maintain a profitable operation. Conversely, a head grade of ore that is too high will shorten the life of the mine. We are estimating that the total cost of mining and milling the ore will be approximately $15 per tonne. If the price of gold fluctuates up or down we may have to adjust our cut off grade, which is currently 1.5 grams per tonne and this will affect the over all life of the mine.

The milling of the ore at the mine site will also be contracted out to a third party contractor. The following is a brief description of the mining process pursuant to our mine design. First, the ore is crushed by a crusher into a smaller size.  Second, the rock is deposited on a conveyor belt and moved to the agglomorator. Third, the agglomorator mixes the rock with lime and the rock is then moved to a stacker. A stacker is a moveable conveyor belt that oscillates back and forth, distributing the rock equally onto a heap leach pad. At that point, the rock is sprinkled with a cyanide mixture for approximately 30 days. The fluid from the percolation through the rock is then pumped through carbon filters. Waste rock is dumped into a ravine, per our permits, while the carbon filters are shipped to a third party contractor for extraction of the precious metals. The waste rock is completely free of any harmful chemicals and is restored to the original ph it had prior to mining.

We have identified and negotiated the purchase of a second hand crusher suitable for our type of operation and for the size of rock we will be mining. We also have onsite and ready for construction the conveyor belts we will need for all phases of the milling operation. The conveyor belts were manufactured in Chihuahua and have been assembled at the Cieneguita mine site. We have identified and purchased a second hand agglomorator, a used stacker and used carbon columns and pumps suitable for the milling stage.

At this time, we do not know the cost associated with the process of having the precious metals extracted and minted into ore bars. If our head grade is not accurate or the heap leach process is not effective, we may not extract enough gold from the carbon filters to pay for this complete operation and we would lose money from the mining operation. If we lost money on the mining and milling operation, we may not be able to stay in business as we would expect the cash flow from operations to cover, at the minimum, the mining and milling operation. Furthermore, we do not have any proven reserves on our property and the inability to find enough ore could severely hinder our mining operations.

We engaged an independent third party consultant to review the work of the engineering firm to verify and agree with the results of the mine design. The independent third party consultants worked with the mining engineering firm to agree on a final design. The mine design is complete and cost approximately $50,000. We paid for the work from our general working capital. The milling equipment and cost of building the plant will be approximately $2,200,000. We estimate that we will need approximately $1,100,000 for working capital during the first four months of mine operation. 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 four months of working capital. The funds would be raised through the sale of debt or equity. We have not identified any additional sources of capital at this time. Furthermore, once we have commenced production, we can give no assurance that we will be profitable or recover any gold.

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Guazapares Property

1.            Phase 1 Exploration

Budget: Concurrently with the exploration of the Cieneguita Property, we budgeted approximately $668,000, which includes $596,000 for a drilling program, of our general working capital for exploration on our Guazapares Property, to December 2007. Of this amount, we spent approximately $100,000 from March 2006 through to the end of December 2006 for phase 1 of the exploration plan. Approximately $624,000 was spent on this property from January 2007 to November 2007.  These funds came from our general working capital.

Milestones: The goals of phase 1 of the exploration plan on the Guazapares Property were to collect rock samples and complete the mapping of the property. This phase has been completed. Management has determined that further exploration is warranted so we have begun phase 2 of the exploration plan, as described below.

We have one full time geologist working on the Guazapares Property collecting rock samples and mapping the property. The goal for this phase was the completion of mapping on the property at a scale of 1:5,000. Rock samples were taken from the property and were sent to ALS Chemex in Chihuahua for chemical analysis and assaying. The sampling protocol followed the best mining practices. The results from phase 1 of the exploration plan were to determine whether subsequent exploration was warranted and if a drill program should be commenced. Phase 1 of work included reviewing available data to create a structural mineralization framework. We also mapped the topography and sampled the entire underground workings along the main level of the San Antonio area. The distribution of the veins, lithology and alteration were also mapped. We have received the results from this phase 1 of exploration.  Management reviewed the results of this phase and determined, based on a recommendation from our lead geologist on the property, to continue with phase 2 of the exploration plan.

2.            Phase 2 Exploration

Budget: We budgeted $100,000 from the total of $668,000 for phase 2 of the exploration plan.  Of this, $50,000 was budgeted for specific sampling and trenching in the San Francisco concession area. These funds came from general working capital of the company.

Milestones: The goals of phase 2 of the exploration plan were to conduct more detailed geological mapping, rock sampling and sample trenches in order to define the structural framework of the mineralized zone to facilitate a drilling program, if warranted. This phase commenced in February 2007 and was completed at the end of June  2007.

The information from phase 2 of the exploration plan has been reviewed by our senior geologist and VP of Exploration and they have made a recommendation to management that further exploration is warranted.  Four drilling targets were identified as part of this mapping process: San Antonio, San Francisco, El Cantilito, and Montana de Oro. A 3,000 to 4,000 meter drilling program has been implemented to test the three main areas: San Antonio, San Francisco and El Cantilito. We will continue to conduct phase 3 of our exploration plan, subject to availability of funding.

3.            Phase 3 Drill Program

Budget: We estimated that the initial drill program expenditure will be $668,000. We are in the process of raising additional capital through the sale of equity or debt to fund the drill program, as only a small portion of the funds budgeted are left in our general working capital to continue the program.

Milestones: A 3,000 meter drill program, consisting of 27 diamond holes will be completed to evaluate the Guazapares project. The drilling program was designed to:

·   Explore the high-grade ore-shoots down plunge and along strike already identified within the Guazapares system.

·   Test for potential zones of high-grade or economic mineralization based on surface indications.

·   Gather information on the system regarding alteration patterns, metal zoning, level of erosion and vector to the most prospective areas of the system.

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This phase commenced in July 2007 and we have drilled 19 holes.  We anticipated that once the drill program is completed, the results would take approximately 30 days to be assayed and interpreted. Unfortunately, due to the current economic climate in the industry, it takes up to 120 days to receive the drill results.  Once these results are known, we will consult our lead geologists and our VP of Exploration to determine whether  to abandon the Guazapares Property or to continue with further drilling.

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

The GU-01, GU-02 and GU-03 holes have been focused on extending zones of high-grade mineralization encountered in the San Antonio adit. The following indicates reported intervals and drill hole intercepts from the three drill holes:

Drill Hole GU-01

Sample	From	To	Width	Au	Ag	Au Eq	Mineralized Intercept
ID	(m)	(m)	(m)	(g/t)	(g/t)	(g/t)	m @ g/t Au Eq
25149	50.23	51.73	1.50	0.762	17.1	1.071783	1.5 m @ 1.071
25152	51.73	53.23	1.50	0.119	3	0.173348
25153	53.23	54.73	1.50	0.488	11.9	0.70358
25154	54.73	56.23	1.50	1.305	15.6	1.587609	5.37 m @ 2.038
25155	56.23	57.60	1.37	0.283	27.7	0.784812
25156	57.60	58.60	1.00	4.63	24.7	5.077464
25157	58.60	60.10	1.50	0.292	7.8	0.433304
25158	60.10	61.60	1.50	0.204	7.4	0.338058
25159	61.60	63.10	1.50	1.585	8.2	1.733551	1.5 m @ 1.733
25184	91.30	92.80	1.50	0.466	3	0.520348
25185	92.80	94.40	1.60	0.603	2.8	0.653725
25186	94.40	95.33	0.93	0.292	4.5	0.373522
25187	95.33	96.83	1.50	0.787	4.3	0.864899
25188	96.83	98.33	1.50	2.76	9.5	2.932101	5.97 m @ 1.494
25189	98.33	99.80	1.47	1.095	11.2	1.297899
25191	99.80	101.30	1.50	0.615	15.3	0.892174

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Drill Hole GU-02

Sample	From	To	Width	Au	Ag	Au Eq	Mineralized Intercept
ID	(m)	(m)	(m)	(g/t)	(g/t)	(g/t)	m @ g/t Au Eq
25285	57.80	58.30	0.50	0.228	18	0.554087
25286	58.30	58.95	0.65	0.18	43	0.958986
25287	58.95	59.75	0.80	0.503	81.2	1.974014	1.98 m @ 1.267
25288	59.75	60.28	0.53	0.273	32.9	0.869014
25289	60.28	61.05	0.77	0.278	26.2	0.752638
25291	61.05	61.61	0.56	0.191	18.7	0.529768
25292	61.61	62.82	1.21	0.198	39.5	0.91358
25293	62.82	64.32	1.50	0.336	19.3	0.685638
25294	64.32	65.82	1.50	0.254	14.4	0.51487
25335	112.75	113.55	0.80	0.101	25.3	0.559333
25336	113.55	114.85	1.30	0.111	47.6	0.973319
25337	114.85	116.10	1.25	0.486	22.1	0.886362
25338	116.10	117.45	1.35	2.54	2.7	2.588913
25339	117.45	118.75	1.30	0.879	2	0.915232
25341	118.75	120.25	1.50	0.436	3.6	0.501217	6.35 @ 1.344
25342	120.25	121.15	0.90	1.165	4.6	1.248333
25343	121.15	122.45	1.30	0.534	51.6	1.468783
25355	135.45	136.60	1.15	1.31	12.2	1.531014	1.15 m @ 1.531

Drill Hole GU-03

Sample	From	To	Width	Au	Ag	Au Eq	Mineralized Intercept
ID	(m)	(m)	(m)	(g/t)	(g/t)	(g/t)	m @ g/t Au Eq
25367	0.00	1.50	1.50	3.17	42.6	3.926392	1.5 m@ 3.92
25455	103.70	105.20	1.50	0.165	50.3	1.058111	1.50 m @ 1.05
25470	119.65	121.05	1.40	0.882	18.5	1.21048	1.40 m @ 1.21
25480	132.35	133.85	1.50	0.293	46.3	1.115088	1.50 m @ 1.11

Diamond drilling of the San Antonio system encountered mineralization in the three drill holes. The highest grades occurred within vein-breccias, quartz veins and quartz stock worked veins exhibiting multiple pulses of hydrothermal activity.

Analysis of the mineralization and alteration assemblages, structural setting and geochemistry of the San Antonio target area indicates that the high gold values tend to cluster in two main mineralization styles:

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

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

Holes GU-01, GU-02 and GU-03 confirm the emergence at San Antonio of one of the high-grade ore-shoot identified in the San Antonio adit where a new high grade gold zone in the underground samples returned grades as high as 37 g/t gold and 1,000 g/t silver over 2 meters. These two drill holes also provide the evidence that the main mineralization tends to cluster as ore-shoots controlled by mainly by the intersection of northwest, east-west, and northeast structures.

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If management decides to continue drilling, we will need to raise additional funding through the sale of debt or equity because we do not have sufficient capital to continue such an exploration program.  Additional drilling would cost a significant amount of money and there is no assurance that we would be able to raise such additional amounts of money. We have not identified any additional sources of funding to implement such a program. If we can not obtain additional financing, we could seek a joint venture partner if the drilling results warranted it. We do not have any joint venture partners at this time and can give no assurance that we will be able to find one if the Guazapares Property warranted such a joint venture.  

The Guazapares Property is without known reserves. Our proposed programs are exploratory in nature.

Encino Gordo

The Encino Gordo Property comprises five mining concessions that total 1,042 hectares (approximately 2,575 acres). We have limited information available to us about this property from previous exploration that was undertaken by other companies. The previous geochemical sampling that was carried out suggests a presence of mineralized structures. These structures are being investigated by geochemical sampling to determine if further exploration is warranted and to help refine the best exploration plan for the concessions.

1.            Phase 1 Exploration

Budget: We have planned for an exploration program, with a total budget of approximately $719,000 from general working capital, through August, 2008, on our Encino Gordo Property.We budgeted $50,000 for mapping and sampling, which was completed in February 2007. We spent $50,000, as budgeted, through the end of February 2007. Our VP of Exploration has reviewed all of the initial material on the property and the results of exploration completed in February 2007 and a second phase of mapping and sampling has been planned. The proposed exploration will consist of mapping the Encino Gordo and Vinorama concessions at a scale of 1:5,000 initially and then 1:1,000 on pre-determined sections. The focus will be on lithology, structure, alteration and veining to determine the potential of the near-mesothermal (porphyry-type) system present at Encino Gordo and the epithermal vein deposits on the Vinorama concession.

The balance of the budgeted funds will be spent as directed by our VP of Exploration once he has reviewed all of the initial material on the property and the results of the exploration completed in February 2007. From January to August 2007 we spent $18,000 on exploration.At this time  we do not have the necessary working capital to proceed. The funds for this additional exploration, if warranted, will come from general working capital if and when available. We can give no assurances that we will be able to raise sufficient capital to continue exploration on this property.

Milestones: The goals of phase one were to complete mapping of the property and to take geochemical samples from the property. The purpose of this initial program was to get a better understanding of the geology of the property.  We completed this phase of the exploration program at the end of February 2007.

We mapped the property at a scale of 1:5,000 with individual veins being mapped at a scale of 1:1,000. We met part of our mapping goal in October 2007, when mapping was completed along the extension of the structures hosting the Elyca vein located along the eastern edge of the Encino Gordo claims, with the balance of the mapping completed at the end of February 2007.

A total of 43 stream sediment samples were collected from the various arroyos cutting the property. Samples of greater than one kilogram were collected with material crushed to less than one millimetre in size. Samples of this rock will be analyzed by ALS Chemex for gold content plus 27 other mineral elements associated with the rock.The sampling protocol followed the best mining practices. The purpose of the sampling was to further define the ore grade and potential of the property. To date, three samples have returned anomalous results of gold which require follow-up to verify source areas.

In October 2006, we prepared a list of preliminary drill hole locations to accompany the SEMARNAT work permit application. We are currently preparing the documents for SEMARNAT work permits on the Encino Gordo Property and it is expected to be approved in March 2008.Our goal is to drill the targets as recommended by our VP of Exploration. Much additional exploration work must be completed and a definitive exploration plan needs to be prepared by our VP of Exploration before management can determine whether or not to continue to the next phase of exploration. The actual drill hole locations are likely to change from those submitted with the working plan permit, as the 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.

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Further exploration on the Encino Gordo Property was completed at the end of August 2007. Our goal was to have a geological report, prepared by our senior geologist by the end of 2007; however, due to lack of working capital this has not been completed yet.  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 make additional expenditures to determine potential drill targets.

2.            Phase 2 Drill Program

Budget: If management decides to continue exploration by initiating a drill program, a budget will be prepared at that time, and the amount and source of capital needed for additional expenditures will be determined.  If a drill program of any size is recommended, we do not have sufficient capital on hand to complete such a program because it would most likely require the expenditure of significant amounts of money. We would need to raise additional capital through the sale of debt or equity. We can give no assurance that we would be able to raise such capital, as we have not identified any source of capital for such a program at this time. If we could not raise additional funds, we would consider seeking a joint venture partner if the results warranted it. We do not have any joint venture partners at this time and can give no assurance that we would be able to find one if the Encino Gordo Property warranted such a joint venture.

Milestones: Phase 2 of the exploration plan would be to initiate a drill program to gather more information.  Such information would be used to determine if we should put the property into production. We do not know when this phase of exploration could be completed, as discussed above. We estimate that the program would take approximately 60 days to complete, with results from the program being returned about 90 days after completion. These are estimates, as the number of drill targets will determine the length of the drill program.  Once the results from the drill program are known, we would consult with our lead exploration geologist and our VP of Exploration to determine whether to abandon the Encino Gordo Property or continue with further drilling exploration.

Management and our VP of Exploration will review the information provided by phase 1 of the exploration plan and determine whether a drill program is recommended. If a drill program is recommended, and we have received our permits that have been applied for in advance, we do not have sufficient information at this time to estimate what the drill program would entail. We need extensive information to determine the number of drill holes to drill, where they would be located and to what depth they would be drilled. This information will be provided by phase 1 of the exploration plan.

The Encino Gordo Property is without known reserves. Our proposed programs are exploratory in nature.

Sahauyacan

The Sahauyacan Property is located near the Chihuahua-Sonora state border approximately 275 kilometers east-southeast of the city of Chihuahua and 50 kilometers south-southwest of the town of Maycobain the state of Chihuahua, Mexico. 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 three main underground mine access drifts supplying feed to a centrally located mill, which is still present. The mine was closed at the time of the Mexican revolution and the Santo Nino Vein system has never been evaluated using modern techniques and has not been explored by drilling. This area is the main focus of our exploration program.

1.            Phase 1 Exploration

Budget: We have spent approximately $557,000 from general working capital, from January 2007 to November 2007, on exploration of this property.The funds spent to date have come from general working capital. The estimated expenditures for future work will need to be raised through the sale of debt or equity. We can give no assurance that we would be able to raise such capital, as we have not identified any source of capital for such a program at this time. If we could not raise additional funds, we would consider seeking a joint venture partner if the results warranted it. We do not have any joint venture partners at this time and can

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give no assurance that we would be able to find one if the Sahauyacan Property warranted such a joint venture.

Milestones We completed our initial mapping of the property,including the underground workings.

As part of our due diligence on acquiring the properties, we had a surface geological mapping and sampling crew evaluate the property from September 2006 through December 2006. Mapping on the property was completed at a scale of 1:5,000 with individual veins being mapped at a scale of 1:1,000. To date, a total of 300 samples have been taken from the property including 101 rock chip and channel samples, 41 stream sediment samples and 158 soil samples.We received the results back from our sampling. The underground workings were evaluated for safe entry and the mine has been deemed unsafe to open. A limited part of the mine was opened and bulk samples were taken.

We met one of our milestones in phase 1 of the exploration plan, which was determining drill hole locations. Our VP of Exploration determined from our phase 1 work that a 13 hole drill program was warranted.

2.            Phase 2 Drill Program

Budget: We budgeted $365,000 to complete a 13 hole drill program. The contractor doing the drilling has completed the drilling.

Milestones: Our VP of Exploration recommended a 13 hole drill program on this property.  Reconnaissance and detailed mapping programs from phase 1 on the Sahauyacan Property have identified four significant drilling targets: Santo Niño, La Cumbre, Cerro Cacho and Santa Teresa. The goal of this phase of exploration was to determine if we should continue exploration with a further drill program. We filed the application for the work permit in February 2007 and it was approved by SEMARNAT.We completed the drilling in May 2007.

Current Drilling program:  To date a total of approximately 2,000 meters have been drilled in 13 diamond drill holes. Eight holes were drilled in the Santo Niño vein-structure (SDH-1, through SDH-4 and SDH-7 through SDH-10), two diamond drill holes (SDH-5 and SDH-6) were drilled in La Cumbre mineralized area and two holes (SDH-11 and SDH-12) on the Santa Theresa vein.

SDH-1 through SDH-4 and SDH-7 through SDH-10 were collared along the Santo Niño mineralized vein. Drill Hole SDH-1 intersected two zones of gold mineralization over the 165.05 meters drilled in this hole, including 7.50 meters with 2.56 g/t Au and 11.00 meters with 2.24 g/t Au including 8.00 meters with 2.98 g/t Au.

The two mineralized zones intersected by SDH-1 are hosted by volcaniclastic rocks interbedded with several andesitic tuffs and breccias. The mineralized zone, intersected from 65.0 to 72.5 meters, is characterized by multiple stages of hydrothermal activity exhibiting quartz veinlets and quartz stockwork mineralization with moderate to weak argillic alteration (illite-kaolin) and propylitic alteration characterized by epidote, chlorite, and calcite. The second mineralized zone intersected from 96.4 to 107.5 meters in SDH-1 is mainly characterized by a weak to moderate silicification exhibiting quartz and calcite veinlets. Areas show dissemination of pyrite as fine crystals are common in the mineralized zones.

In addition, the low values of silver may suggest that we are still high in the mineralized system and our VP of Exploration believes that the silver and other base metal content may increase with depth and consequently the Ag:Au ratio will change.

A summary of the assay results of the two mineralized zones intersected by the SDH-1 is provided in the table below.

Drillhole	From (meters)	To (meters)	Interval (meters)	Au (g/t)	Ag (g/t)	Au Eq. (g/t)
SDH-1	65.00	66.50	1.50	2.02	0.8
	66.50	68.00	1.50	8.09	2.8
	68.00	69.50	1.50	0.26	1.2
	69.50	71.00	1.50	0.233	1.3
	71.00	72.50	1.50	2.23	2.1
	96.50	98.00	1.50	6.13	49.4
	98.00	98.50	0.50	9.24	21.1

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98.50	99.50	1.00	0.529	0.7
99.50	100.50	1.00	1.695	1.2
100.50	101.50	1.00	1.415	9.2
101.50	102.50	1.00	3.81	10.5
102.50	103.50	1.00	0.038	0.09
103.50	104.50	1.00	1.00	5.9
104.50	105.50	1.00	0.363	7.3
105.50	106.50	1.00	0.341	9.6
106.50	107.50	1.00	0.111	10.5

The remaining holes did not return encouraging assay results. The results from drill holes SDH-3 and SDH-4 show gold anomalies varying from 0.01 to 0.02 g/t. Geological and structural mapping surveys along the Santo Niño vein have identified a NE structure that is displacing the mineralized zone. Current field investigations are aimed to define in more detail the structural setting on this part of the mineralized vein-structure.

Drill Holes SDH-5 and SDH-6 were collared in the Le Cumbre zone. The two holes intersected mineralization from surface to 175 metres. Only the SDH-5 intersected several two-meter-wide intercepts with gold mineralization ranging from 1.03 to 1.905 g/t.  Other gold values ran between 0.2 to 0.5 grams/tonne. Our VP of Explorationbelieves that the gold in these zones is free gold and is contained in the fractures in the oxides.  As the drilling consumes massive quantities of water, we believe the free gold has been washed away from the core. As a result, we plan to re-drill the Le Cumbre zone using reverse circulation drilling to ensure all the particles are captured while drilling. No assurance, though, may be given that any gold values will be found when it is redrilled using reverse circulation drilling. A detailed evaluation of these gold values and their correspondent geological conditions is in progress.

The final area tested at Sahauyacan was the Santa Theresa target, where two drill holes (SDH-11 and SDH-12) were completed. SDH-12 has intersected a high grade mineralized zone, consisting of 7.5 meters with 56.01 g/t Au and 283.22 g/t Ag. The following are the assay intercepts from the Santa Theresa structure.

Drillhole	From (meters)	To (meters)	Interval (meters)	Au (g/t)	Ag (g/t)
SDH-12	74.50	76.00	1.50	6.21	148
	76.00	77.50	1.50	0.716	8.5
	77.50	79.00	1.50	268.75	1215
	79.00	80.50	1.50	2.46	39.8
	80.50	82.00	1.50	1.93	4.8

Additional check assays of the core from 77.50 to 79.00 returned values of 431 g/t Au and 1.490 g/t Ag over 1.5 meters. These results have not been qualified or confirmed by the Company.

Surface mapping and drilling results suggest that high gold values tend to cluster at certain areas along the Santo Nino and the Santa Theresa vein structures. SDH-11 returned anomalous gold zones in the structure. SDH-12 shows potential for a significant increase in the Santa Theresa mineralization area.

Drill Holes SDH-11 returned only anomalous gold zones in the structure. SDH-12 shows that the potential for a significant increase in the Santa Theresa mineralization area. The mineralization is controlled by NWN structures running from the Santa Theresa target to the north to the La Cumbre target. The Company’s VP of Exploration will evaluate these results and further evaluation the Sahauyacan Property by reverse circulation drilling at La Cumbre and diamond drilling at Santa Theresa and Santo Nino to test the veins. This program will help to define the potential volume and grade of a large portion of the mineralized vein systems at Sahauyacan.

Despite these results, the Sahauyacan Property has no known or estimated resources or reserves.

3.            Phase 3 Exploration.

Management including our VP of Exploration will review the information provided by the second phase of exploration and determine whether further exploration is recommended. If further exploration is recommended, we do not have sufficient information at this time to estimate what that program would entail.  This information will be provided by the second phase of exploration.

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The Sahauyacan Property is without known reserves. Our proposed programs are exploratory in nature.

Although three of our four 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 Property 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, one junior geologist and four assistants for supervising the drilling work and taking splits for the drilling samples.

Once we receive results from these exploration programs, 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 sufficient enough to obtain the financing necessary to proceed. The decision will be based mainly on the recommendations of our senior geologist and VP of Exploration. Other factors that will influence the production decision will be the current price of gold bullion, availability of mining equipment and a mining feasibility study.

Results of Operations

Nine months ended November 30, 2007 compared to the nine months ended November 30, 2006.

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

Revenues

We did not earn revenues during the three or nine months ended November 30, 2007 or 2006 because we did not have commercial production of any of our properties. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties, if ever. We are presently in the exploration stage of our business. We can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties or, if such resources are discovered, that we will enter into commercial production of our mineral properties. Interest income is recorded under “Other Income in the Statement of Operations”in the financial statements.

Operating Costs

We did not incur any operating costs during the three and nine months ended November 30, 2007 or 2006 due to the fact that we did not achieve production from exploration activities during either year.

Expenses

Our expenses increased to $2,454,000 and $6,653,000 for the three and nine months ended November 30, 2007 compared to $981,000 and $3,606,000 for the three and nine months ended November 30, 2006, respectively.The increase is primarily attributable to higher administrative costs, stock-based compensation to officers, directors and consultants and developing the exploration program.

General and administrative cash expenses increased to $530,000 and $1,822,000 in the three and nine months ended November 30, 2007 respectively, compared to $160,000 and $958,000 in the three and nine months ended November 30, 2006.

Management fees decreased to $141,000in the three months and increased to $390,000 in the nine months ended November30, 2007, from $146,000 and $342,000 in the three and nine months ended November 30, 2006, respectively. Finders’ fees decreased to $nil in the nine months ended November 30, 2007 from $285,000 in the nine months ended November 30, 2006.  Accounting and legal fees increased to $130,626in the three months and decreased to $119,720 in the nine months ended November 30, 2007, from $84,000 and $177,000 in the three and nine months ended November 30, 2006, respectively. The increase in fees was primarily attributable to higher auditing costs and the cost of regulatory filings.

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Stock-based compensation expense increased to $631,000 and $2,304,000 in the three and nine months ended November 30, 2007 respectively, from $487,000 and $1,710,000 in the three and nine months ended November 30, 2006. The 2007 amount relates to warrants issued and stock options granted to management and key personnel for $1,479,000 and $825,000, respectively.

Mineral exploration in the three and nine months ended November 30, 2007 increased to $714,000 and $1,947,000 respectively, compared to $333,000 and $938,000 for the three and nine months ended November 30, 2006. We anticipate that exploration expenditures will increase in fiscal 2008 as a result of exploration activities on our Mexican mineral properties.

Loss

Our net loss increased to $2,490,000 and $6,689,000 for the three and nine months ended November 30, 2007 respectively, compared to $968,000 and $5,883,000 for the three and nine months ended November 30,2006.

This change in our loss was primarily attributable to higher investor relations expenses, stock-based compensation and exploration expense in 2007. The net losses in both 2007 and 2006 were comprised of items not requiring an outlay of cash. In 2007, the non-cash component of stock-based compensation was $2,304,000. In 2006, the non-cash component is attributable to $487,000 of stock-based compensation and to a beneficial conversion feature of $2,266,000 on convertible debentures issued in the three months ended May 31, 2006; which was recorded as interest expense.  We anticipate that we will continue to incur a loss until such time as we can commence the development stage of our operations and achieve significant revenues from sales of gold recovered from our Mexican mineral properties, if ever. There is no assurance that we will commence the development stage of our operations at any of our Mexican mineral properties or achieve revenues.

Liquidity and Capital Resources

Since inception, we have undergone two unsuccessful business combinations, which have caused us to incur significant liabilities and have resulted in the accumulation of a substantial deficit during the exploration stage. As of November 30, 2007, we have total assets of $1,670,000,total liabilities of $2,087,000 and a deficit of $32,420,000 accumulated during the exploration stage.

Cash and Working Capital

We had cash and cash equivalents of $859,000 as of November 30, 2007, compared to cash of $46,000 as of August 31, 2007 and $843,000 as of November 30, 2006. We had working capital deficiency of $735,000 as of November 30, 2007, compared to $1,276,000 as of August 31, 2007and a working capital deficiency of $915,000 as of November 30, 2006.

We will require additional financing during the current fiscal year according to our planned exploration activities. We plan to spend approximately $3,900,000 from December 2007 to August 2008 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 milling equipment and building a plant to put that property into production. We anticipate spending approximately $1,400,000 during the next 12 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.

The amount of working capital could be adversely affected further in the event claims are made against us alleging that certain shares we previously issued pursuant to Form S-8 registration statements constituted an illegal public offering because the company was a “shell company” at the time and, as a result, was not eligible to use Form S-8 for registration of shares under the Securities Act of 1933. In August and October of 2005, the Company issued shares of common stock to an officer of the Company, as compensation for consulting services. The two share issuances were for a combined total of 30,000 shares and each of the share issuances was made pursuant to a registration statement on Form S-8 under the Securities Act of 1933.  Although the Company believes these shares were properly issued, a claim could be made that issuance of

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the shares constituted an illegal public offering because the Company was a “shell company” at the time.  Shell companies  [i.e. companies which have no or nominal operations and either (i) no or nominal assets; (ii) assets consisting solely of cash and cash equivalents; or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets] are not eligible to use Form S-8 for registration under the Securities Act of 1933. If either of these transactions did violate federal securities laws, subsequent purchasers of the shares may have claims against us for damages or for rescission of their purchase transaction and recovery of the full subscription price paid, together with interest. As of the date of this annual report, no one has made or threatened any claim against us alleging violation of the federal securities laws. In the event such claims were successfully asserted there is no assurance that we would have sufficient funds available to pay and it is likely that we would be required to use funds currently designated as working capital for that purpose. That would substantially reduce the amount of working capital available for other purposes and, in that event, we could be forced to cease or discontinue certain operations and to liquidate certain assets to pay our liabilities, including, but not limited to, rescission claims.

Cash Used in Operating Activities

Cash used in operating activities increased to $2,780,000 for the nine months ended November 30, 2007 compared to $1,986,000 for the nine months ended November30, 2006. The cash used in operating activities was primarily for general and administrative expenses and exploration costs.

Cash Used in Investing Activities

The Company used cash of $44,000 for purchase of equipment for the nine months endedNovember 30, 2007 compared to cash used of $150,000 for the nine months ended November 30, 2006.

Financing Activities

Cash provided by financing activities amounted to $3,677,000 for the nine months ended November 30, 2007 compared to $2,496,000 for the nine months ended November 30, 2006. Almost all of the cash provided by financing activities was from exercise of warrants and notes payables.  Cash provided by financing activities was used to fund our operating and investing activities.

We anticipate continuing to rely on equity sales of our common stock or issuance of debt in order to continue to fund our business operations.Issuances of additional shares will result in dilution to our existing shareholders.

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

On April 3, 2006 and May 31, 2006, the Company issued 550,000 common shares and 200,000 common shares,respectively and closed a private placement for total proceeds of $375,000. As at February 28, 2006, the Company had received $170,000 of subscriptions for this unit offering. Units consisted of one share of common stock and one-half of one warrant. Each full warrant entitles the investor to purchase an additional share of the Company’s common stock at a price of $1.00 per share and is exercisable until April 30, 2008. The units were priced at $0.50 each.

During the quarter ended May 31, 2006, the Company issued a total of $2,265,500 convertible debentures. The convertible debentures, with principal and accrued interest at 7% per year were convertible into $25,000 units at the option of the holder. Each unit consisted of a warrant to purchase 25,000 of the Company’s shares of common stock at $1.00 and $25,000 of debt, which may be converted to shares of common stock at $0.50 per share and is exercisable until April 30, 2008. In addition, the warrants are redeemable by the Company, at $0.01 per share, in the event the Company’s common stock closes with a bid price, on average, over $3.00 per share for a consecutive 20-day period. Further, under the terms of the debenture, until May 2007, the Company is prohibited from effecting or entering into an agreement to affect any subsequent financing involving a “Variable Rate Transaction” The term Variable Rate Transaction means a transaction in which the Company issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of common stock at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of  common stock at any time after the initial issuance of such debt or equity securities.

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The holders of the debentures converted all of the debentures to shares of common stock at $0.50 per share in June 2006.  The Company issued 5,835,000 shares and 2,917,500 warrants to debenture holders upon the conversion. We have paid to the convertible debenture holders a total of $58,308, which is their accumulated interest on the debentures. During August 2006, the Company cancelled 50,000 shares of common stock with respect to the conversion and 25,000 warrants with respect to this conversion due to non-payment of subscription funds.

Going Concern

Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern 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 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. As at November 30, 2007,the Company had working capital deficiency of $735,000 (November 30, 2006 - $915,000 working capital), and an accumulated deficit during the exploration stage of $32,420,000(November 30, 2006 – $26,170,000).  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

There is no assurance that our operations will be profitable. The Company has conducted private placements of convertible debt and common stock, which have generated funds to satisfy all of the initial cash requirements of its planned Mexican mining ventures.

Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements which have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our investors.

ITEM 3.                       CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its SEC reports are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company’s management, including its president and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the companies are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our independent registered public accounting firm reported to our board of directors certain conditions involving internal controls which they believe represent material weaknesses in our internal control environment. These matters are with regard to insufficient personnel resources within the accounting function, based on the size and complexity of the organization, to affect timely financial close process and to effectively evaluate and resolve certain routine and non-routine and/or complex accounting transactions. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Significant deficiencies are control issues that could have a significant adverse effect on the ability to record, process, summarize and report financial data in the financial statements.

Our management and the board of directors agreed with our independent registered public accounting firm on the matter raised in their report and agreed to address the material weakness.

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To remediate our internal control weaknesses, management intends to implement the following measures: the Company will add sufficient accounting personnel to properly segregate duties and to effect a timely, accurate preparation of the financial statements. The Company plans to have this implemented by the end of the fiscal year 2008.

Changes in internal controls: There were no changes in internal controls over financial reporting, known to the president or chief financial officer that occurred during the period covered by this report that has materially affected, or is likely to materially effect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

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

None.

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ITEM 5.                       EXHIBITS

The following exhibits are filed in reference:

Exhibit Number	Description
3.1	Articles of Incorporation, as amended on December 10, 2001 and February 13, 2006 (Herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on April 7, 2006).
3.2	Bylaws of the Corporation (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
4.1	Registration Agreement dated April 20, 2004, by and among Sunburst Acquisitions IV, Inc., and each of the purchasers in a private placement of shares of Sunburst (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
4.2	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 filed with the Securities and Exchange Commission on June 3, 2004).
4.3	Promissory Note between Sierra Minerals 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 filed with the Securities and Exchange Commission on June 3, 2004).
4.4	Securities Purchase Agreement with exhibits entered in connection with the $1,350,000 original issued discount secured convertible debenture financing dated August 25, 2004 (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
4.5	Secured Convertible Debenture by and between Bristol Capital, LLC and Sunburst Acquisitions IV, Inc. dated January 15, 2004 (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on July 10, 2006).
4.6	Transaction Fee Agreement dated April 22, 2004 between Sunburst Acquisitions IV Inc. and T.R. Winston & Company LLC (Herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on April 7, 2006).
4.7	Finder’s Fee Agreement dated 2004 between Sunburst Acquisitions IV, Inc. and Liberty Management, LLC (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
4.8	Convertible Debenture template used to sell debentures and units of Mexoro Minerals Ltd. for the offering that occurred in January through May of 2006 (Herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on April 7, 2006).
4.9	Stock option plan approved by the shareholders of Mexoro Minerals, Ltd. on February 13, 2006. (Herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on April 7, 2006).
4.10	Subscription Agreement template used to sell units of Mexoro Minerals Ltd. for the offering that occurred in February and March of 2006 and was offered to accredited investors under Regulation D (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
4.11	Convertible Debentures issued December 8, 2005 to Daimler Capital, James Longshore, and Spectrum International in the amount of $300,000 (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)

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10.1	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. (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
10.2	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 (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
10.3	Amendment to Joint Venture Agreement dated June 1, 2004. (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
10.4	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 Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
10.5	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).
10.6	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 (Encino Gordo) (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
10.7	OPERATOR’S AGREEMENT dated effective as of the 18th day of August, 2005, among Minera Rio Tinto, S.A. de C.V. a corporation duly incorporated and validly existing pursuant to the laws of the United Mexican States and having an office at Pascual Orozco No. 2117 - A Chihuahua, State of Chihuahua, Mexico 31310, and Sunburst de Mexico, S.A. de C.V. a corporation duly incorporated and validly existing pursuant to the laws of the United Mexican States and having an office at Suite 5, Avenida del Mar No.1022 Zona Costera, Mazatlan, State of Sinaloa, Mexico (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)

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10.8	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).
10.9	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 (San Antonio) (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	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 at Niños 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 (San Francisco) (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	THE NEW AGREEMENT entered into on December 8, 2005 among the Company, Sunburst de Mexico, and MRT (herein incorporated by reference from the Company’s current report on Form 8-K for report date December 8, 2005 and filed with the Securities and Exchange Commission on December 14, 2005).
10.12	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).
10.13	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).
10.14	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).
10.15	Consulting Agreement with G.M. Capital Partners, Ltd. dated January 30, 2006 (incorporated by reference from Current Report on Form 8-K filed with the Securities and Exchange Commission on February 7, 2006).
10.17	Amendment to the New Agreement, dated April 6, 2006 by and among Mexoro Minerals, Ltd., Sunburst Mining de Mexico S.A. de C.V., and Minera Rio Tinto, S.A. de C.V. (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)

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10.18	Addendum To Purchase Contract Of Mining Rights To Lump Sum Entered Into On May 6, 2004 by Corporativo Minero, S.A. De C.V. And Sunburst Mining De Mexico, S.A. De C.V., dated March 24, 2006 (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
10.19	Agreement to Extend August Payment Due Date, entered into on July 18, 2006 by Minera Rio Tinto and Sunburst de Mexico (Herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.
10.20	Amended Agreement with G.M. Capital Partners Ltd. dated August 31, 2006 (herein incorporated by reference to the Current Report on Form 8-K dated August 31, 2006 and filed on September 21, 2006.
10.21	Letter Employment Agreement with Matthew Wunder, dated August 15, 2006 (herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.
10.22	Original Agreement between MRT and Corporativo Minero dated 2004 concerning the Cieneguita Property (herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on December 18, 2006.)
10.23	Agreement between MRT and La Empresa Denominada Minera Rachasa dated 2004 concerning the San Francisco concessions (herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
10.24	Agreement between MRT and Rafael Astorga Hernandez, dated July 20, 2006, concerning the San Antonio concessions (herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on September 25, 2006.)
10.25	Consent of MRT to assign the Agreement between MRT and Rafael Astorga Hernandez to Sunburst de Mexico (herein incorporated by reference from the Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on December 18, 2006.)
10.26	Exploration and Sale Option Agreement of Mining Concessions Entered By and Between Minera Emilio, S.A. de C.V. and Sunburst Mining de Mexico, S.A. de C.V. (herein incorporated by reference from the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2006.)
10.27	Agreement to Defer Guazapares Property Payments, entered into on September 19, 2007 by Sunburst de Mexico S.A. de C.V., Mexoro and MRT (herein incorporated by reference to the Current Report on Form 8-K dated September 19, 2007 and filed on October 9, 2007.)
10.28	Agreement to Defer Cieneguita Property Payments, entered into on May 4, 2007 by Corporativo Minero S.A. de C.V. and Sunburst de Mexico S.A. de C.V. *
14.1	Code of Ethics (herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on April 7, 2006.)
16.1	Responsive letter of Comiskey & Co. (herein incorporated by reference from Current Report on Form 8-K filed with the Securities and Exchange Commission on July 16, 2004.)
21.1	Subsidiaries of the Registrant (herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on April 7, 2006.)
31.1	Certification of Chief Executive Officerand Chief Financial Officerof Mexoro Minerals Ltd. pursuant to Rule 13a-14(a)/15d-14(a). *
32.1	Certification of Chief Executive Officer and Chief Financial Officer of Mexoro Minerals Ltd. pursuant to 18 U.S.C. Section 1350. *

*filed herewith

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SIGNATURES

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

MEXORO MINERALS LTD.

By: /S/ Robert Knight

Robert Knight, President,Chief Financial Officerand Director

Date: January 14, 2008

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