S-1/A

As filed with the Securities and Exchange Commission on September 23, 2013

Registration No. 333-189977

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1 TO FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

LONE STAR GOLD, INC.

(Exact name of registrant in its charter)

Nevada	1000	45-2578051
(State or other jurisdiction of	(Primary Standard Industrial Classification	(I.R.S. Employer Identification Number)
incorporation or organization)	Code Number)

6565 Americas Parkway NE, Suite 200

Albuquerque, NM 87110

(505) 563-5828

 (Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

Capitol Corporate Services, Inc.

202 South Minnesota Street

Carson City, NV 89703

(800) 899-0490

 (Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of communications to:

Gregg E. Jaclin, Esq.

Anslow & Jaclin, LLP

195 Route 9 South, Suite 204

Manalapan, NJ 07726

Tel. No.: (732) 409-1212

Fax No.: (732) 577-1188

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

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

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

CALCULATION OF REGISTRATION FEE

			Proposed		Proposed
			Maximum		Maximum		Amount of
Title of Each Class of Securities	Amount to be		Offering Price		Aggregate		Registration
to be Registered	Registered (1)		Per Share (2)		Offering Price		Fee (3)
Common Stock, par value $0.001 per share, issuable pursuant to the KVM Investment Agreement		26,100,000	$	0.034	$	887,400	$	121.04
Total					$		$

(1)	We are registering 26,100,000 shares of our common stock that we will put to KVM Capital Partners LLC pursuant to that certain investment agreement (the “KVM Investment Agreement”). The KVM Investment Agreement was entered into on June 27. 2013. In the event of stock splits, stock dividends or similar transactions involving the common stock, the number of common shares registered shall, unless otherwise expressly provided, automatically be deemed to cover the additional securities to be offered or issued pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). In the event that the adjustment provisions of the KVM Investment Agreement require the registrant to issue more shares than are being registered in this registration statement, for reasons other than those stated in Rule 416 of the Securities Act, the registrant will file a new registration statement to register those additional shares.
(2)	The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o) of the Securities Act on the basis of the closing bid price of the common stock of the registrant as reported on the OTCBB on June 28, 2013.
(3)	Offset pursuant to Rule 457(p) under the Securities Act by the registration fee of $132.99 paid on July 16, 2013 pursuant to the Registrant’s S-1 Registration Statement, File No. 333-189977.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED SEPTEMBER 23, 2013

26,100,000 Shares of Common Stock

2

LONE STAR GOLD, INC.

This prospectus relates to the resale of up to 26,100,000 shares of common stock of Lone Star Gold, Inc. (“we” or the “Company”), par value $0.001 per share, issuable to KVM pursuant to that certain investment agreement. The investment agreement permits us to “put” up to $5,000,000 in shares of our common stock to KVM over a period of up to thirty-six (36) months. We will not receive any proceeds from the resale of these shares of common stock. However, we will receive proceeds from the sale of securities pursuant to our exercise of the put right offered by KVM. KVM is deemed an underwriter for our common stock.

The selling stockholder may offer all or part of the shares for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. KVM is paying all of the registration expenses incurred in connection with the registration of the shares except for accounting fees and expenses and we will not pay any of the selling commissions, brokerage fees and related expenses.

Our common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under the ticker symbol “LSTG.” On August 14, 2013 , the closing price of our common stock was $0.0334 per share.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 5 to read about factors you should consider before investing in shares of our common stock.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Date of This Prospectus Is:  _____________, 2013

TABLE OF CONTENTS

	Page
Prospectus Summary	4
The Offering	5
Risk Factors	5
Special Note Regarding Forward-Looking Statements	13
Use of Proceeds	13
Market For Common Equity and Related Stockholder Matters	14
Management’s Discussion and Analysis of Financial Condition and Results Of Operations	15
Description of Business	21
Directors and Executive Officers	33
Executive Compensation	35
Security Ownership of Certain Beneficial Owners and Management	36
Certain Relationships and Related Transactions	37
Changes In and Disagreement With Accountants On Accounting and Financial Disclosure	38
Selling Stockholders	38
Plan of Distribution	39
Description of Securities To Be Registered	41
Legal Matters	42
Experts	42
Available Information	42
Index To Consolidated Financial Statements	F-1

3

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of Lone Star Gold, Inc. (referred to herein as the “Company,” “we,” “our,” and “us”). You should carefully read the entire Prospectus, including “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the accompanying financial statements and notes before making an investment decision.

Business Overview

We are currently a start-up exploration stage company in the business of gold and mineral exploration, acquisition and development. We were incorporated in the State of Nevada under the name Keyser Resources, Inc. on November 26, 2007.  Our business was initially operated to acquire an option to purchase a mining interest in Canada. After a change in control in November 2010, we explored a merger with another company in order to obtain an option to purchase several oil and gas leases in Nevada. A merger agreement was signed in January 2011. The then-current management decided not to pursue the merger, and the merger agreement was terminated by mutual agreement of the parties as of March 18, 2011.

On March 29, 2011, we underwent another change in management.  On March 29, 2011, Daniel M. Ferris was elected to serve as the sole director.  Mr. Ferris subsequently appointed himself President, Secretary and Treasurer. Following the appointment of Daniel M. Ferris as our sole director and officer, we changed our focus to engage in the acquisition, exploration and development of gold and silver mining properties. To further reflect this change in business focus, we changed our name to “Lone Star Gold, Inc.” on June 14, 2011. In addition, to create a more flexible capital structure, we increased the number of authorized shares of our common stock from 75,000,000 to 150,000,000 on June 14, 2011. A 20:1 forward stock split was declared to stockholders of record as of June 17, 2011.

On August 29, 2011, we entered into an investment agreement with North American Gold Corp. (“North American”) pursuant to which North American agreed to invest up to $15,000,000 to purchase our common stock in increments of $100,000 or an integral multiple thereof, at our option at any time through August 31, 2013 (the “North American Investment Agreement”).

Investment Agreement with KVM

On June 27, 2013, we entered into an investment agreement with KVM Capital Partners LLC, a New York limited liability company (“KVM”). Pursuant to the terms of the KVM Investment Agreement, KVM committed to purchase up to $5,000,000 of our common stock over a period of up to thirty-six (36) months. From time to time during the thirty-six (36) months period commencing from the effectiveness of the registration statement, we may deliver a put notice to KVM which states the dollar amount that we intend to sell to KVM on a date specified in the put notice. The maximum investment amount per notice shall be no more than two hundred percent (200%) of the average daily volume of the common stock for the ten consecutive trading days immediately prior to date of the applicable put notice. The purchase price per share to be paid by KVM shall be calculated at a twenty percent (20%) discount to the lowest volume weighted average price of the common stock as reported by Bloomberg, L.P. during the ten (10) consecutive trading days immediately prior to the receipt by KVM of the put notice. We initially reserved 30,000,000 shares of our common stock for issuance under the KVM Investment Agreement based upon the registration statement filed with the Securities and Exchange Commission (the “SEC”) on July 16, 2013. We have more shares reserved than are covered in this registration statement.

In connection with the KVM Investment Agreement, we also entered into a registration rights agreement with KVM, pursuant to which we are obligated to file a registration statement with the SEC covering 26,100,000 shares of our common stock underlying the KVM Investment Agreement within 21 days after the closing of the transaction. In addition, we are obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 120 days after the closing of the transaction and maintain the effectiveness of such registration statement until termination of the KVM Investment Agreement.

The 26,100,000 shares to be registered herein represent 25.89% of the shares issued and outstanding, assuming that the selling stockholder will sell all of the shares offered for sale.

4

At an assumed purchase price of $0.0272 (equal to 80% of the closing price of our common stock of $0.034 on August 14, 2013), we will be able to receive up to $709,920 in gross proceeds, assuming the sale of the entire 26,100,000 shares being registered hereunder pursuant to the KVM Investment Agreement. Accordingly, we would be required to register additional 157,723,530 shares to obtain the balance of $4,290,080 under the KVM Investment Agreement. We are currently authorized to issue 150,000,000 shares of our common stock. We may be required to increase our authorized shares in order to receive the entire purchase price. KVM has agreed to refrain from holding an amount of shares which would result in KVM owning more than 4.99% of the then-outstanding shares of our common stock at any one time.

There are substantial risks to investors as a result of the issuance of shares of our common stock under the KVM Investment Agreement. These risks include dilution of stockholders’ percentage ownership, significant decline in our stock price and our inability to draw sufficient funds when needed.

KVM will periodically purchase our common stock under the KVM Investment Agreement and will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to KVM to raise the same amount of funds, as our stock price declines.

The aggregate investment amount of $5 million was determined based on numerous factors, including the following: Our current running costs are approximately $1 – 2 million per annum, and thus we need a portion of the investment amount to pay general operating expenses. We believe we need the remaining funds for capital expenditures related to the Tailings Property and the Candelaria project, including the construction of a nitrogen leach plant on the Tailings property. While it is difficult to estimate the likelihood that the Company will need the full investment amount, we believe that the Company may need the full amount of $5 million funding under the KVM Investment Agreement.

Where You Can Find Us

Our principal office is located at 6565 Americas Parkway NE, Suite 200, Albuquerque, New Mexico 87110. Our telephone number is (505) 563-5828.

THE OFFERING

Common stock outstanding before the offering	100,804,663 shares of common stock as of June 28, 2013.
Common stock outstanding after the offering	126,904,663 shares of common stock.
Use of proceeds	We will not receive any proceeds from the sale of shares by the selling stockholder. However, we will receive proceeds from the sale of securities pursuant to the KVM Investment Agreement. The proceeds received under the KVM Investment Agreement will be used for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors, in its good faith deem to be in the best interest of the Company.
OTCBB Trading Symbol	LSTG.OB
Risk Factors	The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment.  See “Risk Factors”.

RISK FACTORS

You should carefully consider the risks described below together with all of the other information included in this Prospectus before making an investment decision with regard to our securities. The statements contained in or incorporated into this Prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

5

Risks Related to Our Business

We are an exploration stage company with a history of operating losses and expect to continue to realize losses in the near future.  We currently have no operations that are producing revenue, and currently rely on investments by third parties to fund our business.  Even when we begin to generate revenues from operations, we may not become profitable or be able to sustain profitability.

We are an exploration stage company, and since inception, we have incurred significant net losses and have not realized any revenue from our operations.  We have reported a net loss of $4,542,053 from the date of inception through June 30, 2013 .  We expect to continue to incur net losses and negative cash flow from operations in the near future, and we will continue to experience losses for at least as long as it takes our company to generate revenue by selling Extracted Minerals from the Tailings, or through our mining operations. The size of these losses will depend, in large part, on whether we find gold or other minerals in our properties and are able to extract and sell the minerals in a profitable manner.  To date, we have not had any operating revenues, nor have we found any minerals or developed any mineral deposits.  Because we do not yet have a revenue stream resulting from sales or other operations, there can be no assurance that we will achieve material revenues in the future.   Should we achieve a level of revenues that make us profitable, there is no assurance that we can maintain or increase profitability levels in the future.

There is substantial doubt as to whether we will continue operations. If we discontinue operations, you could lose your investment.

The following factors raise substantial doubt regarding the ability of our business to continue as a going concern: (i) the losses we incurred since our inception; (ii) our lack of operating revenues since inception through the date of this Report; and (iii) our dependence on the sale of equity securities to continue in operation. We have signed certain investment agreements with North American, for up to $15,000,000 through sales of our Common Stock, and KVM for up to $5,000,000 through sales of our Common Stock.  However, North American has the option to refuse to fund any request for investment if market conditions are not favorable. We anticipate that we will incur increased expenses without realizing enough revenues from operations. We therefore expect to incur significant losses in the foreseeable future. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business. If we are unable to obtain additional financing from outside sources and eventually produce enough revenues, we may be forced to curtail or cease our operations. If this happens, you could lose all or part of your investment.

Our lack of any operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.

We do not have any material operating history, which makes it impossible to evaluate our business on the basis of historical operations.  Furthermore, we have pursued the business of mineral exploration and development for a short time, and thus our business carries both known and unknown risks. As a consequence, our past results may not be indicative of future results. Although this is true for any business, it is particularly true for us because of our lacking any material operating history.

We recently underwent two separate changes in management, and the current management had no experience in mining or mineral exploration prior to joining the Company.

We underwent a change in management in November 2010 and again in March 2011. The new director and sole executive officer of the Company was not previously an employee of or otherwise involved in the management of the Company. While Mr. Ferris has prior business experience, he had no prior experience in mining or mineral exploration or development before joining the Company.

6

Together, two of our stockholders have the ability to significantly influence any matters to be decided by the stockholders, which may prevent or delay a change in control of our company.

Mr. Ferris and  Mr. John Rhoden  currently own approximately 22.32% of our Common Stock on a fully diluted basis, as a group.  As a result, they could exert considerable influence over the outcome of any corporate matter submitted to our stockholders for approval, including the election of directors and any transaction that might cause a change in control, such as a merger or acquisition.  Any stockholders in favor of a matter that is opposed by these two stockholders would have to obtain a significant number of votes to overrule the collective votes of Mr. Ferris and the other principal stockholder.

Mr. Ferris is our sole director and officer and the loss of Mr. Ferris could adversely affect our business.

Since Mr. Ferris is currently our sole director and officer, if he were to die, become disabled, or leave our company, we would be forced to retain individuals to replace him. There is no assurance that we can find suitable persons to replace him if that becomes necessary. We have no “Key Man” life insurance at this time.

We hold the Concessions through a Mexican subsidiary, Metales, in which we own a 70% interest. Therefore, our ability to realize revenues from the La Candelaria project will depend in part upon the payment of dividends by Metales and thus is dependent on Mexican corporate and other law.

As a U.S. company, we cannot hold the Concessions (as defined in Description of Business) directly. Instead, Mexican law requires a company formed in Mexico to own the Concessions. We have invested in Metales in order to comply with the Mexican law. Therefore, Metales must comply with Mexican laws regarding the declaration and payment of dividends in order to distribute profits to its stockholders, including the Company. If it fails to do so, we could fail to realize revenues from the project.

Risks Relating to Mining Activities

We have no known mineral reserves and we may not find any gold or, if we find gold, it may not be in economic quantities. If we fail to find any gold or if we are unable to find gold in economic quantities, we will have to suspend operations.

The chance of finding gold, silver or other mineral reserves on any individual parcel of land is almost infinitesimal. It is not uncommon to spend millions of dollars on a potential project, complete many phases of exploration and still not obtain reserves that can be economically exploited. Therefore, our chances finding economically viable mineral reserves are remote.

We have no known mineral reserves. Even if we find gold or silver deposits, we may not be of sufficient quantity to warrant recovery. Additionally, even if we find gold or silver deposits in sufficient quantity to warrant recovery, we ultimately may find that those deposits are not recoverable. Finally, even if any gold or silver is recoverable, we may be unable to recover at a profit. Failure to locate deposits in economically recoverable quantities will cause us to cease operations.

We face a high risk of business failure because of the unique difficulties and uncertainties inherent in mineral exploration ventures.

Potential investors should be aware of the difficulties generally encountered by new mineral exploration companies and their high rate of failure. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays that we may encounter in our mining activities. These potential problems may lead to additional costs and expenses that exceed current estimates. Problems such as unusual or unexpected formations and other adverse conditions often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon the Concessions and acquire new properties for exploration. The acquisition of additional properties will depend on whether we possess sufficient capital resources at the time. If no funding is available, we may be forced to abandon our mining operations.

The Tailings may fail to yield Extracted Minerals in amounts or grades that are sufficient to produce a steady source of revenue to Amiko Kay. If the Tailings operation fails to produce sufficient revenue to offset the substantial costs incurred in exploration and development of the site, we may lose all amounts invested under the JV Agreement.

7

Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.

The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial position.

We may not have access to all of the supplies and materials we need to explore our properties, which could delay or suspend our operations.

Competition and unforeseen limited sources of supplies in the industry or in the region in which we operate could result in occasional spot shortages of supplies, such as explosives, and certain equipment such as bulldozers and excavators. If we cannot find the products and equipment we need, we will have to suspend our exploration plans until we do find the products and equipment we need.

We face intense competition in the mining industry. We will have to compete for financing and for qualified managerial and technical employees.

The mining industry is intensely competitive. Competition includes large established mining companies with substantial capabilities and with greater financial and technical resources than we have. As a result of this competition, we may be unable to acquire additional attractive mining claims or financing on terms we consider acceptable. We also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration and development programs may be slowed down or suspended.

Our properties are located in Mexico and are subject to changes in Mexican political conditions and government regulations.

The Concessions and Tailings are located in Mexico. In the past, Mexico has been subject to political and social instability. Change and uncertainty in Mexico could lead to changes in existing government regulations affecting mineral exploration and mining. Our business activities in Mexico may be adversely affected by changing governmental regulations relating to the mining industry. More generally, shifts in political conditions may increase the cost of conducting our business or maintaining our properties. Finally, Mexico’s status as a developing country may make it more difficult to obtain required financing for our projects.

Our business operations may be adversely affected by social and political unrest in Chihuahua, or by violence and crime in Mexico.

Both La Candelaria and the Mine Tailings Project are located in the state of Chihuahua, Mexico. Our business operations could be negatively impacted if Chihuahua or other areas of Mexico experiences a period of social and political unrest. Various areas in Mexico are affected by persistent violence and crime, which has been well-publicized in the US. Our exploration and construction program in La Candelaria, or the processing of the Tailings, could be interrupted if we are unable to hire qualified personnel or if we are denied access to our properties. We may be required to make additional expenditures to provide increased security in order to protect our property or personnel located at our sites. Significant delays in exploration or increases in expenditures will likely have a material adverse effect on our financial condition and results of operations.

Our operations in Mexico may be adversely affected by factors outside our control, such as changing political, local and economic conditions, any of which could materially adversely affect our financial position or results of operations.

The La Candelaria Concessions are mineral concessions granted by the Mexican government. We hold the Mine Tailings Project under a contractual arrangement with a Mexican national.

8

Both of these projects are subject to the laws of Mexico. Exploration and potential development activities are potentially subject to political and economic risks, including:

· Cancellation or renegotiation of contracts;

· Competition from companies not subject to US laws and regulations, such as the Foreign Corrupt Practices Act;

· Changes in Mexican laws and regulations;

· Changes in tax laws;

· Royalty and tax increases or claims by Mexican governmental authorities;

· Expropriation or nationalization of property;

· Foreign exchange controls;

· Import and export regulations;

· Environmental controls;

· Risks of loss due to civil strife, war, guerilla activity, insurrection and terrorism; and

· Other risks arising out of foreign sovereignty over the areas in which our business is operated.

Our business in Mexico is dependent on our consultants.

We are almost entirely dependent on the services of consultants in Mexico to operate our business in Mexico and to advise the Company on matters vital to its continued viability and success. For example, Adam Whyte is responsible for overseeing the day to day operation of the La Candelaria property, while Miguel Jaramillo (“Jaramillo”) operates the Mine Tailings Project. We rely on such persons for advice on matters such as permitting and environmental compliance, as well as mining operations. In addition, we rely on legal counsel in Mexico to maintain the registration of our properties, to form our subsidiaries and to advise us on other matters involving Mexican law. The loss of these persons or our inability to attract and train additional skilled employees may adversely affect our business, future operations and financial condition. 

We require substantial funds merely to determine if mineral reserves exist on our Concessions.

Any potential development and production of minerals on our Concessions depends upon the results of exploration programs, feasibility studies and the recommendations of qualified engineers and geologists. Such activities require substantial funding. Before deciding to explore for, and then produce or develop, mineral reserves, we must consider several significant factors, including, but not limited to:

• Costs of bringing the property into production;

• Availability and costs of financing;

• Ongoing costs of production;

• Market prices for the products to be produced;

• Environmental compliance regulations and restraints; and

• Political climate and/or governmental regulation and control.

There is no assurance that Extracted Minerals from the Tailings will be produced in amounts that will make the Tailings project commercially viable.

The 1.2 million tons of Tailings must be processed at a plant operated by a third party to determine whether any gold, silver or other minerals may be extracted. There is no assurance that any valuable minerals will be extracted after processing. Even if valuable minerals are extracted from the Tailings, there is no assurance that they will be in sufficient quantities, or of sufficient grades, to allow the processing to be commercially viable for the Company. If we cannot make a profit by processing the Tailings, the Tailings project may fail, and we may lose our investment in the Tailings project. The failure of the Tailing project to provide a source of current revenue to the Company may also force us to abandon or curtail our other operations.

9

The Assignment Agreement and the Option Agreement obligate the Company to fund certain exploration costs under the Work Plan. If we fail to satisfy those obligations, Gonzalez could demand a return of the Concessions.

Under the terms of that certain assignment agreement (the “Assignment Agreement”) and the option agreement between American Gold Holdings, Ltd. and Homero Bustillos Gonzalez (“Gonzalez”) dated January 11, 2011 (the “Option Agreement”), if we fail to comply with our obligations to make expenditures under the Work Plan (as defined in the Description of Business) before January 11, 2014, the Option Agreement will terminate and we will be obligated to return the Concessions to Gonzalez. If this occurs, we would lose all our investment in the Concessions.

Since most of our expenses are paid in Mexican pesos, and our outside investors fund the Company in United States dollars, we are subject to adverse changes in currency values that may adversely affect our results of operations.

Our operations in the future could be affected by changes in the value of the Mexican peso against the United States dollar. The appreciation of non-U.S. dollar currencies such as the peso against the U.S. dollar increases expenses and the cost of purchasing capital assets in U.S. dollar terms in Mexico, which can adversely impact our operating results and cash flows. Conversely, depreciation of the non-U.S. dollar currencies usually decreases operating costs and capital asset purchases in U.S. dollar terms. The value of cash and cash equivalents denominated in foreign currencies also fluctuates with changes in currency exchange rates.

Title to some of our properties may be defective or challenged.

While we believe that we have satisfactory title to our properties, some titles may be defective or subject to challenge. In addition, certain of our Mexican properties could be subject to rights of the Ejido, as discussed below.

Our ability to develop our property in Mexico is subject to the rights of the Ejido (local inhabitants) to use the surface for agricultural purposes.

Our ability to mine minerals is subject to maintaining satisfactory arrangements with the Ejido for access and surface disturbances. Ejidos are groups of local inhabitants who were granted rights to conduct agricultural activities on the property. We must negotiate and maintain a satisfactory arrangement with these residents in order to disturb or discontinue their rights to farm. While Jaramillo and our consultants we have successfully negotiated and signed such agreements related to the Tailing project, our ability to maintain these agreements or consummate similar agreements for new projects could impair or impede our ability to successfully mine the properties.

In the event of a dispute regarding title or any other matter related to our operations in Mexico, we might be subject to Mexican courts or dispute resolution entities, where we would be faced with unfamiliar laws and procedures.

The resolution of disputes in foreign countries can be costly and time consuming. In a foreign country we would be faced with the additional burden of understanding unfamiliar laws and procedures. We would also be faced with the necessity of hiring lawyers and other professionals who are familiar with the foreign laws. For these reasons, we may incur unforeseen losses if we are forced to resolve a dispute in Mexico or any other foreign country.

Risks Related to Our Common Stock

We may conduct further offerings in the future in which case investors' shareholdings will be diluted.

Since our inception, we have relied on sales of our Common Stock and warrants to fund our operations. We have signed certain investment agreements with North American, for up to $15,000,000 through sales of our Common Stock, with Deer Valley, for up to $15,000,000 through sales of our Common Stock, and with KVM, for up to $5,000,000. Such investment agreements grant the investors the ability to buy a substantial number of shares of Common Stock in a series of private placement transactions at a price that is at a discount to the market price. In addition, under the Option Agreement, we must allow Gonzalez the opportunity to maintain his percentage stock ownership in the Company until the date on which we have complied fully with our obligations under the Option Agreement or January 11, 2014, whichever comes first, so any issuance of Common Stock or equivalents will result in even greater dilution because of the shares or share equivalents that will have to be issued to Jaramillo as a result.  Finally, Jaramillo is entitled to 600,000 shares of Common Stock as partial consideration under the Joint Venture Agreement (the “JV Agreement”) with Jaramillo. We may conduct further equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake.  If Common Stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders.  We anticipate continuing to rely on equity sales of our Common Stock in order to fund our business operations.  If we issue additional stock, investors' percentage interests in us will be diluted.  The result of this could reduce the value of current investors' stock.

10

We are subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

Our Common Stock is subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934 (the “Exchange Act”), commonly referred to as the “penny stock rule.”  Section 15(g) sets forth certain requirements for transactions in penny stock, and Rule 15g-9(d) incorporates the definition of “penny stock” that is found in Rule 3a51-1 of the Exchange Act.  The SEC generally defines a penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. We are subject to the SEC’s penny stock rules.

Since our Common Stock is deemed to be penny stock, trading in the shares of our Common Stock is subject to additional sales practice requirements on broker-dealers who sell penny stock to persons other than established customers and accredited investors.  “Accredited investors” are persons with assets in excess of $1,000,000 (excluding the value of such person’s primary residence) or annual income exceeding $200,000 or $300,000 together with their spouse. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such security and must have the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt the rules require the delivery, prior to the first transaction of a risk disclosure document, prepared by the SEC, relating to the penny stock market.  A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities.  Finally, monthly statements must be sent disclosing recent price information for the penny stocks held in an account and information to the limited market in penny stocks.  Consequently, these rules may restrict the ability of broker-dealer to trade and/or maintain a market in our Common Stock and may affect the ability of our stockholders to sell their shares of Common Stock.

There can be no assurance that our shares of Common Stock will qualify for exemption from the Penny Stock Rule. In any event, even if our Common Stock was exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock if the SEC finds that such a restriction would be in the public interest.

We do not expect to pay dividends in the foreseeable future.

We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business.  Therefore, our stockholders will not receive any funds unless they sell their Common Stock, and stockholders may be unable to sell their shares on favorable terms or at all.

Our common stock is subject to price volatility unrelated to our operations.

The market price of our Common Stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our Common Stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or ourselves. In addition, the OTCBB is subject to extreme price and volume fluctuations in general.  This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our Common Stock.

11

Trading in our common stock on the OTC Bulletin Board is limited and sporadic making it difficult for our shareholders to sell their shares or liquidate their investments.

Our Common Stock is currently listed for public trading on the OTC Bulletin Board. The trading price of our Common Stock has been subject to wide fluctuations.  Trading prices of our Common Stock may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our Common Stock will be matched or maintained. These broad market and industry factors may adversely affect the market price of our Common Stock, regardless of our operating performance.  In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources.

KVM will pay less than the then-prevailing market price for our common stock.

The Common Stock to be issued to KVM pursuant to the KVM Investment Agreement will be purchased at a 20% discount to the lowest trading price of our Common Stock during the ten (10) consecutive trading days immediately before KVM receives our notice of sale.  KVM has a financial incentive to sell our Common Stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price.  If KVM sells the shares, the price of our Common Stock could decrease.  If our stock price decreases, KVM may have a further incentive to sell the shares of our Common Stock that it holds.  These sales may have a further impact on our stock price.

Your ownership interest may be diluted and the value of our common stock may decline by exercising the put right pursuant to the KVM Investment Agreement.

Pursuant to the KVM Investment Agreement, when we deem it necessary, we may raise capital through the private sale of our Common Stock to KVM at a price equal to a discount to the lowest volume weighted average price of the common stock for the ten (10) consecutive trading days before KVM receives our notice of sale. Because the put price is lower than the prevailing market price of our Common Stock, to the extent that the put right is exercised, your ownership interest may be diluted.

We are registering an aggregate of 26,100,000 shares of common stock to be issued under the KVM Investment Agreement. The sales of such shares could depress the market price of our common stock.

We are registering an aggregate of 26,100,000 shares of Common Stock under the registration statement of which this prospectus is a part, pursuant to the KVM Investment Agreement. Notwithstanding KVM’s ownership limitation, the 26,100,000 shares would represent approximately 25.89% of our shares of Common Stock outstanding immediately after our exercise of the put right under the Investment Agreement. The sale of these shares into the public market by KVM could depress the market price of our Common Stock.

We may not have access to the full amount available under the KVM Investment Agreement.

Our ability to draw down funds and sell shares under the KVM Investment Agreement requires that this resale registration statement be declared effective and continue to be effective.  This registration statement registers the resale of 26,100,000 shares issuable under the KVM Investment Agreement, and our ability to sell any remaining shares issuable under the KVM Investment Agreement is subject to our ability to prepare and file one or more additional registration statements registering the resale of these shares. These registration statements may be subject to review and comment by the staff of the SEC, and will require the consent of our independent registered public accounting firm. Therefore, the timing of effectiveness of these registration statements cannot be assured. The effectiveness of these registration statements is a condition precedent to our ability to sell all of the shares of Common Stock to KVM under the KVM Investment Agreement. Even if we are successful in causing one or more registration statements registering the resale of some or all of the shares issuable under the KVM Investment Agreement to be declared effective by the SEC in a timely manner, we may not be able to sell the shares unless certain other conditions are met. For example, we might have to increase the number of our authorized shares in order to issue the shares to KVM. Accordingly, because our ability to draw down any amounts under the KVM Investment Agreement is subject to a number of conditions, there is no guarantee that we will be able to draw down any portion or all of the proceeds of $5,000,000 under the KVM Investment Agreement.

12

Certain restrictions on the extent of puts and the delivery of advance notices may have little, if any, effect on the adverse impact of our issuance of shares in connection with the KVM Investment Agreement, and as such, KVM may sell a large number of shares, resulting in substantial dilution to the value of shares held by existing shareholders.

KVM has agreed, subject to certain exceptions listed in the KVM Investment Agreement, to refrain from holding an amount of shares which would result in KVM or its affiliates owning more than 4.99% of the then-outstanding shares of our Common Stock at any one time. These restrictions, however, do not prevent KVM from selling shares of Common Stock received in connection with a put, and then receiving additional shares of Common Stock in connection with a subsequent put.  In this way, KVM could sell more than 4.99% of the outstanding Common Stock in a relatively short time frame while never holding more than 4.99% at one time.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements. When used in this Prospectus or in any other presentation, statements which are not historical in nature, including the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” “may,” “project,” “plan” or “continue,” and similar expressions are intended to identify forward-looking statements. They also include statements containing a projection of revenues, earnings or losses, capital expenditures, dividends, capital structure or other financial terms.

The forward-looking statements in this Prospectus are based upon our management’s beliefs, assumptions and expectations of our future operations and economic performance, taking into account the information currently available to them. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. These forward-looking statements are based on our current plans and expectations and are subject to a number of uncertainties and risks that could significantly affect current plans and expectations and our future financial condition and results.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Prospectus might not occur. We qualify any and all of our forward-looking statements entirely by these cautionary factors. As a consequence, current plans, anticipated actions and future financial conditions and results may differ from those expressed in any forward-looking statements made by or on our behalf. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented herein.

USE OF PROCEEDS

We will not receive any proceeds from the sale of shares by the selling stockholder. However, we will receive proceeds from the sale of securities pursuant to the KVM Investment Agreement. The proceeds received from any “Puts” tendered to KVM under the KVM Investment Agreement will be used for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors, in its good faith deem to be in the best interest of the Company.

DILUTION

The following information is based upon the Company’s unaudited balance sheet as filed in the Company’s Form 10-Q on August 19, 2013 , for the period ended June 30, 2013 , the net tangible book value of the Company’s assets as of June 30, 2013 is $(0.00077).

“Dilution” as used herein represents the difference between the offering price per share of shares offered hereby and the net tangible book value per share of the Company’s common stock after completion of the offering. Dilution in the offering is primarily due to the losses previously recognized by the Company.

13

The net book value of the Company at June 30, 2013 was $(73,149) or $(0.001) per share. Net tangible book value represents the amount of total tangible assets less total liabilities. Assuming that 26,100,000 of the shares offered hereby were purchased by investors (a fact of which there can be no assurance) as of June 30, 2013 , the then outstanding 126,904,663 shares of common stock, which would constitute all of the issued and outstanding equity capital of the Company, would have a net tangible book value $636,771 (after deducting commissions and offering expenses) or approximately $0.005 per share.

At an assumed purchase price of $0.0272 (equal to 80% of the closing price of our common stock of $0.034 on August14, 2013 ), we will be required to issue an aggregate of 183,823,529 shares of common stock, if the full amount of $5,000,000 is exercised pursuant to the KVM Investment Agreement.

Assuming a 50% decrease to the purchase price of $0.0272 (equal to 80% of the closing price of our common stock of $0.034 on August14, 2013 ), we will be required to issue an aggregate of 367,647,058 shares of common stock, if the full amount of $5,000,000 is exercised pursuant to the KVM Investment Agreement.

Assuming a 75% decrease to the purchase price of $0.0272 (equal to 80% of the closing price of our common stock of $0.034 on August14, 2013 ), we will be required to issue an aggregate of 735 , 294 , 117 shares of common stock, if the full amount of $5,000,000 is exercised pursuant to the KVM Investment Agreement.

The dilution associated with the offering and each of the above scenarios is as follows:

	Offering		183,823,529 shares issued		367,647,058 shares issued		725,294,117 shares issued
Offering price	$	0.02720	$	0.02720	$	0.01360	$	0.00680
Net Tangible Book Value Before Offering (per share)	$	(0.001)	$	(0.001)	$	(0.001)	$	(0.001)
Net Tangible Book Value After Offering (per share)	$	0.00498	$	0.00222	$	0.00059	$	0.00012
Dilution per share to Investors	$	0.02222	$	0.02498	$	0.01301	$	0.006682
Dilution percentage to Investors		81.69%		91.84%		95.66%		98.24%

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Public Market for Common Stock

Since June 20, 2011, shares of our common stock have been quoted on the OTCBB under the symbol “LSTG”, following the change of our corporate name to “Lone Star Gold, Inc.” From October 27, 2010 to June 20, 2011, our shares of common stock were quoted on the OTCBB under the symbol “KYSR”. Our stock began trading on October 27, 2010 at $0.155 and the stock price did not change until the July 2011. Accordingly, there are no high and low bids for the common stock before the third quarter 2011.

The following table summarizes the high and low historical closing prices reported by the OTCBB Historical Data Service for the periods indicated. OTCBB quotations reflect inter-dealer prices, without retail mark-up, mark down or commissions, so those quotes may not represent actual transactions.

	High		Low
2011
Third Quarter 2011	$	1.40	$	0.80
Fourth Quarter 2011	$	1.21	$	0.60
2012
First Quarter 2012	$	0.66	$	0.28
Second Quarter 2012	$	0.23	$	0.14
Third Quarter 2012	$	0.19	$	0.075
Fourth Quarter 2012	$	0.09	$	0.03
2013
First Quarter 2013	$	0.158	$	0.031
Second Quarter 2013	$	0.059	$	0.0306
Third Quarter 2013 (Through September 19, 2013)	$	0.035	$	0.021

14

Holders

We had approximately 17 record holders of our common stock as of August 14, 2013 , according to the books of our transfer agent. The number of our stockholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.

Dividends

There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

1.	we would not be able to pay our debts as they become due in the usual course of business; or
2.	our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

We have not declared any dividends. We do not plan to declare any dividends in the foreseeable future.

Equity Compensation Plans

Other than the shares of common stock to be issued to Mr. Ferris under his Employment Agreement, as described more fully in “Executive Compensation” below, we have no equity compensation program, including no stock option plan, and none are planned for the foreseeable future.

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

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Prospectus. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Business Overview

We are currently a start-up exploration stage company in the business of gold and mineral exploration, acquisition and development. We were incorporated in the State of Nevada under the name Keyser Resources, Inc. on November 26, 2007.  Our business was initially operated to acquire an option to purchase a mining interest in Canada. After a change in control in November 2010, we explored a merger with another company in order to obtain an option to purchase several oil and gas leases in Nevada. A merger agreement was signed in January 2011. The then-current management decided not to pursue the merger, and the merger agreement was terminated by mutual agreement of the parties as of March 18, 2011.

On March 29, 2011, we underwent another change in management.  On March 29, 2011, Daniel M. Ferris was elected to serve as the sole director.  Mr. Ferris subsequently appointed himself President, Secretary and Treasurer. Following the appointment of Daniel M. Ferris as our sole director and officer, we changed our focus to engage in the acquisition, exploration and development of gold and silver mining properties. To further reflect this change in business focus, we changed our name to “Lone Star Gold, Inc.” on June 14, 2011. In addition, to create a more flexible capital structure, we increased the number of authorized shares of our common stock from 75,000,000 to 150,000,000 on June 14, 2011. A 20:1 forward stock split was declared to stockholders of record as of June 17, 2011.

15

Agreements

La Candelaria Project

In May 2011, Metales HBG, S.A. de C.V., a company organized under the laws of Mexico (“Metales”) was formed, with the Company owning 70% of the issued and outstanding shares of capital stock. Metales owns certain gold and silver mining Concessions covering 800 hectares, or 1,976 acres, near Guachochi, Chihuahua, Mexico. The Concessions are sometimes referred to as the “La Candelaria Project”. See Note 5 to the Financial Statements.

The Company has granted anti-dilution rights to Gonzalez, such that the Company must allow Gonzalez the opportunity to maintain his percentage stock ownership in the Company until the date on which the Company has complied fully with its obligations under the Option Agreement or January 11, 2014, whichever comes first. Gonzalez has waived the exercise of his anti-dilution rights with respect to issuances of Common Stock to North American under the Investment Agreement, but has not waived those rights as to the Fairhills Investment Agreement discussed below.

If the Company fails to comply with all its obligations under the Option Agreement before January 11, 2014, the Option Agreement will terminate and the Company will be obligated to return the Concessions to Gonzalez. The Company and Gonzalez have verbally agreed that any further Work Plan payments have been put on hold until such time as the Company has sufficient capital to continue the project.

The Concessions are without known proven (measured) or probable (indicated) reserves, as defined under SEC Industry Guide 7, and the exploration program described in this Quarterly Report is exploratory in nature. See “No Proven or Probable Reserves” below.

Tailings Project

On January 26, 2012, the Company, acting through a newly-formed subsidiary, Amiko Kay entered into the Joint Venture Agreement with Jaramillo to process mine tailings located in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico, and, after processing, to use, market and sell any minerals extracted from the Tailings. See Note 6 to the Financial Statements for a description of the JV Agreement.

The Company is obligated to fund $250,000 for the benefit of the processing operation before January 26, 2013, under the work commitment established for the Tailings Project. For the year ended December 31, 2012, the Company made payments totaling $250,000 pursuant to the Work Commitment. For the period ended June 30, 2013 , the Company made payments totaling $10,000 towards the second year Work Commitment. See “Results of Operations” below.

On the Tailings property, two out of three on-site washing jigs are now complete and operational. The jigs separate the heavy mineral-rich material from the lighter worthless material in the Tailings. The Company has been pre-washing material for approximately three months to maximize the silver and gold content per ton of material to be shipped to nearby floatation and leaching plants in Parral, Mexico. The cost of the wash plant and jig circuit was $60,000 to date. Washing has been halted until the local plant in Parral is operational, as discussed below.

Approximately 6,000 tons of the Tailings material has been sent to the processing plant in Parral, Mexico (the "Parral Plant"). As of the date of this Quarterly Report, this shipment has not been fully processed.  The Parral Plant closed unexpectedly during the third quarter of 2012 and reopened in March 2013.  It has operated sporadically since March 2013 and has not been able to operate on a consistent basis.  Accordingly, the Company estimates that the Parral Plant has accumulated a one year backlog of tailings to process, and the Company does not believe that it can rely on the Parral Plant to process a significant amount of the tailings in the foreseeable future.  The Company has developed plans to build its own plant capable of processing 150 tons of tailings per day.  The cost to build such a plant is estimated to be $1M.  The Company is actively seeking investors to fund the construction of a plant.  Accordingly, the Company has no revenues from the Tailings as of the date of filing.   

No Proven or Probable Reserves

16

We are a start-up, exploration-stage company engaged in the search for gold and related minerals. No proven (measured) or probable (indicated) reserves have been established with respect to the La Candelaria project or the Tailings project, and the proposed program of exploration and development for the La Candelaria project and the Tailings project is exploratory in nature. There is no assurance that a commercially viable mineral deposit, or reserve, exists on the property covered by the Concessions or the Tailings project or can be shown to exist until sufficient and appropriate exploration is done, and a comprehensive evaluation of such work concludes that the extraction of such a mineral deposit, if found, can be economically and legally feasible.

Recent Development

KVM Investment Agreement

On June 27, 2013, we entered into the KVM Investment Agreement with KVM Capital Partners pursuant to which KVM agreed to purchase shares of our common stock for an aggregate purchase price of up to $5,000,000.

The KVM Investment Agreement provides that we may, from time to time during the thirty-six (36) months period commencing from the effectiveness of the registration statement, in our sole discretion, deliver a put notice to KVM which states the dollar amount that we intend to sell to KVM on a date specified in the put notice. The maximum investment amount per notice shall be no more than two hundred percent (200%) of the average daily volume of the common stock for the ten consecutive trading days immediately prior to date of the applicable put notice. The purchase price per share to be paid by KVM shall be calculated at a twenty percent (20%) discount to the lowest volume weighted average price of the common stock as reported by Bloomberg, L.P. during the ten (10) consecutive trading days immediately prior to the receipt by KVM of the put notice. We have reserved 30,000,000 shares of our common stock for issuance under the KVM Investment Agreement.

We plan to use the proceeds from the sale of the common stock under the KVM Investment Agreement for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors, in its good faith deem to be in the best interest of the Company.

Results of Operations

We have not generated any revenue since our inception.  We do not anticipate earning revenues until we have begun to commercially produce minerals from the Concessions, the Tailings, or other mineral properties that we may own in the future.

Three months ended June 30, 2013 and 2012

For the periods below, we had the following expenses:

	For the Three months Ended June 30,
	2013		2012
General and administrative	$	100,768	$	63,852
Exploration		-		108,500
Management fees		303,699		279,999
Total operating expenses	$	404,467	$	452,351

For the three months ended June 30, 2013 , we incurred general and administrative expenses totaling $100,768.   This was an increase of $36,916 compared to the second quarter of 2012.

For the three months ended June 30, 2012, we incurred general and administrative expenses totaling $63,852.   In 2012, our expenses consisted, primarily, of  general and administrative expenses and office supplies of $35,764, legal fees of $17,258, accounting and auditing fees of $2,575, depreciation expense of $2,340 and rent expense of $1,297.

There we no exploration expenses for the three months ended June 30, 2013.

For the three months ended June 30, 2012, we incurred aggregate Exploration costs of $108,500 are costs of $3,500 related to the La Candelaria Project and costs of $90,000 related to the Tailings Project.  With respect to the La Candelaria Project, we paid a total of $3,500 under the Work Plan for La Candelaria.  With respect to the Tailings Project, the Company made payments of $90,000 to the Joint Venture, which includes approximately $40,000 for construction of the wash plant, $40,000 for equipment and trucks and $10,000 for repairs, fuel, taxes, insurance, office and management costs.

During the three months ended June 30, 2013, the Company paid management fees totaling $53,700 to our sole officer and director and recognized $249,999 in expenses related to the stock grant under Mr. Ferris’ Employment Agreement.

17

Six months ended June 30, 2013 and 2012

For the periods below, we had the following expenses:

	For the Six months Ended June 30,
	2013		2012
General and administrative	$	205,986	$	215,916
Exploration		24,500		465,196
Management fees		583,698		559,998
Total operating expenses	$	814,184	$	1,241,110

For the six months ended June 30, 2013, we incurred operating expenses totaling $814,184.  This was a decrease of $426,926 compared to the six months ended June 30, 2012.  In 2013, our expenses consisted, primarily, of accounting and auditing fees of $87,271, legal and other professional fees of $98,608, depreciation expense of $4,680 and travel expenses of $15,427.

For the six months ended June 30, 2012, we incurred general and administrative expenses totaling $215,916.  In 2012, our expenses consisted, primarily, of professional fees of $59,095, accounting and auditing fees of $40,362, legal fees of $37,237, telephone expense of $5,301, travel of $2,229, depreciation expense of $2,340 and rent expense of $2,696.

Included in Exploration expenses of $24,500 for the six months ended June 30, 2013 are costs of $24,500 related to the Tailings and La Candelaria Projects.  With respect to the Tailings Project, the Company made a payment of $10,000 for services from a mining consultant.   For La Candelaria, the Company made a payment of $14,500 to Mining Capital Advisors for services.

For the six months ended June 30, 2012, we incurred aggregate Exploration costs of $465,196.  Costs related to the La Candelaria Project totaled $185,195 and funding of the Tailings Project totaled $250,000.  With respect to the La Candelaria Project, we paid a total of $60,195 under the Work Plan for La Candelaria, and made $125,000 in payments to Homero Gonzalez under the Option Agreement.  With respect to the Tailings Project, the Company made payments of $250,000 to the Joint Venture, which includes approximately $60,000 for construction of the wash plant, $122,500 for equipment and trucks and $67,500 for repairs, fuel, taxes, insurance, office and management costs.

During the six months ended June 30, 2013, the Company paid management fees totaling $83,700 to our sole officer and director and recognized $499,998 in expenses related to the stock grant under Mr. Ferris’ Employment Agreement.

Results of Operations for the Year Ended December 31, 2012 as Compared to the Year Ended December 31, 2011

We have not generated any revenue since our inception.  For the years ended December 31, 2012 and 2011, we had the following expenses:

	For the year ended December 31, 2012		For the year ended December 31, 2011
General and administrative	$	350,447	$	486,741
Exploration cost		495,195		530,925
Management fees		1,119,996		543,974
	$	1,965,638	$	1,561,640

For the year ended December 31, 2012, we incurred $350,447 in general and administrative expenses, $495,195 in exploration costs and $1,119,996 in management fees.  Our general and administrative fees were primarily for legal costs and accounting and auditing fees. Management fees include cash compensation and the value ($999,996) of the equity compensation paid to Mr. Ferris. Exploration costs include direct costs associated with La Candelaria of $213,500 and the Tailings Project of $280,000.

For the year ended December 31, 2011, we incurred $486,741 in general and administrative expenses, $530,925 in exploration costs and $543,974 in management fees.  Our general and administrative fees were primarily for legal costs and accounting and auditing fees. Management fees include cash compensation and the value ($473,974) of the equity compensation paid to Mr. Ferris. Exploration costs include direct costs associated with La Candelaria of $201,925 and the value of stock issued to Gonzalez of $303,000.

The following is a summary of our balance sheets as of June 30 , 2013 and December 31, 2012:

	June 30 , 2013			December 31, 2012
Cash	$	-		$	-
Current Liabilities		290,301			320,053
Working Capital Deficit		(286,122	)		(319,901	)
Shareholders’ Equity (Deficit)		(73,149	)		(102,248	)

18

We have committed to fund $450,000 over three years under the La Candelaria Work Plan, and $1,000,000 over two years under the work commitment for the Tailings Project.  Because the Company has no revenues from operations, we are dependent upon obtaining additional financing in order to fund our obligations under the Work Plan, and also to fund our obligations under the Tailings Project.  The Company has funded its exploratory program to date primarily through sales of its restricted common stock. 

During the six months ended June 30, 2013, we received $375,000 from the sale of 10,810,000 shares of common stock under the Fairhills Investment Agreement, which we used to make certain payments relating to the Company’s Tailings Project, and for general operating expenses. Additionally, we received $42,500 in net proceeds from a loan from KVM (See Note 3 - Debt).

In June 2013, the Company entered into the KVM Investment Agreement with KVM whereby KVM agreed to purchase up to $5 million of the Company’s common stock over a period of up to 36 months.

In connection with the KVM Investment Agreement, the Company also entered into a Registration Rights Agreement with KVM pursuant to which the Company was obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) covering the resale of the 30,000,000 shares of common stock underlying the KVM Investment Agreement. On July 16, 2013, the Company filed a registration statement on Form S-1 with the SEC.  The Company has agreed to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 120 days after the closing of the transaction and to maintain the effectiveness of such registration statement until termination of the KVM Investment Agreement.   The Company intends to use the proceeds from the sale of common stock under the KVM Investment Agreement to fund anticipated general operating expenses of approximately $1,000,000 to $2,000,000 per annum, to fund capital expenditures related to the Tailings property and the Candelaria project and for other purposes that the Board of Directors determines to be in the best interest of the Company.  In particular, the Company intends to commence construction as soon as possible on an on-site nitrogen leach processing plant at its Tailings property located in the state of Chihuahua, Mexico. The processing plant will enable the Company to maximize the silver and gold content per ton of shipment from the project's mine tailings. The Company currently expects to use the full $5,000,000 available under the KVM Investment Agreement in order to complete the processing plant and other projects that the Company requires in order to commence substantive revenue generating activities on the Tailings project. 

Investment Agreements

On August 29, 2011, the Company and North American Gold Corp., a company organized under the laws of the Marshall Islands (“North American”), executed an Investment Agreement (the “North American Investment Agreement”). Under the North American Investment Agreement, North American agreed to invest up to $15,000,000 to purchase the Company’s Common Stock in increments of $100,000 or an integral multiple thereof, at the Company’s option at any time through August 31, 2013 (the “Open Period”). During the Open Period, the Company has the option to deliver a put notice (a “Put Notice”) to North American that states the number of shares of Common Stock the Company proposes to sell to North American (the “Put Shares”), and the price per share for those Put Shares (the “Share Price”). The Share Price is equal to 90% of the volume weighted average closing price of the Common Stock for the 20 days immediately preceding the date of the Put Notice. The closing for the sale of the Put Shares pursuant to a Put Notice shall take place no later than 10 Trading Days after the date of such Put Notice. A “Trading Day” is defined as a day in which the NASDAQ stock market or OTC Bulletin Board is open for business.  North American has the right to refuse to close any requested sale of Put Shares because of negative market conditions affecting the Common Stock.

The North American Investment Agreement was amended to allow the Company to use the net proceeds from the sale of the Put Shares to fund the exploration and development of gold and silver mining concessions in the La Candelaria project and other projects approved in advance by the Company and North American.  The Company and North American have agreed that the proceeds may be used to fund expenses incurred in connection with the Mine Tailings Project.

19

The sales of Put Shares will not be registered under the Securities Act of 1933, but will be issued under an exemption from the registration requirements of the Securities Act of 1933. Any Put Shares issued and sold to North American will be “restricted securities” and will be subject to applicable restrictions on resale.

As of the date of this filing, North American has purchased 1,966,148 Put Shares from the Company, resulting in gross proceeds to the Company (before any wire transfer or other fees) of $1,150,000.  North American owns a total of 2,291,148 shares of Common Stock, or 2.6% of the issued and outstanding shares.

On April 30, 2012, we entered into the Deer Valley Investment Agreement with Fairhills, which was subsequently amended on June 25, 2012 and September 21, 2012, pursuant to which Fairhills agreed to purchase shares of our Common Stock for an aggregate purchase price of up to $15,000,000.  Fairhills assigned the agreement to Deer Valley on November 12, 2012, and it was subsequently amended on November 26, 2012.  In January and February 2013, the Company exercised its right pursuant to the Deer Valley Investment Agreement to require Deer Valley to purchase additional shares of the Company’s Common Stock.  The total amount of the puts is $270,000 (See Note 12 – Subsequent Events).

The Deer Valley Investment Agreement and Registration Rights Agreement were terminated in June 2013.  Accordingly, the Company has no obligations remaining under those aforementioned agreements.

Bridge Note

On June 25, 2012, we borrowed $50,000 from Fairhills evidenced by a 2% Secured Note (the “Note”). The Note contains the following payment terms: (a) the unpaid principal amount accrues interest at the rate of two percent (2%) per annum, (b) the unpaid principal and all accrued but unpaid interest thereon will be due and payable on December 24, 2012, and (c) any portion of the unpaid principal and accrued but unpaid interest may be prepaid by the Company, without penalty. Payment of the Note is secured by 3,750,000 shares of our Common Stock owned by Daniel M. Ferris, our sole director and officer. On November 12, 2012, Fairhills transferred all rights and obligations under the Note to Deer Valley. On June 26, 2013, Deer Valley transferred all rights and obligations under the Note to KVM.

As of the date hereof, KVM used the 3,750,000 shares to repay the remaining portion of the Note.  Accordingly, the Note has no outstanding balance and the Company is no longer obligated to repay the Note.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive exploration activities. For these reasons our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern.

Accounting and Audit Plan

We intend to continue to have our outside consultant assist us in the preparation of our quarterly and annual financial statements and have these financial statements reviewed or audited by our independent auditor. Our outside consultant is expected to charge us approximately $3,000 to prepare our quarterly financial statements and approximately $10,000 to prepare our annual financial statements.

20

Off-balance sheet arrangements

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

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our historical financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.

DESCRIPTION OF BUSINESS

General Overview

We are currently a start-up exploration stage company in the business of gold and mineral exploration, acquisition and development. Our principal office is located at 6565 Americas Parkway NE, Suite 200, Albuquerque, New Mexico 87110. Our telephone number is (505) 563-5828.

We were incorporated in the State of Nevada under the name Keyser Resources, Inc. on November 26, 2007.  Our business was initially to acquire an option to purchase a mining interest in Canada. After a change in control in November 2010, the Company explored a merger with another company in order to obtain an option to purchase several oil and gas leases in Nevada. A merger agreement was signed in January 2011.  The then-current management of the Company decided not to pursue the merger, and the merger agreement was terminated by mutual agreement of the parties as of March 18, 2011.

On March 29, 2011, the Company underwent another change in management.  On March 29, 2011, Daniel M. Ferris was elected to serve as the sole director.  Mr. Ferris subsequently appointed himself President, Secretary and Treasurer.

Following the appointment of Daniel M. Ferris as sole director and officer of the Company, the Company has changed its focus to that of a company engaged in the acquisition, exploration and development of gold and silver mining properties.  To further reflect this change in business focus, the Company changed its name to “Lone Star Gold, Inc.” on June 14, 2011.  In addition, to create a more flexible capital structure, the Company increased the number of authorized shares of its Common Stock from 75,000,000 to 150,000,000 on June 14, 2011.  A 20:1 forward stock split was declared to stockholders of record as of June 17, 2011.

Agreements

La Candelaria

Metales HBG, S.A. de C.V. (“Metales”) was formed under the laws of Mexico on May 31, 2011.  We own 70% of the issued and outstanding shares of capital stock of Metales while the remaining 30% are held by Homero Bustillos Gonzalez, a resident of Mexico (“Gonzalez”).  On June 10, 2011, Gonzalez assigned to Metales eight gold and silver mining concessions (the “Concessions”) covering property located in the town of Guachochi, state of Chihuahua, Mexico.  The Concessions cover 800 hectares, or approximately 1,976 acres.

Gonzalez transferred the Concessions to Metales pursuant to an agreement previously entered into with a third party, American Gold Holdings, Ltd., a company formed under the laws of the British Virgin Islands (“American Gold”).  American Gold paid Gonzalez an aggregate of $125,000 prior to the formation of Metales, as required by its agreement with Gonzalez.  On August 17, 2011, in connection with its investment in Metales and the exploration and development of the Concessions, the Company, American Gold, and Gonzalez executed an Assignment Agreement (the “Assignment Agreement”) pursuant to which (a) American Gold assigned to the Company all of its right and interest in and to a Letter of Intent between American Gold and Gonzalez, and an Option to Purchase Agreement between American Gold and Gonzalez dated January 11, 2011 (the “Option Agreement”), (b) the Company accepted the assignment of all of the rights and interest of American Gold in and to the Letter of Intent and the Option Agreement, and (c) the Company assumed all of the duties and obligations of American Gold under the Letter of Intent and the Option Agreement with Gonzalez.  In connection with the execution of the Assignment Agreement, American Gold released any claims against the Company, Metales or Gonzalez in connection with the (i) $125,000 payment it made to Gonzalez, (ii) the Letter of Intent or the Option Agreement, or (iii) the Assignment Agreement.

21

Pursuant to the Assignment Agreement, the Company has taken or has agreed to take the following actions that are required under the Option Agreement and the Letter of Intent, in connection with transfer of the Concessions to Metales:

1. The Company has issued 125,000 shares of its Common Stock to North American Gold Corp, a company organized under the laws of the Marshall Islands (“North American”), as repayment of the $125,000 that American Gold paid Gonzalez in connection with the Option Agreement.  The shares were issued to North American in satisfaction of the Company’s obligations under the Assignment Agreement, at the direction of American Gold.

2. The Company has issued 300,000 shares of its Common Stock to Gonzalez.

3. The Company has paid Gonzalez an additional $125,000.

4. The Company, either alone or through Metales, is obligated to fund $150,000 per year of development costs for three years, for a total of $450,000 (the “Work Plan”).  Pursuant to a verbal agreement, Work Plan payments further have been put on hold until such time as the Company has sufficient capital to continue the project.

Gonzalez retains a 2% Net Smelter Returns Royalty on the Concessions.  In addition, the Company is obligated to issue 1,000,000 shares of its Common Stock to Gonzalez upon the discovery of a 1 million-ounce equivalent gold deposit, as defined by industry standards as set forth by a recognized exchange in North America.  Metales is obligated to undertake work necessary to bring the existing geological survey on the property up to NI 43-101 standards.  Finally, the Company has granted anti-dilution rights to Gonzalez, such that the Company must allow Gonzalez the opportunity to maintain his percentage stock ownership in the Company until the date on which the Company has complied fully with its obligations under the Option Agreement or January 11, 2014, whichever comes first.  Gonzalez has waived the exercise of his anti-dilution rights with respect to issuances of Common Stock to North American under an investment agreement we entered into with North American on August 29, 2011.  See “North American Investment Agreement."  There have been no such waivers with respect to the Fairhills or Deer Valley Agreements.

If the Company fails to comply with all its obligations under the Option Agreement before January 11, 2014, the Option Agreement will terminate and the Company will be obligated to return the Concessions to Gonzalez.

The Company advanced approximately $122,341 to Metales in the first year of the Work Plan, which, together with payments made to Gonzalez that were credited to the Work Plan, satisfied its obligations for that first year.  The Company paid approximately $60,195 towards the payments required in 2012, the second year of the Work Plan and will make additional payments totaling $239,805 in 2013 as required under the Work Plan.  The Company and Gonzalez have verbally agreed that any further Work Plan payments have been put on hold until such time as the Company has sufficient capital to continue the project.

22

La Candelaria Concessions

The concession numbers, file numbers, dates of term, surface area and location of the Concessions are as follows:

Mine Concessions “La Candelaria”

Concession Number: 234759 File number: 016/37587 Term: August 14, 2009- August 13, 2059 Surface Area: 100 hectares Municipality and State: Guachochi, Chihuahua Concession Number: 234760 File number: 016/37588 Term: August 14, 2009- August 13, 2059 Surface Area: 100 hectares Municipality and State: Guachochi, Chihuahua

Concession Number: 234761 File number: 016/37589 Term: August 14, 2009- August 13, 2059 Surface Area: 100 hectares Municipality and State: Guachochi, Chihuahua Concession Number: 234762 File number: 016/37590 Term: August 14, 2009- August 13, 2059 Surface Area: 100 hectares Municipality and State: Guachochi, Chihuahua

Concession Number: 235690 File number: 016/38785 Term: February 16, 2010- February 15, 2060 Surface Area: 100 hectares Municipality and State: Guachochi, Chihuahua Concession Number: 235691 File number: 016/38786 Term: February 16, 2010- February 15, 2060 Surface Area: 100 hectares Municipality and State: Guachochi, Chihuahua

Concession Number: 235692 File number: 016/38787 Term: February 16, 2010- February 15, 2060 Surface Area: 100 hectares Municipality and State: Guachochi, Chihuahua Concession Number: 235693 File number: 016/38788 Term: February 16, 2010- February 15, 2060 Surface Area: 100 hectares Municipality and State: Guachochi, Chihuahua

All references to “La Candelaria” herein refer to all eight concessions unless otherwise indicated.

The Concessions in the La Candelaria project are without known proven (measured) or probable (indicated) reserves, as defined under SEC Industry Guide 7, and the exploration program described in “History and Plan of Operation” below is exploratory in nature.

Authorization and Permits

The transfer of the Concessions to Metales must be registered under Mexican law.  We have been advised that the transfer of the Concessions from Gonzalez to Metales has been registered with the appropriate Mexican authorities.Under Mexican law, a mining concession gives the holder both exploration and exploitation rights for any minerals found in the property.  To maintain the concession, the holder must pay appropriate taxes, perform assessment work, comply with environmental laws, and file a production report each year with the appropriate authorities.  Foreign individuals and companies wanting to hold concessions must do so through ownership in a Mexican corporation or through a joint venture and they may not hold mining concessions directly.  Because of those requirements, we will have to rely on persons associated with Metales, and our employees and consultants in Mexico, to perform all acts necessary to comply with the legal requirements necessary to maintain the Concessions.

The Company has been advised that consultants working with Metales have obtained all of the approvals required for exploration rights under the Concessions, but if the work on the Concessions advances to a development stage, Metales will require further permits from the appropriate authorities.

Location and Access

The property covered by the Concessions is located approximately 125 miles southwest of the city of Chihuahua, Mexico, in the municipality of Guachochi.  The town of Tonachi is approximately 3 miles southeast from the border of the Concessions.  Guachochi may be reached by a paved state highway.  The road to the property from Guachochi is an established paved highway, with the final 20 miles (36 km) being good quality dirt roads capable of handling large trucks and other vehicles.  The closest airstrip is located just outside Guachochi, but Chihuahua remains the main hub.

23

A map of the location of both the La Candelaria Concessions and the Mine Tailings project (described in the next section) is set forth below:

La Candelaria and Mine Tailings Project (Source: Lone Star Gold, Inc. 2012)

A map showing the location of the Concessions in relation to the nearest towns of Guachochi and Tonachi is set forth below:

La Candelaria Project (Source: Lone Star Gold, Inc. 2012)

History and Plan of Operation

The Company, either alone or through Metales, is obligated to fund $150,000 per year of development costs for three years, for a total of $450,000 (the “Work Plan”). The Work Plan consists of a 3-phase, $450,000 exploration program.  Phase 1 exploration work includes mapping of the property; defining 10-15 core drill targets; and equipping a regional satellite office in Chihuahua to conduct work programs on the property while providing a secure sample transfer location for delivery to the ALS CHEMEX regional office/processing plant. The geological team will conduct layers of geo-chemical and geo-physical analysis of the entire property to increase the Company's geo-chemical data. In addition, the team will isolate surface areas of interest and define any underground structures and faults systems. Phase 2 exploration work will include drilling the initial targets identified in Phase 1. Phase 3 exploration work will include further defining underground structures in the most economical areas on the property based on previous drill results.  Miguel Jaramillo, an independent consultant also is acting as the Company’s Vice President of Exploration, and Adam Whyte, an independent consultant in Mexico, oversee the exploration program for the Company.

24

Metales has been involved in Phase 1 exploration, including gathering as much drill data as possible from the previously identified low sulphidation epithermal system; identifying drill targets; and beginning initial drilling.  In terms of gathering data, existing data and new data received by Metales will undergo a geo-physical study and ongoing analysis, including full spectral results.  As part of the Phase 1 exploration, crews have extracted approximately 200 rock chips and stream sediment samples of the entire 800-hectare area. Crews have also begun a limited shallow drilling program focused on the southeast zone of the property covered by the Concessions.  To date, much of the data has been mapped and processed in Lone Star's Chihuahua office.

In November 2011, a team of geologists drilled ten drill holes to a depth of approximately 200 meters (650 feet). The initial results received from ALS CHEMEX showed only trace amounts of gold and silver. The Company is currently remapping the area in order to determine whether additional drilling targets are warranted. If results from the initial drilling stage indicate further drilling is justified, a larger drill unit will be used, capable of reaching depths of 500 meters (1,600 feet) or more.

Exploration is currently halted until mid-2013, while plans are completed to combine the $89,805 remaining under the Company’s commitment to the 2012 Work Plan with the $150,000 that the Company has agreed to provide for the 2013 Work Plan. This total commitment of $239,805 will be used to perform deep core drilling, which is expected to be completed in the second quarter of 2013, assuming the Company has raised sufficient funds for the Work Plan by mid-2013. The Company and the consultants working with Metales decided to spend the combined amounts for the 2012 and 2013 Work Plans to avoid duplicating the cost of transporting the drilling equipment and set up costs. Metales will decide whether to perform further drilling after the new data from the drilling campaign has been analyzed.

Mineralization

The mineralization is believed to be a low sulphadation epithermal deposit. Quartz and calcite vein structures are likely to have been caused by a nearby magma chamber. Large drop off structures and rock formations also show potential of a caldera collapse on the property. If that is true, then this would be classified as a large low grade deposit.

It is believed that certain areas of the La Candelaria were previously disturbed by small freelance mining operations, which scavenge mineralized ore from properties they do not own, but the Company’s consultants have not found visible signs of contamination on the site.

Source of Funding for Exploration

The Company advanced approximately $122,341 to Metales in the first year of the Work Plan, which, together with payments made to Gonzalez that were credited to the Work Plan, satisfied its obligations for that first year. The Company paid approximately $60,195 towards the payments required in 2012 (the second year of the Work Plan) before exploration was halted.  The Company will contribute the remaining $89,805 for 2012 and $150,000 for the 2013 Work Plan in 2013 should the Company decide to continue with the project.

The Company currently relies on sales of the Company’s Common Stock to fund its obligations under the Work Plan. The Company intends to use proceeds from the Tailings project to fund its obligations under the Work Plan if and when proceeds become available.

25

Sample Collection

Consultants working with Metales collect samples from drilling in large plastic bags containing 5-8 kilograms of material, which are strapped and labeled with GPS coordinates. Foremen on the site document the packages and store them in a secure locker. The packages are shipped to our office in Chihuahua and then to ALS Chemex’s laboratories in either Canada or Mexico. For faster results, some samples may be delivered to either the Chihuahua state government processing lab in Parral, or the ERSA Global Laboratory in Torreon, Mexico.

Mine Tailings Project

On January 26, 2012, the Company, acting through a newly-formed subsidiary, entered into a Joint Venture Agreement (the “JV Agreement”) with Miguel Angel Jaramillo Tapia (“Jaramillo”), a resident of Mexico.  Under the JV Agreement, Amiko Kay, S. de R.L. de C.V., a company organized under the laws of Mexico (“Amiko Kay”), and Jaramillo formed a joint venture to process 1,200,000 tons of mine tailings located in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico (the “Tailings”), and, after processing, to use, market and sell any minerals extracted from the Tailings. The Company owns 99% of the issued and outstanding membership interests of Amiko Kay.

Joint Venture Agreements

Mine tailings represent the refuse remaining after ore has been processed. Amiko Kay and Jaramillo entered into the JV Agreement so they could re-process the mine tailings heap to extract minerals that were not extracted during the initial processing, and to market and sell any minerals extracted from the Tailings.  The Tailings project is contractual in nature, meaning that no new entity has been formed by Amiko Kay and Jaramillo.

As consideration for Jaramillo’s agreement to process the Tailings pursuant to the JV Agreement, we paid Jaramillo $25,000 when he signed a letter of intent for a proposed acquisition of an interest in the Tailings, and another $75,000 when he signed the JV Agreement.

We also agreed to pay Jaramillo an additional $200,000 no later than January 26, 2013.  The Company and Jaramillo verbally agreed to defer this payment and as of the date of the filing of this Report, the payment has not been made.  Per the verbal agreement between the Company and Jaramillo, the payments have been put on hold until such time as the Company has sufficient capital to continue the project.

In addition, Amiko Kay agreed to fund an amount up to $1,000,000 for the benefit of the processing operation over its first two years, as follows:

. $250,000 within the first year of the JV Agreement for the purchase of used heavy equipment, miscellaneous equipment and materials for processing the Tailings, and taxes, permits, and general operating expenses.

. $750,000 within the second year of the JV Agreement for the construction of a heap leach system and floatation plant on the Property.

Amiko Kay may make an additional $250,000 available to the JV Agreement, if additional processing equipment is justified and required to maximize the liberation beyond the $1,000,000 base commitment of precious metals in the Tailings material.  However, at this time no additional funds are anticipated to be made by Amiko Kay.

As further consideration, the Company is obligated to issue 600,000 shares Common Stock to Jaramillo.  300,000 shares were issued in the first two quarters of 2012, and the remaining 300,000 shares will be issued in April 2013.

The shares of Common Stock will be restricted shares and were issued with appropriate legends to that effect. Jaramillo executed a Share Issuance Agreement concurrently with the execution of the JV Agreement, with respect to the shares of Common Stock to be issued under the JV Agreement.

26

The project was initially scheduled to process 100-200 tons of the Tailings per day at a processing plant in Parral, a short distance from the Property, with plans to eventually increase the amount processed to 600-800 tons per day, depending on the ability to employ more equipment and workers at the Tailings pile and to complete construction of the heap leach system and flotation plant on the property on which the Tailings are located (the "Property"), as described in “History and Plan of Operation” below.

Jaramillo will manage the day-to-day affairs associated with processing the Tailings, selling the minerals extracted from the Tailings (“Extracted Minerals”), and performing other related activities.  Jaramillo will pay all expenses associated with the processing of the Tailings, the sale of any Extracted Minerals from the Tailings, and other obligations of the project, initally from the funds received under the Work Commitment and, eventually, from revenues from operations.  All net revenues from the sale of any Extracted Minerals or other sources, after deducting expenses, will be distributed and paid monthly, with 65% of net revenues paid to Amiko Kay (and the Company) and 35% of the net revenues paid to Jaramillo. It is anticipated that the portion to be paid to Amiko Kay will be paid directly to the Company. Jaramillo will provide a monthly accounting of all revenues and expenses associated with the processing operations.

The JV Agreement provides that title to the Property and the Tailings will remain in Jaramillo’s name. Jaramillo will be responsible for obtaining all permits, approvals and authorizations associated with the processing of the Tailings.  He is also responsible for causing the processing of the Tailings to comply with all applicable laws, rules and regulations, and to maintain insurance on the Property.  Amiko Kay will have access to the Property and the Tailings at all times during the term of the JV Agreement.

Amiko Kay and Jaramillo will mutually develop plans and programs to process the Tailings.  Jaramillo will prepare a detailed budget setting forth the expenses to be paid under the Work Commitment, which will be approved by Amiko Kay.  Finally, Jaramillo will provide quarterly financial reports to Amiko Kay.  The Company and Amiko Kay intend to oversee the activities of Jaramillo and to confirm compliance of the operation with the budgets and plans agreed upon by the parties on an ongoing basis.  The cost of building a new plant should be approximately $1,000,000 and take seven or eight months to complete.  Funding for this plant would come from either Fairhills or Deer Valley, should the Company commit to proceed in building its own plant.

If either party defaults under the JV Agreement, the defaulting party’s rights to participate in the Tailings operation will be immediately suspended, and the defaulting party will have no right to share in the revenues subject to the JV Agreement until the breach is cured.  If the defaulting party is Jaramillo, then Amiko Kay may perform the duties of Jaramillo under the Agreement. The nondefaulting party may also sue for damages incurred as a result of the event of default.

Despite the Company’s role in jointly developing policies and programs of the project, including its ability to monitor Jaramillo’s actions, and its control over the funds provided under the Work Commitment, the Company has limited control over the processing operations contemplated by the JV Agreement. Jaramillo makes all day to day decisions regarding the processing of the Tailings, the construction of the wash plant on the property, and the plans to construct a heap leach system and flotation plant. As noted above, he is also responsible for obtaining all permits, selling any extracted minerals and paying all expenses. The Company, through Amiko Kay and its on-site consultant, regularly advises Jaramillo as to these matters, makes on-site inspections of the operation and receives progress reports from Jaramillo, but the Company is ultimately dependent on Jaramillo to make all operational decisions and execute all plans with respect to the project. The Company does control initial funding of the project and receives reports of the specific costs and expenses of the enterprise, which it intends to compare against the agreed budget before making further advances. Otherwise, except as outlined above, the Company has no direct control over the operations.

If the Company determines that Jaramillo is breaching his responsibilities under the Agreement, the Company’s could either terminate the Agreement, or allow the suspension of Jaramillo’s right to participate in the Tailings, as provided in the JV Agreement. If Jaramillo is in default, then the Company has the contractual right (but not the obligation) to perform the duties of Jaramillo under the JV Agreement; however, it is unlikely that the Company would do so, given Jaramillo’s ownership of the surrounding properties and the Company’s lack of physical processing resources in Mexico. Alternatively, the Company could withhold payments under the Work Commitment until the default is cured, in order to minimize any further financial exposure to the Company and to encourage Jaramillo to resolve the default. The significant costs and resources required for litigation, together with the Company's limited financial resources at this time, make the pursuit of litigation unlikely at this time.

27

The JV Agreement will terminate upon completion of processing the Tailings, as determined by Amiko Kay in its sole discretion.  If Jaramillo materially breaches the JV Agreement, Amiko Kay may terminate the JV Agreement upon 30 days notice to Jaramillo.  Jaramillo has no right to terminate the JV Agreement before the processing of the Tailings is complete.

Jaramillo provides independent consulting services to the Company on the La Candelaria project.  He acts as Vice President of Exploration on the La Candelaria project (although he is not an executive officer, or an employee, of the Company, Metales or  Amiko Kay).  See Item 10, Directors, Executive Officers and Corporate Governance, below.

Location and Access

The Tailings are located in the town of San Antonio del Potrero, Mineral de Jal, comprising approximately 75 hectares. The Tailings pile is approximately 200 meters from a paved state highway in San Antonio del Potrero. The Tailings pile is registered with the San Antonio Ejido and the city of Hidalgo del Parral. The city of Hidalgo del Parral is located approximately 220 kilometers from the city of Chihuahua, Mexico. Hidalgo del Parral may be reached by a paved road from all directions, including from Chihuahua. The closest airport is located in Chihuahua.

A map of the general location of the Tailings property can been seen in “La Candelaria - Location and Access” above. A map of the location of the Tailings pile in relation to the city of Hidalgo del Parral is set forth below:

 Mine Tailings (Source: Lone Star Gold, Inc. 2012)

The Tailings come from the Beta Colorado vein that runs approximately 8 kilometers north of the city of Hidalgo Del Parral. The main structure of the vein is approximately 16 meters wide and has been mined for over 250 years by various parties and mining continues today. There are currently 8-10 mines operating on the north end of the Beta Colorado vein, with multiple shoot structures on the same trend. The Company has been informed that there are no signs of recent contamination on the site.

The Tailings pile is approximately 650 meters in length and averages 100 meters wide. The average depth of the pile is 15 meters, for a total of 975,000 cubic meters. The Company’s consultants have estimated that the Tailings weigh 1.2 million tons. The estimate of 1.2 million tons of tailings has been calculated by applying a factor of 1.25 tons per cubic meter of Tailings material. The Company’s consultants derived the factor of 1.25 tons of material per cubic meter by weighing trucks filled with the Tailings material. No additional material is being added to the pile.

The Tailings are without known proven (measured) or probable (indicated) reserves, as defined under SEC Industry Guide 7, and the exploration program described in “History and Plan of Operation” is exploratory in nature. See “No Proven or Probable Reserves” below.

28

History and Plan of Operation

As stated above, Amiko Kay agreed to fund an amount up to $1,000,000 for the benefit of the processing operation over its first two years, as follows:

. $250,000 within the first year of the JV Agreement for the purchase of used heavy equipment, miscellaneous equipment and materials for processing the Tailings, and taxes, permits, and general operating expenses.

. $750,000 within the second year of the JV Agreement for the construction of a heap leach system and possibly a floatation plant on the Property.

Amiko Kay may make an additional $250,000 available, if additional processing equipment is justified and required to maximize the liberation of precious metals in the Tailings material.  However, at this time no additional funds are anticipated to be made by Amiko Kay.

We have obtained the results of 29 test samples performed by ALS CHEMEX. The samples were taken from the Tailings in late 2010 by the previous owner.  The results of analysis of the test samples showed an average of 113 grams per ton of silver, with additional by-product of gold, zinc, lead and copper.  The Company is not planning any additional testing at this time.

The consultants in Mexico working on the Tailings project performed additional testing by having a sample of approximately 45 kilograms (approximately 88 pounds) of the Tailings processed and analyzed. Grade assays based on the sampling were received from SGM (Servicio Geologico Mexicano). The results of the analysis showed an average of 115 grams per ton of silver and 0.7 grams per ton of gold, with 1% per ton of lead and zinc. The grade assays are not recognized as NI 43-101 standard.

In late February 2012, Jaramillo began shipping 100 tons of Tailings per day to a processing plant. In 2012, no Tailings were processed because of the plant closed unexpectedly and underwent a change in management. Jaramillo was informed that the plant was scheduled to re-open in the fall of 2013, but has recently re-opened .  The Company has received no revenues from minerals extracted from the Tailings as of this date.

Pursuant to the JV Agreement, Jaramillo will manage the day-to-day affairs associated with processing the Tailings. Adam Whyte, an independent consultant for the Company in Mexico, works with Jaramillo on the Tailings project.

Amiko Kay is obligated to fund $250,000 under the JV Agreement before January 26, 2013, under the work commitment established for the Tailings Project. For the year ended December 31, 2012, the Company made payments totaling $250,000 pursuant to the Work Commitment in satisfaction of its funding obligations for the first year.

On the Tailings property, two out of three on-site washing jigs are now complete and operational. The jigs separate the heavy mineral-rich material from the lighter worthless material in the Tailings. Material has been pre-washed to maximize the silver and gold content per ton of material to be shipped to nearby floatation and leaching plants in Parral, Mexico. The cost of the wash plant and jig circuit was $60,000 to date.

Approximately 6,000 tons of the Tailings material has been sent to the processing plant in Parral, Mexico.  The first processing plant selected in Parral, Mexico which closed unexpectedly for the last few months and recently re-opened, earlier than previously expected. The plant is expected to resume processing in the near future. The plant’s management has agreed to receive and process 200 tons per day (tpd) of the Company’s Tailings material. In addition, the Company is negotiating an agreement with a second nearby processing plant. The Company has no revenues from the Tailings to date.

29

Jaramillo and Adam Whyte have completed a preliminary study regarding the construction of a benign nitrogen leaching pile process to be built on the property, which is expected to be capable of processing 1,000 tons of Tailings per day. This relatively new leaching process represents the benefits of not using cyanide and of having minimal environmental impact. In turn, the complexity of the permitting process for the plant's construction will be greatly reduced. They are in the process of obtaining permits for the new plant.

Authorizations and Permits

The surface rights to the land on which the Tailings are located are subject to the rights of a local Ejido. Ejidos are groups of local inhabitants who were granted rights to conduct agricultural activities on the property. The Company’s consultants has informed us that Jaramillo currently has a written agreement with all the leaders of the area Ejido that controls the surface rights of Tailings property, allowing the processing of the Tailings pile, and that the head of mining for the state of Chihuahua has granted verbal approval for all stages of the plan to process the Tailings. After designs for the leaching plant are complete, Jaramillo will obtain all necessary documentation from the appropriate permitting authorities for construction.

Source of Funding for Exploration

The Company currently relies on sales of Common Stock to fund its obligations under the JV Agreement. The Company intends to use future revenues from the sale of minerals extracted from the Tailings to fund its obligations, if and when such revenues have been received.

Equipment

Pursuant to the Work Plan, equipment has been purchased to assist in moving the Tailings to be processed, including two dump trucks, a backhoe, two drills, two washing jigs, compressors, generators, pumps, a hopper, conveyors and holding tanks. The cost of this equipment was approximately $200,000. The Tailings operation has access to three 6-inch water lines that pump water from a neighboring shaft mine, and can obtain electricity from an electrical sub-station located 200 meters from the Tailings.

Reclamation

Jaramillo and Adam Whyte, the Company’s consultant, currently plan to re-shape the Tailings pile and spread it over a larger area after the Tailings have been processed, and to leave an irrigation system for local farmers to cultivate grass for grazing. The Company has been advised by its consultant that the leaders of the Ejido and the Chihuahua mining authorities have verbally agreed to this plan.

LOI Regarding the Ocampo Property

On September 29, 2011, the Company entered into a letter of intent  (the “Ocampo LOI”) with Antonio Aguirre Rascon, a resident of Mexico, to acquire a 70% interest in mining concessions covering approximately 570 hectares located in the municipality of Ocampo in the state of Chihuahua, Mexico.  The Ocampo LOI was intended to serve as the basis for a definitive agreement to be negotiated between the parties.  If the definitive agreement was not executed within 90 days of the date of the Ocampo LOI, the Ocampo LOI would expire unless extended by mutual agreement of the parties.  The Ocampo LOI expired as of December 29, 2011.

No Proven or Probable Reserves

We are a start-up, exploration-stage company engaged in the search for gold and related minerals.  No proven (measured) or probable (indicated) reserves have been established with respect to the La Candelaria project or the Tailings project, and the proposed program of exploration and development for the La Candelaria project and the Tailings project is exploratory in nature.  There is no assurance that a commercially viable mineral deposit, or reserve, exists on the properties covered by the Concessions or the Tailings project or can be shown to exist until sufficient and appropriate exploration is done, and a comprehensive evaluation of such work concludes that the extraction of such a mineral deposit, if found, can be economically and legally feasible.

30

Competition

The mining industry is intensely competitive. Competition includes large established mining companies with substantial capabilities and with greater financial and technical resources than we have. As a result of this competition, we may be unable to acquire additional attractive mining claims or financing on terms we consider acceptable. We also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration and development programs may be slowed down or suspended.

Compliance with Governmental Regulation

The Company is committed to complying with all governmental and environmental regulations applicable to the Company, its properties and its business. Permits from a variety of regulatory authorities are required for many aspects of mine operation. The Company relies on its consultants in Mexico to obtain and maintain all permits, authorizations and approvals necessary or desirable to maintain our business and properties.  The Company has been informed that it has the necessary permits and approvals to proceed with the operation of the Tailings project, including a preliminary verbal approval from the Chihuahua mining authorities for the construction of a plant on the Tailings Property.

North American Investment Agreement

On August 29, 2011, we entered into an investment agreement with North American pursuant to which North American agreed to invest up to $15,000,000 to purchase our Common Stock in increments of $100,000 or an integral multiple thereof, at our option at any time through August 31, 2013.

Fairhills Investment Agreement

On April 30, 2012, we entered into a Fairhills Investment Agreement, which was subsequently amended on June 25, 2012 and on September 21, 2012, with Fairhills Capital Offshore Ltd., a Cayman Islands exempted company. Pursuant to the terms of the Fairhills Investment Agreement, Fairhills committed to purchase up to $15,000,000 of our Common Stock over a period of up to thirty-six (36) months.

In connection with the Fairhills Investment Agreement, we also entered into a registration rights agreement with Fairhills, pursuant to which we are obligated to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering 30,000,000 shares of our Common Stock underlying the Fairhills Investment Agreement within 21 days after the closing of the transaction. In addition, we are obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 120 days after the closing of the transaction and maintain the effectiveness of such registration statement until termination of the Fairhills Investment Agreement.

On November 12, 2012, Fairhills entered into an assignment and assumption agreement with Deer Valley Management, LLC, a Delaware limited liability company (“Deer Valley”), pursuant to which Fairhills transferred and assigned all rights and obligations under the Fairhills Investment Agreement and registration rights agreement to Deer Valley. Such investment agreement will be referred to as the “Deer Valley Investment Agreement” in this filiing. Fairhills and Deer Valley have common ownership and management. The Deer Valley Investment Agreement was subsequently amended on November 26, 2012.

In December 2012 and January, February and March 2013, the Company exercised its right to put an aggregate 9,510,000 shares to Deer Valley pursuant to the Deer Valley Investment Agreement, for an aggregate put option price of $285,000.  The proceeds of the sale of the shares will be used to fund general corporate expenses associated with our operations.  At an assumed purchase price of $0.0302 (equal to 75.5% of the closing price of our Common Stock of $0.04 on April 3, 2013), we will be able to receive up to another $286,598 in additional gross proceeds from the sale of the remaining 9,490,000 shares registered on the Form S-1 declared effective in December 2012.  Accordingly, we would be required to register an additional 412,991,104 shares to obtain the balance of $12,472,331 under the Deer Valley Investment Agreement. We are currently authorized to issue 150,000,000 shares of our Common Stock. We may be required to increase our authorized shares in order to receive the entire purchase price. Deer Valley has agreed to refrain from holding an amount of shares which would result in Deer Valley owning more than 4.99% of the then-outstanding shares of our Common Stock at any one time.

31

On September 14, 2012, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Fairhills pursuant to which Fairhills purchased 653,595 shares from us for a total purchase price of $50,000. The proceeds of the sale of the shares will be used to fund general corporate expenses associated with our operations.  The Securities Purchase Agreement required us to use commercially reasonable efforts to file a registration statement on Form S-1 with the SEC covering the resale of the shares within 30 days of the date of the sale of the shares and to use our commercially reasonable efforts to have the registration statement declared effective by the SEC as soon as practicable, but in no event later than the earlier of (i) 120 days after the deadline for filing of the registration statement, or (ii) the 5th business day after the date that the Company is advised that the registration statement will not be reviewed or is not subject to further review.  We filed a registration statement on Form S-1 that covered the resale of the shares issued to Fairhills on October 16, 2012, which was declared effective on December 21, 2012, after being reviewed by the SEC.

The Securities Purchase Agreement also contains price protection provisions.  At the earlier of the date (the “Triggering Date”) that (i) any registration statement covering resale of the shares is declared effective, or (ii) the shares may be sold under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), the shares will be valued based on the price of the shares on the Triggering Date.  If the shares have an aggregate value of less than $50,000 using such discount, we will issue additional registered shares to Fairhills such that the total value of the shares and the additional shares equals $50,000, based on the foregoing discounted price.  Based on the terms of the price protection and the trading price of $0.03 per share on December 21, 2012, the effective date of the registration statement, the value of the shares issued to Fairhills was $19,607.85.  The Company is obligated to issue Fairhills an additional 1,013,072 shares of Common Stock under the price protection clause, which it recently authorized its transfer agent to issue.

The Deer Valley Investment Agreement and Registration Rights Agreement were terminated in June 2013.  Accordingly, the Company has no obligations remaining under those aforementioned agreements.

Employees

Currently, the sole employee of the Company is Daniel M. Ferris, our President, Treasurer, Secretary and sole director. Mr. Ferris is employed under an Employment Agreement, which is described more fully in Item 10, Directors, Executive Officers and Corporate Governance.

Subsidiaries

We have two subsidiaries:  Metales HBG, S.A. de C.V. (“Metales”) and Amiko Kay, S. de R.L. de C.V. (“Amiko Kay”).  Both are companies organized under the laws of Mexico.

We own 70% of the issued and outstanding shares of stock of Metales. Our President, Mr. Ferris, is the sole administrator of Metales. As sole administrator, he assumes the duties of a Board of Directors. Miguel Robles, the Company’s attorney in Mexico, has limited duties for the day-to-day operation of Metales.

We own 99% of the issued and outstanding membership interests of Amiko Kay.  Miguel Robles owns a 1% ownership interest to satisfy Mexican law requirements for there being at least two owners.

32

Our current corporate structure chart is as follows:

Intellectual Property

We do not own any patents or trademarks.

Legal Proceedings

We are not aware of any pending legal proceedings which involve the Company or any of our properties.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The Directors and Officers serving our Company are as follows:

Name	Age	Positions Held
Daniel M. Ferris	31	President, Secretary, Treasurer  and Director

The sole director named above will serve until the next annual meeting of the stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders' meeting.

Officers will hold their positions at the pleasure of the board of directors. On July 12, 2011, we entered into an employment agreement with Mr. Ferris regarding his position as President of the Company. The employment agreement has an initial term of three years, and after the initial term will automatically renew for successive one-year periods until terminated in accordance with the agreement. The employment agreement may be terminated voluntarily by either party upon 30 days written notice, upon Mr. Ferris’ death or disability, by mutual agreement at the end of the term, or for “cause” by the Company. The employment agreement defines “cause” as the willful and continued failure by Mr. Ferris to perform his duties under the employment agreement, conviction of a felony, or engaging in conduct that is contrary to the best interests of the Company or adversely affects the Company’s reputation.

33

Biographical Information – Daniel M. Ferris

Mr. Ferris was elected sole director and President, Secretary and Treasurer of the Company on March 29, 2011. Mr. Ferris was also recently appointed President, Secretary and Treasurer of Curry Gold Corp. (OTCBB: CURG), a shell company with no current operations. Mr. Ferris’ career began in public relations. Mr. Ferris was a senior publicist at Freud Communications. After leaving Freud Communications, he began his own public relations and corporate strategy firm, Magnum Communications. Magnum Communications assisted clients in Europe with public relations, financing arrangements, and recruitment. Mr. Ferris’ association with Magnum Communications ended in January 2009. Recently, Mr. Ferris has assisted fund managers with raising funds for a diamond project in the Democratic Republic of Congo. He also serves as a consultant for LCI, which is affiliated with Caesar’s Palace Group. Mr. Ferris’ position at the Company represents his primary business activity. Mr. Ferris currently resides in London.

Significant Employees and Consultants

We have no employees, other than our President, Mr. Ferris.

We have retained several consultants. Miguel Angel Jaramillo Tapia (“Jaramillo”) is an independent consultant who is acting as our Vice President of Exploration (although he is not an executive officer or employee of the Company). Jaramillo, a professional geologist, has worked on numerous mining projects in the Sierra Madre area of Mexico, in which the Concessions are located. He has worked as a consultant performing economic feasibility studies for mining companies in the area. He presently owns his own geo-exploration company focused on mineral mining and analysis of investment projects. Jaramillo also has a working knowledge of the local area surrounding the Concessions. We do not have a written consulting contract with Jaramillo.

We have entered into the JV Agreement with Jaramillo to process the Tailings. See “Description of Business” section. He is entitled to 35% of the net revenue from the Tailings operation under the JV Agreement, as well as 600,000 shares of common stock as partial consideration. Jaramillo is paid for his services as a consultant on the La Candelaria project from the Work Plan for La Candelaria.

Adam Whyte is a consultant for the Company based in Mexico, who performs consulting services pursuant to a consulting agreement dated October 31, 2011.  The contract calls for Mr. Whyte to receive $15,000 upon execution of the agreement, $5,000 per month through the term of the agreement, and a one-time grant of 150,000 restricted shares of our common stock. The term of agreement is one year and it will automatically renew if not cancelled in writing 30 days prior to the end of the annual period.

We employ the services of engineering consultants. On September 27, 2011, we signed a contract with Ralph R. Sacrison, P.E., of the firm Sacrison Engineering, to perform engineering consulting and related services. We agree to pay Sacrison Engineering a monthly retainer of $1,000 per month, which will cover 2 full days of services. The contact may be terminated at any time by either party.

We have an informal agreement with Dr. Mike Seeger, of MX Mining Capital Advisors, to provide up to two days’ advice via phone, email or Skype for $1,500 per month. The engagement is at-will.

For our accounting requirements we use the services of an accounting firm to assist in the preparation of our financial statements. We also have employed U.S. legal counsel in connection with our securities reporting requirements and other matters related to our business.

Finally, we also employ legal counsel in Mexico in connection with the formation of our Mexican subsidiaries, and on-going legal work associated with the business of our subsidiaries in Mexico, such as the registration of our properties with Mexican governmental authorities.

34

Code of Ethics

We have not adopted a code of ethics that applies to our executive officers and employees. We anticipate that we will adopt a code of ethics when appropriate as we hire additional employees and engage additional officers and directors.

Committees of the Board of Directors

We do not presently have a separately designated audit committee, compensation committee, nominating committee, executive committee or any other committees of our Board of Directors. As such, the sole director acts in those capacities. We believe that committees of the Board are not necessary at this time given that we are in the exploration stage.

Audit Committee Financial Expert

Mr. Ferris does not qualify as an “audit committee financial expert.” We believe that the cost related to retaining such a financial expert at this time is prohibitive, given our current operating and financial condition. Further, because we are in the development stage of our business operations, we believe that the services of an audit committee financial expert are not necessary at this time.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of our common stock to file reports of ownership and change in ownership with the Securities and Exchange Commission and the exchange on which the common stock is listed for trading. Executive officers, directors and more than ten percent stockholders are required by regulations promulgated under the Exchange Act to furnish us with copies of all Section 16(a) reports filed. Based solely on our review of copies of the Section 16(a) reports filed for the fiscal year ended December 31, 2012 , we believe that our executive officers, directors and ten percent stockholders complied with all reporting requirements applicable to them.

EXECUTIVE COMPENSATION

The following table sets forth all compensation paid by the Company for the fiscal years of 2011 and 2012.  

Summary Compensation Table

Name	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Non-Equity Incentive Plan Compensation ($)	All Other Compensation ($)	Total ($)
Mr. Ferris	2012	$120,000	-	$999,996	-	-	$1,119,996
Mr. Ferris	2011	$70,000	-	-	-	-	$70,000
Mr. Vollmers	2010	-	-	-	-	-	-
Mr. Bidaux	2010	-	-	-	-	-	-
Mr. Bidaux	2009	$12,480	-	-	-	-	$12,480

Neither Mr. Bidaux nor Mr. Vollmers received compensation from the Company in 2010 and 2011, as applicable.  Mr. Ferris replaced Mr. Vollmers as sole director and officer on March 29, 2011.

Outstanding Equity Awards at the End of the Fiscal Year

We do not have any equity compensation plans and therefore no equity awards were outstanding as of December 31, 2012.

Stock Option Grants

We have not granted any stock options to our executive officers as of December 31, 2012.

35

Employment Agreements

 On July 12, 2011, the Company entered into an employment agreement with Mr. Ferris regarding his position as President of the Company.  The employment agreement has an initial term of three years, and after the initial term will automatically renew for successive one-year periods until terminated in accordance with the agreement.  The employment agreement may be terminated voluntarily by either party upon 30 days written notice, upon Mr. Ferris’ death or disability, by mutual agreement at the end of the term, or for “cause” by the Company.  The employment agreement defines “cause” as the willful and continued failure by Mr. Ferris to perform his duties under the employment agreement, conviction of a felony, or engaging in conduct that is contrary to the best interests of the Company or adversely affects the Company’s reputation.

Under the terms of his employment agreement, as compensation for serving as President of the Company, Mr. Ferris will be paid a base salary of $120,000 per year during the Term.  Mr. Ferris will also be entitled to receive 3,000,000 shares of Common Stock, which will vest in three equal increments over the first 3 years of the term.  Therefore, Mr. Ferris will receive 1,000,000 shares of Common Stock on July 12 of each of the years 2012, 2013, 2014.  If Mr. Ferris’ employment is terminated for “cause”, or if he voluntarily resigns, then he would not be entitled to receive any shares of Common Stock that have not vested as of the date of resignation or termination.  If Mr. Ferris’ employment is terminated for any other reason, he would receive the full 3,000,000 shares of Common Stock.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the ownership, as of August 14, 2013 , of our Common Stock by our sole officer and director, and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. Information with respect to beneficial owners who are not officers and directors is to the best of our knowledge.  As of August 14, 2013 , there were 100,804,663 common shares issued and outstanding.  All persons named have sole voting and investment power with respect to the shares, except as otherwise noted.

Name and Address of Beneficial Owner	Number of Shares Owned Beneficially	Percentage Ownership
Officers and directors:
Daniel M. Ferris President, Secretary, Treasurer and Director 6565 Americas Parkway NE, Suite 200 Albuquerque, NM  87110	8,500,000	8.43%
5% or more beneficial owners: John Rhoden	22,500,000	22.32%
All executive officers and directors as a group	8,500,000	8.43%

(1)

Includes 3,750,000 shares of Common Stock as pledge to secure the 2% Secured Note issued to Deer Valley by the Company.

(2)

On January 13, 2012, the Company agreed to redeem certain shares of Common Stock held by two of its principal shareholders. The Company agreed to redeem 7,500,000 shares of Common Stock owned by Dan M. Ferris, for total consideration of $1.00.  In addition, the Company agreed to redeem 22,500,000 shares of Common Stock held by John G. Rhoden, for total consideration of $1.00.  The redeemed shares of Common Stock are to be retired and restored to the status of authorized and unissued shares, and not held in treasury.  The number of shares owned by Mr. Ferris and Mr. Rhoden in the chart above includes the effect of the redemption of these shares, although the redemption of Mr. Rhoden’s shares has not been reflected in the books and records of the Company’s transfer agent.  See section “Certain Relationships and Related Transactions” below.

36

Changes in Control

The Company underwent a change in management on November 17, 2010, when Mr. Bidaux resigned as sole director and officer of the Company.  Shareholders holding at least a majority of the issued and outstanding shares of the Common Stock elected Mr. Vollmers to serve as the sole director. Mr. Vollmers subsequently appointed himself President, Secretary and Treasurer. The Company underwent another change in management on March 29, 2011, when Mr. Ferris became our sole director and executive officer.  There are currently no arrangements which would result in a change in control of the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

The following is a description of transactions since January 1, 2011 to which the Company has been a party in which the amount involved exceed or will exceed $120,000 and in which any of the person who serves as our director and executive officer or with any beneficial owners of more than 5% of our common stock, or entities affiliated with them, had or will have a direct or indirect material interest.

On June 25, 2012, we borrowed $50,000 from Fairhills evidenced by a 2% Secured Note. The Note contains the following payment terms: (a) the unpaid principal amount accrues interest at the rate of two percent (2%) per annum, (b) the unpaid principal and all accrued but unpaid interest thereon will be due and payable on December 24, 2012, and (c) any portion of the unpaid principal and accrued but unpaid interest may be prepaid by the Company, without penalty. Payment of the Note is secured by 3,750,000 shares of our common stock owned by Daniel M. Ferris, our sole director and officer. The Note was subsequent assigned to Deer Valley by Fairhills.

As of June 30, 2012, an advance from Maurice Bideaux, former chief executive officer and director, in the amount of $38,910, remains unpaid.

In December 2010, the Company lent $290,000 to American Liberty Petroleum Corp. (“ALP”) and in 2011 lent ALP another $295,000. The promissory notes executed by ALP in connection with the loans contained the following payment terms: (a) the unpaid principal amount accrued interest at the rate of six percent (6%) per annum, (b) the unpaid principal and all accrued but unpaid interest thereon was due and payable on April 30, 2011, and (c) the unpaid principal and accrued but unpaid interest could be prepaid in whole or in part at the option of ALP, without penalty or premium. The notes are not secured by any assets of ALP. ALP made no payments of principal or interest under the notes. In April 2011, the Company assigned the notes to New World in consideration for the redemption of the Units owned by New World. As a result, the Company no longer holds any notes from ALP. At the time the loans were made, Mr. Vollmers was the sole director and officer of ALP and of the Company. However, Mr. Vollmers is no longer a director or executive officer of the Company. Mr. Vollmers sold his shares of common stock in March 2011 to Mr. Ferris, and resigned as director and executive officer of the Company.

On January 24, 2011, the Board of Directors of the Company approved a series of transactions that would result in the merger of TAEC, a subsidiary of ALP, with and into the Company. See “Business.” If the proposed merger had been completed, the Company would have acquired an option agreement to purchase certain oil and gas properties in Nevada, which were the sole asset of ALP. Mr. Rhoden, Mr. Vollmers and New World, as stockholders holding more than 50% of the votes entitled to be cast with respect to the approval of the transactions, adopted resolutions authorizing the Company to complete the series of transactions.  However, the Company and ALP have since terminated their agreement for the purchase of the assets, and the Company has no further obligations under such agreement.

On January 13, 2012, the Company agreed to redeem certain shares of the common stock of the Company held by two of its principal shareholders. The Company redeemed 7,500,000 shares of common stock owned by Dan Ferris, for total consideration of $1.00. Mr. Ferris is the sole officer and director of the Company. In addition, the Company redeemed 22,500,000 shares of common stock held by John G. Rhoden, for total consideration of $1.00.

After redemption, Mr. Ferris owns 7,500,000 shares of common stock, and Mr. Rhoden owns 22,500,000 shares of common stock, representing 8.64% and 25.92%, respectively, of the issued and outstanding shares of common stock. The redeemed shares of common stock were retired and restored to the status of authorized and unissued shares, and not held in treasury. The Company, Mr. Ferris and Mr. Rhoden agreed to effect the redemption in order to reduce the number of issued and outstanding shares of common stock.

37

The stock transfer agent has not yet recorded the redemption of the stock formerly owned by Mr. Rhoden due to a delay caused by his inability to locate and deliver one of his stock certificates. However, the number of issued and outstanding shares reported by the Company in this prospectus gives effect to this redemption.

Director Independence

Quotations for the Company’s common stock are entered on the Over-the-Counter Bulletin Board inter-dealer quotation system, which does not have director independence requirements. For purposes of determining director independence, the Company applied the definitions set out in NASDAQ Rule 4200(a)(15). Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. As a result, the Company does not have any independent directors. Our sole director, Daniel M. Ferris, is also the Company’s principal executive officer.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

As previously reported on the Current Report on Form 8-K filed with the SEC on March 10, 2011, on March 7, 2011 , our Board of Directors dismissed Seale and Beers, CPAs, our independent registered public accountants.  On the same date, the accounting firm of LBB & Associates Ltd., LLP was engaged by our Board of Directors as our new independent registered public accountants.   None of the reports of Seale  and Beers on the Company's  financial  statements for the year ended December 31, 2009 or subsequent interim periods contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles, except for a going concern qualification in the registrant's audited financial statements.

During the registrant's year ended December 31, 2009 and the subsequent interim periods thereto, there were no disagreements with Seale and Beers, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Seale and Beers’ satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report on the registrant's financial statements.

Seale and Beers furnished us with a letter addressed to the Securities and Exchange Commission stating that it agrees with the above statements.

During the two most recent fiscal years and the interim periods preceding the engagement, the registrant has not consulted LBB & Associates Ltd., LLP regarding any of the matters set forth in Item 304(a)(2) of Regulation S-K.

SELLING STOCKHOLDER

We are registering for resale shares of our common stock that are issued and outstanding held by the selling stockholder identified below. We are registering the shares to permit the selling stockholder to resell the shares when and as it deems appropriate in the manner described in the “Plan of Distribution.” As of the date of this Prospectus, there are 100,804,663 shares of common stock issued and outstanding.

The following table sets forth:

· the name of the selling stockholder,

· the number of shares of our common stock that the selling stockholder beneficially owned prior to the offering for resale of the shares under this Prospectus,

· the maximum number of shares of our common stock that may be offered for resale for the account of the selling stockholder under this Prospectus, and

· the number and percentage of shares of our common stock to be beneficially owned by the selling stockholder after the offering of the shares (assuming all of the offered shares are sold by the selling stockholder).

38

The selling stockholder has never served as our officer or director or any of its predecessors or affiliates within the last three years, nor has the selling stockholder had a material relationship with us. The selling stockholder is neither a broker-dealer nor an affiliate of a broker-dealer. The selling stockholder did not have any agreement or understanding, directly or indirectly, to distribute any of the shares being registered at the time of purchase.

The selling stockholder may offer for sale all or part of the shares from time to time. The table below assumes that the selling stockholder will sell all of the shares offered for sale. The selling stockholder is under no obligation, however, to sell any shares pursuant to this Prospectus.

			Number of
			Shares of
	Shares of	Maximum	Common
	Common Stock	Number of	Stock
	Beneficially	Shares of	Beneficially		Percent
	Owned prior to	Common Stock	Owned after		Ownership
Name	Offering (1)	to be Offered	Offering		after Offering
KVM Capital Partners (2)	0	26,100,000		0		0	%

(1) Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, securities that are currently convertible or exercisable into shares of our common stock, or convertible or exercisable into shares of our common stock within 60 days of the date hereof are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder’s name.

(2) Includes  26,100,000 shares issuable to KVM pursuant to the KVM Investment Agreement. Neil Kleinman has the voting and dispositive power over the shares owned by KVM.

PLAN OF DISTRIBUTION

Pursuant to the terms of the KVM Investment Agreement, KVM committed to purchase up to $5,000,000 of our common stock over a period of up to thirty-six (36) months. From time to time during the thirty-six (36) months period commencing from the effectiveness of the registration statement, we may deliver a put notice to KVM which states the dollar amount that we intend to sell to KVM on a date specified in the put notice. The maximum investment amount per notice shall be no more than two hundred percent (200%) of the average daily volume of the common stock for the ten consecutive trading days immediately prior to date of the applicable put notice. The purchase price per share to be paid by KVM shall be calculated at a twenty percent (20%) discount to the lowest trading price of the common stock as reported by Bloomberg, L.P. during the ten (10) consecutive trading days immediately prior to the receipt by KVM of the put notice. We have reserved 30,000,000  shares of our common stock for issuance under the KVM Investment Agreement.

In connection with the KVM Investment Agreement, we also entered into a registration rights agreement with KVM, pursuant to which we are obligated to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering shares of our common stock underlying the KVM Investment Agreement within 21 days after the closing of the transaction. In addition, we are obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 120 days after the closing of the transaction and maintain the effectiveness of such registration statement until termination of the KVM Investment Agreement.

At an assumed purchase price of $0.0272 (equal to 80% of the closing price of our common stock of $0.034 on August 14, 2013 ), we will be able to receive up to $709,920 in gross proceeds, assuming the sale of the entire 26,100,000 shares being registered hereunder pursuant to the KVM Investment Agreement. Accordingly, we would be required to register additional 157,723,530 shares to obtain the balance of $4,290,080 under the KVM Investment Agreement. We are currently authorized to issue 150,000,000 shares of our common stock. We may be required to increase our authorized shares in order to receive the entire purchase price. KVM has agreed to refrain from holding an amount of shares which would result in KVM owning more than 4.99% of the then-outstanding shares of our common stock at any one time.  

39

The selling stockholder may, from time to time, sell any or all of its shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholder may use any one or more of the following methods when selling shares:

· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

· block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction

· purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

· an exchange distribution in accordance with the rules of the applicable exchange;

· privately negotiated transactions;

· short sales after this registration statement becomes effective;

· broker-dealers may agree with the selling stockholder to sell a specified number of such shares at a stipulated price per share;

· through the writing of options on the shares;

· a combination of any such methods of sale; and

· any other method permitted pursuant to applicable law.

The selling stockholder may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholder and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that a selling stockholder will attempt to sell shares of common stock in block transactions to market makers or other purchasers at a price per share which may be below the then market price. The selling stockholder cannot assure that all or any of the shares offered in this prospectus will be issued to, or sold by, the selling stockholder. The selling stockholder and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus, are “underwriters” as that term is defined under the Securities Act, or the Exchange Act, or the rules and regulations under such acts. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

Pursuant to the KVM Investment Agreement, the Company may enter into an agreement with a registered broker-dealer to act as a placement agent.  The Company has no intention to engage a placement agent in connection with this registration statement, and has not had any discussions with any broker-dealers.  Additionally, KVM does not have the right to require the Company to engage a placement agent, or pick the broker-dealer to act as placement agent.  Furthermore, the engagement of a placement agent does not impact KVM’s obligation to provide the Company cash funds in connection with the delivery of a put notice.

Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling stockholder. The selling stockholder may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.  Notwithstanding the foregoing, if the Company decides to engage a placement agent in connection with this registration statement, then the Company shall be obligated to pay the fees connected to the placement agent.  This may result in the Company receiving less than the expected total proceeds of $5,000,000.

KVM has agreed to pay all fees and expenses incident to the registration of the shares of common stock. KVM intends to sell/distribute the shares of common stock that they acquire from the Company in the open market.

The selling stockholder shall acquire the securities offered hereby in the ordinary course of business and has advised us that it has not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of its shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any selling stockholder. If we are notified by any selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus.

If the selling stockholder uses this Prospectus for any sale of the shares of common stock, it will be subject to the prospectus delivery requirements of the Securities Act.

40

Regulation M

The anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of our common stock and activities of the selling stockholder.

During such time as it may be engaged in a distribution of any of the shares we are registering by this registration statement, KVM is required to comply with Regulation M. In general, Regulation M precludes any selling security holder, any affiliated purchasers and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a "distribution" as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a "distribution participant" as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution.

Regulation M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. We have informed KVM that the anti-manipulation provisions of Regulation M may apply to the sales of their shares offered by this prospectus, and we have also advised KVM of the requirements for delivery of this prospectus in connection with any sales of the common stock offered by this prospectus.

Pursuant to the KVM Investment Agreement, KVM shall not sell stock short, either directly or indirectly through its affiliates, principals or advisors, our common stock during the term of the agreement.

DESCRIPTION OF SECURITIES TO BE REGISTERED

Authorized Capital Stock

We are authorized to issue 150,000,000 shares of common stock, $0.001 par value per share.

Common Stock

As of August 14, 2013, 100,804,663 shares of common stock are issued and outstanding.

The holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our board of directors and are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs. Our common stock does not provide the right to a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are entitled to one non-cumulative vote per share on all matters on which shareholders may vote.

All shares of common stock now outstanding are fully paid for and non-assessable. We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the state of Nevada for a more complete description of the rights and liabilities of holders of our securities. All material terms of our common stock have been addressed in this section.

Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.

Warrants

As of June 30, 2013, there were 200,000 share purchase warrants outstanding and exercisable.  The warrants have a weighted average remaning life of 1.33 years and a weighted average exercise price of $1.20 per warrant for one common share.

41

Dividends

We have never declared or paid any cash dividends on shares of our capital stock. We currently intend to retain earnings, if any, to fund the development and growth of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, cash needs and growth plans.

LEGAL MATTERS

The validity of the common stock offered by this prospectus will be passed upon for us by Szaferman, Lakind, Blumstein & Blader, PC, Lawrenceville, New Jersey.

EXPERTS

The consolidated financial statements of our company included in this prospectus and in the registration statement have been audited by LBB & Associates Ltd., LLP, an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance on such report, given the authority of said firm as an expert in auditing and accounting.

The consolidated financial statements of our company included in this prospectus and in the registration statement have been audited by Seale and Beers, CPAs, an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance on such report, given the authority of said firm as an expert in auditing and accounting.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

WHERE YOU CAN FIND MORE INFORMATION

We filed with the Securities and Exchange Commission a registration statement under the Securities Act for the common stock in this offering. This prospectus does not contain all of the information in the registration statement and the exhibits and schedule that were filed with the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedule that were filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules that were filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F Street, N.E. Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from the Securities and Exchange Commission upon payment of the prescribed fee. Information regarding the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.

We file periodic reports under the Exchange Act, including annual, quarterly and special reports, and other information with the Securities and Exchange Commission. These periodic reports and other information are available for inspection and copying at the regional offices, public reference facilities and website of the Securities and Exchange Commission referred to above.

42

Lone Star Gold Inc.

 (An Exploration Stage Company)

June 30, 2013

	Index
Consolidated Balance Sheets	F–2
Consolidated Statements of Operations	F–3
Consolidated Statements of Cash Flows	F–4
Notes to the Consolidated Financial Statements	F–5

F-1

Lone Star Gold, Inc.

(An Exploration Stage Company)

Consolidated Balance Sheets

(unaudited)

	June 30, 2013			December 31, 2012
ASSETS
Current assets:
Cash	$	-		$	-
Prepaid expenses		4,179			152
Total current assets		4,179			152
Property and equipment, net		33,673			38,353
Mining assets		179,300			179,300
Total assets	$	217,152		$	217,805
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	86,347		$	90,372
Accrued liabilities		35,541			110,216
Note payable, net		9,000			50,000
Derivative liability		120,503			30,555
Due to related party		38,910			38,910
Total current liabilities		290,301			320,053
Total liabilities		290,301			320,053
Commitments
Shareholders’ deficit:
Common stock, 150,000,000 shares authorized, $0.001 par value;         100,804,663 and 89,994,663 shares issued and outstanding as of June         30, 2013 and December 31, 2012, respectively		100,805			89,995
Additional paid-in capital		4,387,370			3,497,642
Deficit accumulated during the exploration stage		(4,542,053	)		(3,671,447	)
Total Lone Star Gold, Inc. shareholders’ deficit		(53,878	)		(83,810	)
Noncontrolling interest in subsidiary		(19,271	)		(18,438	)
Total shareholders’ deficit		(73,149	)		(102,248	)
Total liabilities and shareholders’ deficit	$	217,152		$	217,805

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

F-2

Lone Star Gold, Inc.

(An Exploration Stage Company)

Consolidated Statements of Operations

(unaudited)

	For the Three months Ended June 30,						For the Six months Ended June 30,						Accumulated from November 26, 2007 (Date of Inception) to June 30,
	2013			2012			2013			2012			2013
Revenue	$	–		$	–		$	–		$	–		$	–
Operating Expenses
General and administrative		100,768			63,852			205,986			215,916			1,177,679
Exploration costs		–			108,500			24,500			465,196			1,072,893
Management fees		303,699			279,999			583,698			559,998			2,260,148
Total Operating Expenses		(404,467	)		(452,351	)		(814,184	)		(1,241,110	)		(4,510,720	)
Loss from operations		(404,467	)		(452,351	)		(814,184	)		(1,241,110	)		(4,510,720	)
Other income (expense)
Interest (expense)		32,869			(22	)		32,693			(22	)		32,419
Interest income		–			–			–			–			9,839
Change in derivative liability		(89,948	)		–			(89,948	)		–			(99,523	)
Gain on settlement of note receivable		–			–			–			–			5,161
Total other income (expense)		(57,079	)		(22	)		(57,255	)		(22	)		(52,104	)
Loss before income taxes		(461,546	)		(452,373	)		(871,439	)		(1,241,132	)		(4,562,824	)
Provision for income tax		–			–			–			–			–
Net Loss for the period		(461,546	)		(452,373	)		(871,439	)		(1,241,132	)		(4,562,824	)
Net income attributable to noncontrolling interest		417			416			833			1,341			20,771
Net loss attributable to Lone Star Gold, Inc.	$	(461,129	)	$	(451,957	)	$	(870,606	)	$	(1,239,791	)	$	(4,542,053	)
Net Loss Per Share – Basic and Diluted	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted Average Common Shares Outstanding		100,661,866			88,143,266			97,612,729			89,935,436

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

F-3

Lone Star Gold, Inc.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(unaudited)

	For the Six months Ended June 30,						Accumulated from November 26, 2007 (Date of Inception)
	2013			2012			June 30, 2013
Operating Activities:
Net loss	$	(871,439	)	$	(1,241,132	)	$	(4,562,824	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		4,680			4,680			15,504
Stock based compensation expense		499,998			499,998			2,099,968
Shares issued for exploration expenses		-			-			429,250
Amortization of debt discount		(41,000	)		-			(41,000	)
Change in derivative liability		89,948			-			99,523
Gain on redemption of common stock		-			-			(5,161	)
Changes in operating assets and liabilities:
Prepaid expenses		(4,027	)		2,087			(4,179	)
Interest receivable		-			-			(9,839	)
Accounts payable and accrued liabilities		(78,160	)		3,065			122,428
Net Cash Used in Operating Activities		(400,000	)		(731,302	)		(1,856,330	)
Investing Activities:
Note receivable extended to Related Party		-			-			(585,000	)
Purchases of property and equipment		-			-			(49,177	)
Purchases of mining assets		-			(75,000	)		(100,000	)
Net Cash Used in Investing Activities		-			(75,000	)		(734,177	)
Financing Activities:
Proceeds from advances – related party		-			-			56,484
Proceeds from sale of common stock		375,000			550,000			2,459,025
Proceeds from issuance of notes payable		50,000			50,000			100,000
Repayments of notes payable		(25,000	)		-			(25,000	)
Redemption of shares		-			(2	)		(2	)
Net Cash Provided by Financing Activities		400,000			599,998			2,590,507
Net change in cash		–			(206,304	)		–
Cash - Beginning of Period		–			215,737			–
Cash - End of Period	$	–		$	9,433		$	–
Supplemental Disclosures
Interest paid	$	–		$	–		$	–
Income taxes paid	$	–		$	–		$	–
Non Cash transactions:
Exchange of notes receivable for redemption of common stock	$	–		$	–		$	600,000
Shares issued for mining assets	$	–		$	79,300		$	79,300
Forgiveness of advances - related party	$	–		$	–		$	17,574
Derivative liability of price protection feature	$	–		$	–		$	20,980
Issuance of non-controlling interest for subscription receivable	$	–		$	–		$	1,500
Repayment of note payable and accrued interest by a shareholder	$	25,540		$	–		$	25,540

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

F-4

Lone Star Gold, Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2013

(unaudited)

1.    Nature of Operations and Continuance of Business

Lone Star Gold, Inc. (the “Company” or “Lone Star”), formerly known as Keyser Resources, Inc., was incorporated in the State of Nevada on November 26, 2007.  The Company is an Exploration Stage Company as defined by Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 915, Development Stage Entities.

On January 26, 2012, the Company, acting through a  subsidiary, Amiko Kay, S. de R.L. de C.V., a company organized under the laws of Mexico (“Amiko Kay”), entered into a Joint Venture Agreement (the “JV Agreement”) with Miguel Angel Jaramillo Tapia (“Jaramillo”), a resident of Mexico. Under the JV Agreement, Amiko Kay and Jaramillo agreed to process mine tailings located in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico (the “Tailings”), and, after processing, to use, market and sell any minerals extracted from the Tailings. The Company owns 99% of the issued and outstanding membership interests of Amiko Kay. The JV Agreement provides Amiko Kay the right to receive 65% of the net revenues from the sale of any materials extracted from the Tailings. The Company is accounting for the activities under the JV Agreement as a collaborative arrangement as defined by ASC 808. As a result, acquisition costs related to the JV Agreement have been capitalized and all other expenditures by the Company related to the JV Agreement have been expensed as incurred as exploration costs. This is in accordance with the Company’s Mineral Property Cost Accounting Policy. For the six months ended June 30, 2013, the Company has recognized $10,000 of costs associated with the collaborative arrangement, which are included in Exploration Costs.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenue since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and other investors, the ability of the Company to obtain any necessary financing to continue operations, and the attainment of profitable operations. As at June 30, 2013, the Company has accumulated losses of $4,542,053 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The unaudited financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012, and for the period November 26, 2007 (inception) to June 30, 2013 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of June 30, 2013 and the results of operations and cash flows for the periods ended June 30, 2013 and 2012, and for the period November 26, 2007 (inception) to June 30, 2013.  The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited.  The results for the three and six month periods ended June 30, 2013 are not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending December 31, 2013.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2012 as included in our Form 10-K filed with the Securities and Exchange Commission.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany accounts and transactions have been eliminated in consolidation.

2.    Related Party Transactions

All related party transactions are recorded at the exchange amount which is the value established and agreed to by the related party.

An advance from Maurice Bideaux, former chief executive officer and director, in the amount of $38,910, remains unpaid.

As of June 30, 2013, the Company’s two largest shareholders, Dan Ferris and John G. Rhoden, own 7,504,954 and 22,500,000 shares of Common Stock, representing 7.45% and 22.32%, respectively, of the issued and outstanding shares of Common Stock.

On January 13, 2012, the Company agreed to redeem 22,500,000 shares of common stock, 0.001 par value, of the Company (“Common Stock”) held by Mr. Rhoden for total consideration of $1.00.  The stock transfer agent has not yet recorded the redemption of the stock formerly owned by Mr. Rhoden due to a delay caused by his inability to locate and deliver one of his stock certificates.  However, the number of issued and outstanding shares reported by the Company in this Quarterly Report gives effect to this redemption.

F-5

Lone Star Gold, Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2013

(unaudited)

In May 2013, the holder of a note payable, which was secured by 3,750,000 shares of the Company owned by Mr. Ferris, exercised his right to foreclose on the shares and accept them as repayment of the note and related interest, which had a total remaining balance of $25,540 at the time of notice.

3.    Debt

Debt as of June 30, 2013 and December 31, 2012 consists of the following:

Description	June 30, 2013			December 31, 2012
Notes payable
In June 2012 the Company entered into a secured note agreement with Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (“Fairhills”), in the principal amount of $50,000 at an annual interest rate of 2%. Principal and accrued and unpaid interest was due on December 24, 2012, which was verbally extended until December 24, 2013.  The Note is secured by 3,750,000 shares of Common Stock owned by Dan Ferris, our President and sole director.  On November 12, 2012, Fairhills transferred all rights and obligations under the Note to Deer Valley Management, LLC ("Deer Valley").  In March 2013, the Company paid $25,000 to Deer Valley to pay down the outstanding balance on its loan.  In May 2013, the remaining $25,000 balance due on this loan was repaid by a shareholder.	$	-		$	50,000
Convertible note payable
In June 2013, the Company borrowed $50,000 from KVM Capital Partners LLC, the repayment of which is to be made on the following terms: (a) the unpaid principal amount accrues interest at the rate of eight percent (8%) per annum, (b) the unpaid principal and all accrued but unpaid interest thereon will be due and payable on December 15, 2013, and (c) any portion of the unpaid principal and accrued but unpaid interest may be prepaid by the Company, without penalty. The proceeds of the loan will be used to make certain payments relating to the Company's mine tailings joint venture in Chihuahua, Mexico, and for general operating expenses.  The note is convertible into 4,761,905 shares of the Company’s common stock.  The Company recorded a discount related to the bifurcation of the derivative liability.  The conversion price shall mean 65% multiplied by the Market Price (as defined herein) (representing a discount rate of 35%).  "Market Price" means the average of the lowes three (3) Trading Price for the Common Stock during the tenth (10) trading day period ending the latest complete trading day prior to the conversion date.	$	50,000		$	-
Less:  Discount		(50,000	)		-
Add:  Amortization of discounts		9,000			-
Total convertible notes payable, net of discount	$	9,000		$	-

4.    Equity

On April 30, 2012, the Company entered into an Investment Agreement (as amended, the “Fairhills Investment Agreement”) with Fairhills pursuant to which Fairhills agreed to purchase shares of Common Stock for an aggregate purchase price of up to $15,000,000.  Fairhills assigned their interest in the Fairhills Investment Agreement to Deer Valley Management, LLC ("Deer Valley") on November 12, 2012. During Q1 and Q2 of 2013, the Company exercised its right pursuant to the Fairhills Investment Agreement with Deer Valley, as successor-in-interest to Fairhills, to require Deer Valley to purchase additional shares of the Company’s Common Stock.  The total amount of these six puts is $360,000.  There was an additional put exercised in December 2012, the amount of which is $15,000 whose shares were not issued until 2013 as well.  The total of these six put shares issuances resulted in 10,810,000 shares being issued in 2013 for proceeds of $375,000.   On June 26, 2013 the Fairhills Investment Agreement was terminated.

On June 27, 2013 the Company entered into an Investment Agreement (the “KVM Investment Agreement”)  with KVM Capital Partners, LLC (“KVM”) whereby KVM agreed to purchase up to $5 million of the Company’s common stock over a period of up to 36 months.  In connection with the KVM Investment Agreement, the Company also entered into a Registration Rights Agreement with KVM pursuant to which the Company was obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) covering the resale of the 30,000,000 shares of common stock underlying the KVM Investment Agreement. The Company filed the registration statement on Form S-1 with the SEC on July 16, 2013 and has agreed to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 120 days after the closing of the transaction and to maintain the effectiveness of such registration statement until termination of the KVM Investment Agreement.

F-6

Lone Star Gold, Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2013

(unaudited)

A summary of warrant activity for the six months ended June 30, 2013 is presented below:

					Weighted
			Weighted		average
			Average		remaining		Aggregate
			Exercise		contractual		Intrinsic
	Warrants		Price		life (years)		Value
Outstanding December 31, 2012		200,000	$	1.20
Granted		-		-
Exercised		-		-
Forfeited or cancelled		-		-
Expired		-		-
Outstanding June 30, 2013		200,000	$	1.20		1.08	$	59,467

5.    Commitments

On October 31, 2011, the Company entered into an agreement with a consultant to perform consulting services as requested by the Company. The contract calls for the consultant to receive $15,000 upon execution of the agreement, $5,000 per month through the term of the agreement, and a one-time grant of 150,000 restricted shares of the Company's $0.001 par value common stock. The fair market value of the common stock on the date of grant was $124,500. The term of the original agreement was one year and the agreement is currently being renewed on a month to month basis.  This contract was terminated on April 1, 2013.

La Candelaria Property

On May 31, 2011, Metales HBG, S.A. de C.V. (“Metales”), a company organized under the laws of Mexico, was formed.  The Company owns 70% of the issued and outstanding shares of capital stock and the  remaining 30% of the issued and outstanding capital stock of Metales is owned by Homero Bustillo Gonzalez (“Gonzalez”).  On June 10, 2011, Gonzalez assigned to Metales eight gold and silver mining concessions (the “Concessions”) related to the “La Candeleria” property located in the town of Guachochi, in the state of Chihuahua, Mexico.  The Concessions cover 800 hectares, or approximately 1,976 acres.

On August 17, 2011, in connection with its investment in Metales and the exploration and development of the Concessions, the Company, American Gold Holdings, Ltd. (“American Gold”) and Gonzalez executed an Assignment Agreement (the “Assignment Agreement”) pursuant to which American Gold assigned all of its right and interest in and to a Letter of Intent between American Gold and Gonzalez, and an Option to Purchase Agreement between American Gold and Gonzalez dated January 11, 2011 (the “Option Agreement”) and Company assumed all of the duties and obligations of American Gold under the Letter of Intent and the Option Agreement. Pursuant to the Assignment Agreement, the Company, either alone or through Metales, is obligated to fund $150,000 per year of development costs for three years, for a total of $450,000.  The Company funded $14,500 and $60,195 during the work periods ending January 11, 2014 and 2013, respectively. In addition, for the six months ended June 30, 2013, the Company did not pay Gonzalez any additional funds, in accordance with its oral agreement with him reached in January 2013.

Gonzalez retains a 2% Net Smelter Returns Royalty on the Concessions. Metales is obligated to undertake work necessary to bring the existing geological survey on the property up to NJ 43-101 standards.  The Company has granted anti-dilution rights to Gonzalez, such that the Company must allow Gonzalez the opportunity to maintain his percentage stock ownership in the Company until the date on which the Company has complied fully with its obligations under the Option Agreement or January 11, 2014, whichever comes first.  Gonzalez has waived the exercise of his anti-dilution rights with respect to issuances of Common Stock to North American under the Option Agreement.  In addition, the Company is obligated to issue 1,000,000 shares of its Common Stock to Gonzalez upon the discovery of a 1 million-ounce equivalent gold deposit, as defined by industry standards as set forth by a recognized exchange in North America.  Finally, if the Company fails to comply with all its obligations under the Option Agreement before January 11, 2014, the Option Agreement will terminate and the Company will be obligated to return the Concessions to Gonzalez.  In January 2013, the Company and Gonzalez verbally agreed to place the work commitments on hold.  Per the verbal agreement between the Company and Gonzalez, all payments have been put on hold until such time as the Company has sufficient capital to continue the project.

Employment Agreement

On July 12, 2011, the Company entered into an Employment Agreement with Dan M. Ferris regarding his position as President of the Company.  The Employment Agreement has an initial term of three years, and after the initial term will automatically renew for successive one-year periods until terminated in accordance with the Agreement (the “Term”).  Mr. Ferris will be paid a base salary of $120,000 per year during the Term.  Mr. Ferris will also be entitled to receive 3,000,000 shares of Common Stock, which will be issued in three equal increments of 1,000,000 shares over the first 3 years of the Term.  The shares of Common Stock will not be registered under the Securities Act, and will be subject to restrictions on transfer.  Therefore, Mr. Ferris will receive 1,000,000 shares of Common Stock on July 12 of each of the years 2012, 2013, and 2014.  The Employment Agreement may be terminated voluntarily by either party upon 30 days written notice, upon Mr. Ferris’ death or disability, by mutual agreement at the end of the Term, or at any time for “cause” by the Company.  If Mr. Ferris’ employment is terminated for “cause”, or if he voluntarily resigns, then he will not be entitled to receive any shares of Common Stock that have not been issued as of the date of resignation or termination.  If Mr. Ferris’ employment is terminated for any other reason, he will be entitled to receive the full 3,000,000 shares of Common Stock.  The Employment Agreement defines “cause” as the willful and continued failure by Ferris to perform his duties under the Employment Agreement, conviction of a felony, or engaging in conduct that is contrary to the best interests of the Company or adversely affects the Company’s reputation.  The fair market value of the stock grant on the date of the Employment Agreement was $3,000,000 based on the fair market value at the time of the agreement.  The Company recognized $249,999 and $499,998 in expense related to the stock grant during the three and six month periods ended June 30, 2013, respectively.

F-7

Lone Star Gold, Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2013

(unaudited)

Tailings Project

On January 26, 2012, the Company, acting through its subsidiary, Amiko Kay, entered into the JV Agreement Jaramillo. Under the JV Agreement, Amiko Kay and Jaramillo agreed to process the Tailings and, after processing, to use, market and sell any minerals extracted from the Tailings. The Company owns 99% of the issued and outstanding membership interests of Amiko Kay.

The Tailings consist of approximately 1.2 million tons of mine tailings from previous mining activity in the Chihuahua area over the last 100 years or more. Mine tailings represent the refuse remaining after ore has been processed. Through the JV Agreement, Amiko Kay and Jaramillo intend re-process the mine tailings heap to extract minerals that were not extracted during the initial processing, and to market and sell any minerals extracted from the Tailings.

As consideration for Jaramillo’s contribution of the right to process the Tailings to the Joint Venture, the Company has paid Jaramillo $100,000 to date.  In addition, the Company agreed to pay Jaramillo an additional $200,000 no later than January 26, 2013.  In January 2013, the Company and Jaramillo entered into a verbal agreement to delay the payment, and as of the date of this filing the payment has not been made.

In addition, the Company or Amiko Kay has agreed to fund an amount up to $1,000,000 (the “Work Commitment”) for the benefit of the JV Agreement over its first two years, as follows:

(a)    $250,000 within the first year of the JV Agreement for the purchase of used heavy equipment, miscellaneous equipment and materials for processing the Tailings, and taxes, permits, and general operating expenses.

(b)    $750,000 within the second year of the JV Agreement for the construction of a heap leach system and floatation plant on the property.

The Company may make an additional $250,000 available to the JV Agreement, if additional processing equipment is justified and required to maximize the liberation of precious metals in the Tailings material. As of June 30, 2013, none of the aforementioned funds have been paid.

As further consideration, the Company is obligated to issue 600,000 shares of the Common Stock to Jaramillo.  To date, the Company has issued 300,000 shares of Common Stock to Jaramillo and anticipates issuing the remaining 300,000 shares in the second half of 2013. The shares of Common Stock will be restricted shares and carry current and appropriate legends to that effect.

Jaramillo manages the day-to-day affairs of processing the Tailings, selling the minerals extracted from the Tailings (“Extracted Minerals”), and other activities contemplated by the JV Agreement. Jaramillo will pay all expenses associated with the processing of the Tailings, the sale of any Extracted Minerals from the Tailings, and other obligations of the JV Agreement, initially, from the funds received under the Work Commitment and, eventually, from revenues from operations. All net revenues from the sale of any Extracted Minerals or other sources, after deducting expenses, will be distributed and paid monthly, with 65% of the net revenues paid to Amiko Kay and 35% of the net revenues paid to Jaramillo. It is anticipated that the portion to be paid to Amiko Kay will be paid directly to the Company. Jaramillo will provide a monthly accounting of all revenues and expenses associated with the operations of the JV Agreement.

Title to the property and the Tailings will remain in Jaramillo’s name. Jaramillo will be responsible for obtaining all permits, approvals and authorizations associated with the processing of the Tailings. He is also responsible for causing the project to comply with all applicable laws, rules and regulations, and to maintain insurance on the property. Amiko Kay will have access to the property and the Tailings at all times during the term of the JV Agreement.

F-8

Lone Star Gold, Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2013

(unaudited)

Amiko Kay and Jaramillo will mutually develop plans and programs to process the Tailings. Jaramillo will prepare a detailed budget setting forth the expenses to be paid under the Work Commitment, which will be approved by Amiko Kay. Finally, Jaramillo will provide quarterly financial reports to Amiko Kay.

If either party defaults under the JV Agreement, the defaulting party’s rights to participate in the JV Agreement will be immediately suspended, and the defaulting party will have no right to share in the revenues of the JV Agreement until the breach is cured. If the defaulting party is Jaramillo, then Amiko Kay may perform the duties of Jaramillo under the Agreement. The nondefaulting party may also sue for damages incurred as a result of the event of default.

The JV Agreement will terminate upon completion of processing the Tailings, as determined by Amiko Kay in its sole discretion.  If Jaramillo materially breaches the JV Agreement, Amiko Kay may terminate the JV Agreement upon 30 days notice to Jaramillo.   Jaramillo has no right to terminate the JV Agreement before the processing of the Tailings is complete.

Jaramillo provides independent consulting services to the Company on the La Candelaria project and acts as Vice President of Exploration on the La Candelaria project (although he is not an executive officer or employee, of the Company, Metales or the Amiko Kay).

Under the JV Agreement, the Company is obligated to fund $250,000 for the benefit of the operations under the JV Agreement before January 26, 2013, under the Work Commitment established for the Tailings Project. For the year ended December 31, 2012, the Company made payments totaling $250,000 pursuant to the Work Commitment.  For the three and six months ended June 30, 2013, the Company made payments totaling $10,000 and $0 towards the second year Work Commitment, respectively.

Approximately 6,000 tons of the Tailings material has been sent to the processing plant in Parral, Mexico (the "Parral Plant").  As of the date of this Quarterly Report, this shipment has not been fully processed.  The Parral Plant closed unexpectedly during the third quarter of 2012 and reopened in March 2013.  It has operated sporadically since March 2013 and had not been able to operate on a consistent basis.  Accordingly, the Company estimates that the Parral Plant has accumulated a one year backlog of tailings to process, and the Company does not believe it can rely on the Parral Plant to process a significant amount of the tailings in the foreseeable future.  The Company has developed plans to build its own plant capable of processing 150 tons of tailings per day.  The cost to build such a plant is estimated to be $1,000,000.  The Company is actively seeking investors to fund the construction of a plant.  Accordingly, the Company has no revenues from Tailings as of the date of this filing.

The Company is constructing a basic wash plant and jig circuit on the property on which the Tailings are located.  The cost of the wash plant and jig circuit, if completed, is expected to be approximately $80,000.

6.    Derivative Liability

On September 14, 2012, the Company entered into a Securities Purchase Agreement, as amended, (the “Fairhills SPA”) with Fairhills pursuant to which the Company sold 653,595 shares of its $0.001 par value Common Stock (the “Shares”) to Fairhills for an aggregate purchase price of $50,000.  The  Fairhills SPA provides that in the event that the value of the Shares is less than $50,000 at the earlier of (a) the effective date of a registration statement or (b) such time as the Shares can be sold pursuant to Rule 144 (the “Triggering Date”), the Company shall issue additional shares of registered Common Stock to Fairhills (the “Additional Shares’) such that the total value of the Shares and the Additional Shares issued to Fairhills by the Company shall total $50,000 (the “Price Protection Clause”).

The Price Protection Clause gives rise to a derivative.  We have measured this derivative at fair value and recognize the derivative value as a current liability and recorded the derivative value on our consolidated balance sheet. The derivative is valued primarily using models based on unobservable inputs that are supported by little to no market activity.  These inputs represent management’s best estimate of what market participants would use in pricing the liability at the measurement date and thus are classified as Level 3. Changes in the fair values of the derivative are recognized in earnings in the current period.  During the year ended December 31, 2012, the Company recorded a derivative liability of $20,980 related to the Price Protection Clause.   At December 21, 2012, the effective date of the registration statement, the price protection feature was triggered and additional shares were valued at approximately $30,000.  These additional shares have not been issued.  On June 26, 2013, the Fairhills SPA was terminated.

On June 27, 2013, the Company entered into a new Securities Purchase Agreement with KVM Capital Partners, LLC (the “KVM SPA”) with essentially the same terms as the Fairhills SPA.  Accordingly, the Company recorded a derivative liability related to the KVM SPA.  Accordingly, a derivative liability of $120,503 has been recorded as of the end of the quarter ending June 30, 2013. The conversion price shall mean 65% multiplied by the Market Price (as defined herein) (representing a discount rate of 35%).  "Market Price" means the average of the lowes three (3) Trading Price for the Common Stock during the tenth (10) trading day period ending the latest complete trading day prior to the conversion date.

F-9

Lone Star Gold Inc.

 (An Exploration Stage Company)

December 31, 2012

	Index
Reports of Independent Registered Public Accounting Firm	F–2
Consolidated Balance Sheets	F–4
Consolidated Statements of Operations	F–5
Consolidated Statements of Cash Flows	F–6
Consolidated Statements of Shareholders’ Equity (Deficit)	F–7
Notes to the Consolidated Financial Statements	F–8

F-1

LBB & ASSOCIATES LTD., LLP

10260 Westheimer Road, Suite 310

Houston, TX 77042

Phone: (713) 800-4343 Fax: (713) 456-2408

Report of Independent Registered Public Accounting Firm

To the Board of Directors of

Lone Star Gold, Inc.

(An Exploration Stage Company)

Albuquerque, New Mexico

We have audited the accompanying consolidated balance sheets of Lone Star Gold, Inc. (the “Company”) as of December 31, 2012 and 2011, and the related consolidated statements of operations, shareholders' equity (deficit), and cash flows for the years then ended and for the period from November 26, 2007 (inception) through December 31, 2012. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the statements of operations, stockholders’ deficit and cash flows for the period from November 26, 2007 (inception) to December 31, 2009, which totals reflected a deficit of $107,017 accumulated during the exploration stage. Those financial statements and cumulative totals were audited by other auditors whose report dated April 12, 2010, expressed an unqualified opinion on those statements and cumulative totals, and included an explanatory paragraph regarding the Company’s ability to continue as a going concern. Our opinion, insofar as it relates to amounts included for that period is based on the report of other independent auditors, mentioned above.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Lone Star Gold, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years then ended and for the period from November 26, 2007 (inception) through December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2013 raise substantial doubt about its ability to continue as a going concern. The 2012 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ LBB & Associates Ltd., LLP

LBB & Associates Ltd., LLP

Houston, Texas

April 12, 2013

F-2

SEALE AND BEERS, CPAs

PCAOB & CPAB REGISTERED AUDITORS

www.sealebeers.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Keyser Resources, Inc

(An Exploration Stage Company)

We have audited the accompanying balance sheet of Keyser Resources, Inc. (An Exploration Stage Company) as of December 31, 2009, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years ended December 31, 2009 and since inception on November 26, 2007 through December 31, 2009. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conduct our audits in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Keyser Resources, Inc. (An Exploration Stage Company) as of December 31, 2009, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years ended December 31, 2009 and since inception on November 26, 2007 through December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has had a loss from operations of $93,034, an accumulated deficit of $107,017, a working capital deficit of $22,992 and has earned no revenues since inception, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans concerning these matters are also described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Seale and Beers, CPAs

Las Vegas, Nevada

April 12, 2010

50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351

F-3

Lone Star Gold Inc.

 (An Exploration Stage Company)

Consolidated Balance Sheets

	December 31, 2012			December 31, 2011
ASSETS
Current assets:
Cash	$	-		$	215,737
Prepaid expenses		152			2,238
Total current assets		152			217,975
Property and equipment, net		38,353			46,325
Mining assets		179,300			25,000
Total assets	$	217,805		$	289,300
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	90,372		$	21,767
Accrued liabilities		110,216			13,698
Note payable		50,000			-
Derivative liability		30,555			-
Due to related party		38,910			38,910
Total current liabilities		320,053			74,375
Total liabilities		320,053			74,375
Commitments
Shareholders’ equity (deficit):
Common stock, 150,000,000 shares authorized, $0.001 par value; 89,994,663 and 116,791,068 shares issued and outstanding as of December 31, 2012 and 2011, respectively		89,995			116,791
Additional paid-in capital		3,497,642			1,812,532
Deficit accumulated during the exploration stage		(3,671,447	)		(1,697,717	)
Total Lone Star Gold, Inc. Shareholders’ equity (deficit)		(83,810	)		231,606
Noncontrolling interest in subsidiary		(18,438)			(16,681)
Total Shareholders’ equity (deficit)		(102,248)			214,925
Total Liabilities and shareholders’ equity	$	217,805		$	289,300

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

F-4

Lone Star Gold Inc.

 (An Exploration Stage Company)

Consolidated Statements of Operations

	For the Year Ended December 31, 2012			For the Year Ended December 31, 2011			Accumulated from November 26, 2007 (Date of Inception) to December 31, 2012
Revenue	$	–		$	–		$	–
Operating Expenses
General and administrative		350,447			486,741			971,693
Exploration costs		495,195			530,925			1,048,393
Management fees		1,119,996			543,974			1,676,450
Total Operating Expenses		(1,965,638	)		(1,561,640	)		(3,696,536	)
Loss from operations		(1,965,638	)		(1,561,640	)		(3,696,536	)
Other income (expense)
Interest (expense)		(274	)		–			(274	)
Interest income		–			8,647			9,839
Change in derivative liability		(9,575	)		–			(9,575	)
Gain on settlement of note receivable		–			5,161			5,161
Total other income (expense)		(9,849	)		13,808			5,151
Loss before income taxes		(1,975,487	)		(1,547,832	)		(3,691,385	)
Provision for income tax		–			–			–
Net Loss for the period		(1,975,487)			(1,547,832)			(3,691,385)
Net loss attributable to noncontrolling interest		1,757			18,181			19,938
Net loss attributable to Lone Star Gold, Inc.	$	(1,973,730)		$	(1,529,651)		$	(3,671,447	)
Net Loss Per Share – Basic and Diluted	$	(0.02)		$	(0.01)
Weighted Average Common Shares Outstanding		89,799,438			118,686,221

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

F-5

Lone Star Gold Inc.

 (An Exploration Stage Company)

Consolidated Statements of Cash Flows

	For the Year Ended December 31, 2012			For the Year Ended December 31, 2011			Accumulated from November 26, 2007 (Date of Inception) to December 31, 2012
Operating Activities:
Net loss	$	(1,975,487	)	$	(1,547,832	)	$	(3,691,385	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		7,972			2,852			10,824
Stock based compensation expense		999,996			599,974			1,599,970
Shares issued for exploration expenses		-			429,250			429,250
Change in derivative liability		9,575			-			9,575
Gain on redemption of common stock		-			(5,161	)		(5,161	)
Changes in operating assets and liabilities:
Prepaid expenses		2,086			(2,238	)		(152	)
Interest receivable		-			(8,647	)		(9,839	)
Accounts payable and accrued liabilities		165,123			6,739			200,588
Net Cash Used in Operating Activities		(790,735	)		(525,063	)		(1,456,330	)
Investing Activities:
Note receivable extended to Related Party		-			(295,000	)		(585,000	)
Purchases of property and equipment		-			(49,177	)		(49,177	)
Purchases of mining assets		(75,000	)		(25,000	)		(100,000	)
Net Cash Used in Investing Activities		(75,000	)		(369,177	)		(734,177	)
Financing Activities:
Proceeds from advances – related party		-			-			56,484
Proceeds from sale of common stock		600,000			1,100,000			2,084,025
Proceeds from issuance of notes payable		50,000			-			50,000
Redemption of shares		(2	)		-			(2	)
Net Cash Provided by Financing Activities		649,998			1,100,000			2,190,507
Net change in cash		(215,737	)		205,760			–
Cash - Beginning of Period		215,737			9,977			–
Cash - End of Period	$	–		$	215,737		$	–
Supplemental Disclosures
Interest paid	$	–		$	–		$	–
Income taxes paid	$	–		$	–		$	–
Non Cash transactions:
Exchange of notes receivable for redemption of common stock	$	–		$	600,000		$	600,000
Shares issued for mining assets	$	79,300		$	–		$	79,300
Forgiveness of advances - related party	$	–		$	–		$	17,574
Derivative liability of price protection feature	$	20,980		$	–		$	20,980
Issuance of non-controlling interest for subscription receivable	$	–		$	1,500		$	1,500

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

F-6

Lone Star Gold, Inc.

 (An Exploration Stage Company)

Consolidated Statements of Shareholders’ Equity (Deficit)

For the Period from November 26, 2007 (Date of Inception) to December 31, 2012

										Deficit
										Accumulated
							Additional			During the			Non-
	Common Stock						Paid-in			Exploration			controlling
	Shares			Par Value			Capital			Stage			Interests			Total
Balance – November 26, 2007 (Date         of Inception)		–		$	–		$	–		$	–		$	–		$	–
Net loss for the period		–			–			–			–			–			–
Balance – December 31, 2007		–			–			–			–			–			–
Common shares issued for cash in private placement:
at $0.001 per share on January 19, 2008		60,000,000			60,000			(57,000	)		–			–			3,000
at $0.015 per share on April 28, 2008		32,699,920			32,700			(8,175	)		–			–			24,525
at $0.05 per share on December 24, 2008		22,600,000			22,600			33,900			–			–			56,500
Net loss for the year – (Restated)		–			–			–			(13,983	)		–			(13,983	)
Balance – December 31, 2008 – (Restated)		115,299,920			115,300			(31,275	)		(13,983	)		–			70,042
Net loss for the year		–			–			–			(93,034	)		–			(93,034	)
Balance – December 31, 2009		115,299,920			115,300			(31,275	)		(107,017	)		–			(22,992	)
Sale of common stock for cash and warrants		6,000,000			6,000			294,000			–			–			300,000
Forgiveness of advances – related party		–			–			17,574			–			–			17,574
Net loss for the year		–			–			–			(61,049	)		–			(61,049	)
Balance – December 31, 2010		121,299,920			121,300			280,299			(168,066	)		–			233,533
Sale of common stock for cash and warrants		6,916,148			6,916			1,093,084			–			–			1,100,000
Redemption of shares		(12,000,000	)		(12,000	)		(588,000	)		–			–			(600,000	)
Services received in connection with formation of subsidiary		–			–			–			–			1,500			1,500
Stock based compensation		150,000			150			598,324			–			–			598,474
Shares issued for exploration costs		425,000			425			428,825			–			–			429,250
Net loss for the period		–			–			–			(1,529,651	)		(18,181	)		(1,547,832	)
Balance – December 31, 2011		116,791,068			116,791			1,812,532			(1,697,717)			(16,681)			214,925
Issuance of common stock for cash		1,903,595			1,904			598,096			–			–			600,000
Stock based compensation		1,000,000			1,000			998,996			–			–			999,996
Shares issued for exploration costs		300,000			300			79,000			–			–			79,300
Derivative liability of price protection feature		–			–			(20,980	)		–			–			(20,980	)
Cancellation of shares		(30,000,000)			(30,000	)		29,998			–			–			(2	)
Net loss for the period		–			–			–			(1,973,730	)		(1,757)			(1,975,487	)
Balance – December 31, 2012		89,994,663		$	89,995		$	3,497,642		$	(3,671,447	)	$	(18,438	)	$	(102,248)

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

F-7

Lone Star Gold Inc.

 (An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

1. Nature of Operations and Continuance of Business

Lone Star Gold, Inc. (the “Company” or “Lone Star”), formerly known as Keyser Resources, Inc. (“Keyser”), was incorporated in the State of Nevada on November 26, 2007. The Company is an Exploration Stage Company as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915,  Development Stage Entities.

On May 10, 2011, stockholders holding at least a majority of the issued and outstanding shares of Common Stock, acting by written consent, adopted resolutions that approved a change in the Company’s name from “Keyser Resources, Inc.” to “Lone Star Gold, Inc.”, an increase in the number of authorized shares of Common Stock to 150,000,000 and a 20:1 forward stock split.  Share information throughout these financial statements and footnotes have been presented retroactively of the stock split.

On May 31, 2011, Metales HBG, S.A. de C.V. (“Metales”), a company organized under the laws of Mexico, was formed, with the Company owning 70% of the issued and outstanding capital stock.  The remaining 30% of the issued and outstanding capital stock of Metales was issued to Homero Bustillos Gonzalez (“Gonzalez”), an individual resident of Mexico.  On June 10, 2011, Gonzalez assigned to Metales eight (8) gold and silver mining concessions related to the “La Candelaria” property located in the town of Guachochi, state of Chihuahua, Mexico (the “Concessions”).  The Concessions cover 800 hectares, or approximately 1,976 acres.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenue since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and other investors, the ability of the Company to obtain any necessary financing to continue operations, and the attainment of profitable operations. As of December 31, 2012, the Company has accumulated losses of $3,671,447 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

a)	Principles of consolidation
	The consolidated financial statements include the accounts of the Company and its subsidiary.  All intercompany accounts and transactions have been eliminated in consolidation.
b)	Non-controlling interests
	Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in represented in the consolidated balance sheets as a component of stockholders’ equity.  Non-controlling interests in the results of operations of the Company are presented in the face of the consolidated statement of operations as an allocation of the total profit or loss between non-controlling interests and the shareholders of the Company.

c)	Basis of Presentation
	These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.

F-8

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

d)

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

e)	Cash and Cash Equivalents
	The Company considers all highly liquid instruments with an original maturity of three months or less at the time of issuance to be cash equivalents.

f)

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Mexican Pesos and management has adopted ASC 830 Foreign Currency Matters. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

g)

Fair Value of Financial Instruments

The Company’s financial instruments consist principally of cash and accounts payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments the fair value of cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all other financial instruments approximate their current fair values because of their nature and relatively short maturity dates or durations.

h) Basic and Diluted Net Loss Per Share   The Company computes net loss per share in accordance with ASC 260, Earnings Per Share which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

F-9

Lone Star Gold Inc.

 (An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

i) Mineral Property Costs   The Company has been in the exploration stage since its formation on November 26, 2007 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition, exploration and development of mineral properties. Mineral properties includes the cost of advance minimum royalty payments, the cost of capitalized mineral property leases, and the cost of property acquired either by cash payment, the issuance of term debt or common shares. Expenditures for exploration on specific properties with no proven reserves are written off as incurred. Mineral property costs will be amortized against future revenues or charged to operations at the time the related property is determined to have an impairment in value. Capitalized acquisition costs are expensed in the period in which it is determined that the mineral property has no future economic value. Capitalized amounts may also be written down if future cash flows, including potential sales proceeds related to the property, are estimated to be less than the carrying value of the property. The Company reviews the carrying value of mineral property interests periodically, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable, reductions in the carrying value of each property would be recorded to the extent the carrying value of the investment exceeds the property’s estimated fair value. In the event that a mineral property is acquired through the issuance of the Company’s shares, the mineral property will be recorded at the fair value of the respective property or the fair value of the common shares, whichever is more readily determinable.
When mineral properties are acquired under option agreements with future acquisition payments to be made at the sole discretion of the Company, those future payments, whether in cash or shares, are recorded only when the Company has made or is obliged to make the payment or issue the shares. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and bankable feasibility, the costs incurred to develop such property are capitalized.

j) Long-lived Assets   In accordance with ASC 360, Property Plant and Equipment the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, two to 10 years; and furniture and equipment, one to five years. Land is not depreciated.

k) Asset Retirement Obligations   The Company follows the provisions of ASC 410 Asset Retirement and Environmental Obligations, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As at December 31, 2012 and 2011, the Company has not recognized any asset retirement obligations.

F-10

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

l) Income Taxes   Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740,  Income Taxes  as of its inception. Pursuant to ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

m) Stock-based Compensation   In accordance with ASC 718, Compensation – Stock Compensation, the Company accounts for share-based payments using the fair value method. The Company has not issued any stock options since its inception. Common shares issued to third parties for non-cash consideration are valued based on the fair market value of the services provided or the fair market value of the Common Stock on the measurement date, whichever is more readily determinable.

n) Comprehensive Income   ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2012 and 2011, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

o) Recent accounting pronouncements   In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or in two separate but consecutive statements. The new guidance was effective for us beginning July 1, 2012 and had presentation changes only.
In May 2011, the FASB issued guidance to amend the accounting and disclosure requirements on fair value measurements.  The new guidance limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, the new guidance expands the disclosures on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. The new guidance was effective for us beginning January 1, 2012.  Other than requiring additional disclosures, there were no  material impacts on our financial statements.
  In January 2010, the FASB issued guidance to amend the disclosure requirements related to fair value measurements.  The guidance requires the disclosure of roll forward activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements).  The guidance was effective for us as of January 1, 2012.  The adoption of this new guidance did not have a material impact on our financial statements.

3. Related Party Transactions   All related party transactions are recorded at the exchange amount which is the value established and agreed to by the related party.
A payable to a related party of $17,574 to Maurice Bideaux, the Company’s former chief executive officer and director, was forgiven by Mr. Bideaux in 2010.  An additional advance from Mr. Bideaux of $38,910 remains unpaid.

F-11

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

	On January 13, 2012, the Company agreed to redeem certain shares of the Common Stock held by two of its principal shareholders.  The Company redeemed 7,500,000 shares of Common Stock owned by Dan M. Ferris, for total consideration of $1.00.  Mr. Ferris is the sole officer and director of the Company.   In addition, the Company redeemed 22,500,000 shares of Common Stock held by John G. Rhoden, for total consideration of $1.00. After redemption, Mr. Ferris owns 7,500,000 shares of Common Stock, and Mr. Rhoden owns 22,500,000 shares of Common Stock, which will represent 8.33% and 25.00%, respectively, of the issued and outstanding shares of Common Stock.  The redeemed shares of Common Stock will be retired and restored to the status of authorized and unissued shares, and not held in treasury.  The Company, Mr. Ferris and Mr. Rhoden have agreed to effect the redemption transactions in order to reduce the number of issued and outstanding shares of Common Stock. The redemption of the stock formerly owned by Mr. Ferris has been reflected on the books and records of the Company’s stock transfer agent. The stock transfer agent has not yet recorded the redemption of the stock formerly owned by Mr. Rhoden due to a delay caused by his inability to locate and deliver one of his stock certificates.  However, the number of issued and outstanding shares reported by the Company in this Report gives effect to this redemption.
4.	Property and equipment Property and equipment consists of a used truck and drill with a cost of $11,100 and $38,077, respectively, being depreciated over 2 and 10 years, respectively.  Total cost of the assets described are $49,177.  Accumulated depreciation at December 31, 2012 was $10,824.  Depreciation expense was $7,972 and $2,852 during the years ended December 31, 2012 and 2011, respectively.
5.	Equity Line of Credit
	On August 29, 2011, the Company and North American Gold Corp., a company organized under the laws of the Marshall Islands (“North American”), executed an Investment Agreement (the “North American Investment Agreement”). Under the North American Investment Agreement, North American agreed to invest up to $15,000,000 to purchase shares of the Common Stock in increments of $100,000 or an integral multiple thereof, at the Company’s option at any time through August 31, 2013 (the “Open Period”).  During the Open Period, the Company has the option to deliver a put notice (a “Put Notice”) to North American that states the number of shares of Common Stock the Company proposes to sell to North American (the “Put Shares”), and the price per share for those Put Shares (the “Share Price”). The Share Price is equal to 90% of the volume weighted average closing price of the Common Stock for the 20 Trading Days immediately preceding the date on which the Company sends the Put Notice. The closing for the sale of the Put Shares pursuant to a Put Notice shall take place no later than 10 Trading Days after the date on which the Company sends such Put Notice. A “Trading Day” is defined as a day in which the NASDAQ stock market or OTC Bulletin Board is open for business.  North American has the right to refuse to close any requested sale of Put Shares because of negative market conditions affecting the Common Stock. The original North American Investment Agreement required the Company to use the net proceeds from the sale of the Put Shares to fund the exploration and development of gold and silver mining concessions in the La Candelaria project in Chihuahua, Mexico. On November 9, 2011, the Company and North American executed a First Amendment to the North American Investment Agreement, which states that the Company shall use the net proceeds from the sale of Put Shares to fund operating expenses, working capital and general corporate activities related to the exploration and development of gold and silver mining concessions held by the Company and/or a subsidiary in relation to the La Candelaria property, the Ocampo property, or any other properties agreed upon in advance by the Company and North American. The Company and North American have further agreed that the Company may use the proceeds of the put shares to fund operations related to the Mine Tailings project.

F-12

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

	The sales of Put Shares will not be registered under the Securities Act of 1933, but will be issued under an exemption from the registration requirements of the Securities Act of 1933. Any Put Shares issued and sold to North American will be “restricted securities” and will be subject to applicable restrictions on resale.  However, the Company does not have sufficient available (authorized) capital to be able to draw down on the entirety of these lines. On April 30, 2012, the Company entered into an Investment Agreement with Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (“Fairhills”), as amended by Amendments No. 1 and No. 2 to Investment Agreement dated June 25, 2012 and September 21, 2012, respectively (as amended, the "Deer Valley Investment Agreement"), pursuant to which Fairhills has agreed to purchase shares of Common Stock for an aggregate purchase price of up to $15,000,000. The Deer Valley Investment Agreement provides that the Company may, from time to time during the Open Period (defined below), in its sole discretion, deliver a put notice to Fairhills which states the dollar amount that the Company intends to sell to Fairhills on a date specified in the put notice. The maximum investment amount per notice shall be no more than two hundred percent (200%) of the average daily volume of the Common Stock for the ten consecutive trading days immediately prior to date of the applicable put notice. The purchase price per share to be paid by Fairhills will be calculated at a twenty-four and a half percent (24.5%) discount to the lowest trading price of the Common Stock reported by Bloomberg, L.P. during the ten (10) consecutive trading days immediately prior to Fairhills receipt of the put notice. The Open Period begins on the trading day after a registration statement is declared effective as to the Common Stock to be subject to the put, and ends thirty-six (36) months after such date, unless earlier terminated in accordance with the Deer Valley Investment Agreement. The Company has reserved 30,000,000 shares of its Common Stock for issuance under the Deer Valley Investment Agreement. The Company will use the proceeds from the sale of the Common Stock under the Deer Valley Investment Agreement for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors, in its good faith, deem to be in the best interest of the Company. On October 16, 2012, the Company filed a Registration Statement on Form S-1 covering the resale of 19,000,000 shares of Common Stock subject to the Deer Valley Investment Agreement (Note 11).  Fairhills assigned their interest to Deer Valley Management on November 12, 2012.  The registration statement was declared effective in December 2012.
6.	Notes Payable
	In June 2012 the Company entered into a secured note agreement with Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (“Fairhills”), in the principal amount of $50,000 at an annual interest rate of 2%. Principal and accrued and unpaid interest was due on December 24, 2012, which was verbally extended until December 24, 2013.  The Note is secured by 3,750,000 shares of Common Stock owned by Dan Ferris, our President and sole director.  On November 12, 2012, Fairhills transferred all rights and obligations under the Note to Deer Valley. In March 2013, the Company paid $25,000 to Fairhills Capital Offshore Ltd. to pay down the outstanding balance on its loan (see Note 12 - Subsequent Events).
7.	Derivative Liability
	On September 14, 2012, the Company sold 653,595 shares of its $0.001 par value Common Stock (the “Shares”) to Fairhills for an aggregate purchase price of $50,000.  The Securities Purchase Agreement, as amended, (the “Fairhills SPA”) entered into between the Company and Fairhills provides that in the event that the value of the Shares is less than $50,000 at the earlier of (a) the effective date of a registration statement or (b) such time as the Shares can be sold pursuant to Rule 144 (the “Triggering Date”), the Company shall issue additional shares of registered Common Stock to Fairhills (the “Additional Shares’) such that the total value of the Shares and the Additional Shares issued to Fairhills by the Company shall total $50,000 (the “Price Protection Clause”).

F-13

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

The Price Protection Clause gives rise to a derivative.  We have measured this derivative at fair value and recognize the derivative value as a current liability and recorded the derivative value on our consolidated balance sheet. The derivative is valued primarily using models based on unobservable inputs that are supported by little to no market activity.  These inputs represent management’s best estimate of what market participants would use in pricing the liability at the measurement date and thus are classified as Level 3. Changes in the fair values of the derivative are recognized in earnings in the current period.  During the year ended December 31, 2012, the Company recorded a derivative liability of $20,980 related to the Price Protection Clause.   At December 21, 2012, the effective date of the registration statement, the price protection feature was triggered and additional shares were valued at approximately $30,000.  These additional shares have not been issued.

8.

Common Stock

On January 19, 2008, the Company issued 60,000,000 shares of Common Stock at $0.00005 per share for cash proceeds of $3,000.

On April 28, 2008, the Company issued 32,699,920 shares of Common Stock at $0.00075 per share for cash proceeds of $24,525.

On December 24, 2008, the Company issued 22,600,000 shares of Common Stock at $0.0025 per share for cash proceeds of $56,500.

On December 3, 2010, the Company issued 6,000,000 Units to New World in a private placement, with each Unit consisting of one share of Common Stock and one warrant to purchase a share of Common Stock at $0.0625 at any time within 3 years, for cash proceeds of $300,000. The relative fair value of the warrants issued was $46,500.

On January 3, 2011, the Company issued 3,000,000 Units to New World in a private placement, with each Unit consisting one share of Common Stock and one warrant to purchase a share of Common Stock at $0.0625 at any time until January 3, 2014, for cash proceeds of $150,000. On January 6, 2011, the Company completed a private placement of an additional 3,000,000 Units to New World on similar terms, for cash proceeds of $150,000. The relative fair value of the warrants issued was $46,000.  All shares of Common Stock and warrants issued to New World have been redeemed.

On April 13, 2011, the Company and New World executed a Redemption Agreement, whereby the Company redeemed all of the shares of Common Stock and the Warrants that New World owned (consisting of the 12,000,000 shares of Common Stock and Warrants to purchase 12,000,000 shares of Common Stock obtained in private placements of Units), and in consideration for the Common Stock and Warrants assigned to New World the four Promissory Notes described above. As a result of the Redemption Agreement, the Company no longer holds the Promissory Notes, and New World owns no shares of Common Stock or other securities of the Company.

On June 30, 2011, the Company entered into an agreement to issue 100,000 Units to North American Gold Corp. in a private placement, for $1.00 per Unit, with each Unit consisting of one share of Common Stock and one Warrant to purchase a share of Common Stock at $1.20 at any time until June 30, 2014, for cash proceeds of $100,000.  The fair market value of the Warrants on the date of issuance was $15,467.

On August 29, 2011, the Company entered into an agreement to issue 100,000 Units to North American in a private placement, with each Unit consisting of one share of Common Stock and one warrant to purchase a share of Common Stock at $1.20 at any time until August 29, 2014, for cash proceeds of $100,000.  The relative fair market value of the warrants on the date of issuance was $44,000.

On August 17, 2011, the Company entered into an agreement to issue 300,000 shares of its Common Stock to Homero Bustillos Gonzalez (“Gonzalez”) in accordance with the Option Agreement discussed more fully in Note 11 below.  The fair market value of the Common Stock was $303,000 on the date of issuance.

F-14

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

On August 17, 2011, the Company entered into an agreement to issue 125,000 shares of its Common Stock to American Gold Holdings, Ltd. ("American Gold") as repayment of the $125,000 that American Gold paid Gonzalez in connection with the Option Agreement discussed more fully in Commitments below.  The shares were issued in the name of North American with the agreement of American Gold. The fair market value of the Common Stock was $126,250 on the date of issuance, September 15, 2011.

On September 14, 2011, the Company issued 238,095 shares of its Common Stock to North American for gross proceeds of $200,000 pursuant to a Put Notice delivered under the Investment Agreement.

On October 24, 2011, the Company sold 204,081 shares of its Common Stock to North American for gross proceeds of $200,000 pursuant to a Put Notice delivered under the Investment Agreement.  The proceeds will be used to fund the Work Plan related to the La Candelaria project, for expenses related to the Ocampo LOI, and other operating expenses incurred by the Company.

On October 31, 2011, the Company entered into an agreement with a consultant to perform consulting services as requested by the Company. The contract calls for the consultant to receive $15,000 upon execution of the agreement, $5,000 per month through the term of the agreement, and a one-time grant of 150,000 restricted shares Common Stock.  The fair market value of the Common Stock on the date of grant was $124,500. The term of agreement is one year and it will automatically renew if not cancelled in writing 30 days prior to the end of the annual period.

On December 27, 2011, the Company sold 273,972 shares of its Common Stock to North American for gross proceeds of $200,000 pursuant to a Put Notice delivered under the Investment Agreement.  The proceeds will be used to fund the Work Plan related to the La Candelaria project, for expenses related to the Ocampo LOI, and other operating expenses incurred by the Company.

On January 13, 2012, the Company redeemed certain shares of Common Stock held by two of its principal shareholders. The Company redeemed 7,500,000 shares of Common Stock owned by Dan Ferris, for total consideration of $1.00.  In addition, the Company redeemed 22,500,000 shares of Common Stock held by John G. Rhoden, for total consideration of $1.00.  The redeemed shares of Common Stock were retired and restored to the status of authorized and unissued shares, and not held in treasury. (See Note 3)

On January 30, 2012, the Company issued 100,000 shares of its Common Stock to Miguel Angel Jaramillo Tapia in accordance with the JV agreement (See Note 11). The fair market value of the shares on the date of issuance was $46,000.

On February 13, 2012, the Company sold 625,000 shares of its Common Stock to North American for gross proceeds of $300,000 pursuant to a Put Notice delivered under the Investment Agreement.    The proceeds will be used to fund the Work Plan related to the La Candelaria project, expenses related to the Tailings Project (See Note 11), and other operating expenses incurred by the Company.

On March 21, 2012, the Company sold 625,000 shares of its Common Stock to North American for gross proceeds of $250,000 pursuant to a Put Notice delivered under the Investment Agreement.

On June 29, 2012, the Company issued 200,000 shares of its Common Stock to Miguel Angel Jaramillo Tapia in accordance with the JV agreement (See Note 11). The fair market value of the shares on the date of issuance was $33,300.

On July 11, 2012, the Company issued 1,000,000 shares of its Common Stock to Dan Ferris in connection with his Employment Agreement (See Note 11).  The shares were valued at the date of grant, which is recognized ratably over the service period.

F-15

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

	On September 14, 2012, the Company sold 653,595 shares of its Common Stock to Fairhills Capital Offshore Ltd in connection with its Securities Purchase Agreement (See Note 7).  The fair market value of the shares on the date issuance was $50,000.
9.	Warrants
	On June 30, 2011, the Company entered into an agreement to issue 100,000 Units to North American Gold Corp (North American), in a private placement, for $1.00 per Unit, with each Unit consisting of one share of Common Stock and one Warrant to purchase a share of Common Stock at $1.20 at any time until June 30, 2014, for cash proceeds of $100,000.  The fair market value of the Warrants on the date of issuance was $15,467, which was calculated using the Black-Scholes option pricing model.  Variables used in the valuation include (1) discount rate of 1.9%, (2) expected life of 3 years, (3) expected volatility of 386% and (4) zero expected dividends. On August 29, 2011, the Company entered into an agreement to issue 100,000 Units to North American in a private placement, with each Unit consisting of one share of the Company’s Common Stock and one warrant to purchase a share of the Company’s Common Stock at $1.20 at any time until August 29, 2014, for cash proceeds of $100,000.  The relative fair market value of the warrants on the date of issuance was $44,000, which was calculated using the Black-Scholes option pricing model.  Variables used in the valuation include (1) discount rate of 0.49%, (2) expected life of 3 years, (3) expected volatility of 536% and (4) zero expected dividends. A summary of warrant activity for the year ended December 31, 2012 is presented below:

					Weighted
			Weighted		average
			average		remaining		Aggregate
			exercise		contractual		intrinsic
	Warrants		price		life (years)		value
Outstanding December 31, 2011		200,000	$	1.20		2.58	$	59,467
Granted		-		-
Exercised		-		-
Forfeited or cancelled		-		-
Expired		-		-
Outstanding December 31, 2012		200,000	$	1.20		1.58	$	59,467

10.

Income Taxes

The Company has a net operating loss carry-forward of approximately $1,627,000 available to offset taxable income in future years which commence expiring in fiscal 2028. The Company is subject to United States income taxes at a rate of 34%. The reconciliation of the provision for income taxes at the United States statutory rate compared to the Company’s income tax expense as reported is as follows:

	Year Ended December 31, 2012			Year Ended December 31, 2011
Income tax recovery at statutory rate	$	331,000		$	165,000
Valuation allowance change		(331,000	)		(165,000	)
Provision for income taxes	$	–		$	–

F-16

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

The significant components of deferred income tax assets as at December 31, 2012 and 2011 are as follows:

	December 31, 2012			December 31, 2011
Net operating losses carried forward	$	553,360		$	222,360
Valuation allowance		(553,360	)		(222,360	)
Net deferred income tax asset	$	–		$	–

11.

Commitments

La Candelaria Property On May 31, 2011, Metales was formed, with the Company owning 70% of the issued and outstanding shares of capital stock.  The remaining 30% of the issued and outstanding capital stock of Metales was issued to Gonzalez.  On June 10, 2011, Gonzalez assigned the Concessions to Metales.  The Concessions cover 800 hectares, or approximately 1,976 acres. Gonzalez transferred the Concessions to Metales pursuant to an agreement with American Gold.    On August 17, 2011, in connection with its investment in Metales and the exploration and development of the Concessions, the Company, American Gold, and Gonzalez executed an Assignment Agreement (the “Assignment Agreement”) pursuant to which (a) American Gold assigned all of its right and interest in and to a Letter of Intent between American Gold and Gonzalez, and an Option to Purchase Agreement between American Gold and Gonzalez dated January 11, 2011 (the “Option Agreement”), (b) the Company accepted the assignment of all of the rights and interest of American Gold in and to the Letter of Intent and the Option Agreement, and (c) the Company assumed all of the duties and obligations of American Gold under the Letter of Intent and the Option Agreement with Gonzalez. Pursuant to the Assignment Agreement (which has an effective date of June 10, 2011), the Company has taken or will take the following actions in connection with transfer of the Concessions from Gonzalez to Metales:

1. The Company issued 125,000 shares of its Common Stock to North American as repayment of the $125,000 that American Gold paid Gonzalez in connection with Option Agreement (the “American Gold Shares”) in September 2011.  The $125,000 was recognized as exploration expense during the year ended December 31, 2011.

2.	The Company issued 300,000 shares of its Common Stock, with a fair value of $303,000, to Gonzalez on September 16, 2011.  The $303,000 was recognized as exploration expense during the year ended December 31, 2011.
3.	The Company, either alone or through Metales, is obligated to fund $150,000 per year of development costs for three years, for a total of $450,000 (the “Work Plan”).  In the years ended December 31, 2012 and 2011, the Company made payments totaling $60,195 and $123,106, respectively, pursuant to the Work Plan.

4. The Company has paid Gonzalez an additional $125,000 in 2012.

The American Gold Shares were issued in the name of North American, with the agreement of American Gold.

F-17

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

Gonzalez retains a 2% Net Smelter Returns Royalty on the Concessions. Metales is obligated to undertake work necessary to bring the existing geological survey on the Property up to NJ 43-101 standards.  The Company has granted anti-dilution rights to Gonzalez, such that the Company must allow Gonzalez the opportunity to maintain his percentage stock ownership in the Company until the date on which the Company has complied fully with its obligations under the Option Agreement or January 11, 2014, whichever comes first.  Gonzalez has waived the exercise of his anti-dilution rights with respect to issuances of Common Stock to North American under the Investment Agreement.  In addition, the Company is obligated to issue 1,000,000 shares of its Common Stock to Gonzalez upon the discovery of a 1 million-ounce equivalent gold deposit, as defined by industry standards as set forth by a recognized exchange in North America.  Finally, if the Company fails to comply with all its obligations under the Option Agreement before January 11, 2014, the Option Agreement will terminate and the Company will be obligated to return the Concessions to Gonzalez.  In January 2013, the Company and Gonzalez verbally agreed to place the work commitments on hold.  Per the verbal agreement between the Company and Gonzalez the payment has been put on hold until such time as the Company has sufficient capital to continue to project.

Employment Agreement

On July 12, 2011, the Company entered into an Employment Agreement with Dan M. Ferris regarding his position as President of the Company.  The Employment Agreement has an initial term of three years, and after the initial term will automatically renew for successive one-year periods until terminated in accordance with the Agreement (the “Term”).  Mr. Ferris will be paid a base salary of $120,000 per year during the Term.  Mr. Ferris will also be entitled to receive 3,000,000 shares of Common Stock, which will be issued in three equal increments of 1,000,000 shares over the first 3 years of the Term.  The shares of Common Stock will not be registered under the Securities Act, and will be subject to restrictions on transfer.  Therefore, Mr. Ferris will receive 1,000,000 shares of Common Stock on July 12 of each of the years 2012, 2013, and 2014.  The Employment Agreement may be terminated voluntarily by either party upon 30 days written notice, upon Mr. Ferris’ death or disability, by mutual agreement at the end of the Term, or at any time for “cause” by the Company.  If Mr. Ferris’ employment is terminated for “cause”, or if he voluntarily resigns, then he would not be entitled to receive any shares of Common Stock that have not been issued as of the date of resignation or termination.  If Mr. Ferris’ employment is terminated for any other reason, he would receive the full 3,000,000 shares of Common Stock.  The Employment Agreement defines “cause” as the willful and continued failure by Ferris to perform his duties under the Employment Agreement, conviction of a felony, or engaging in conduct that is contrary to the best interests of the Company or adversely affects the Company’s reputation.  The fair market value of the stock grant on the date of the Employment Agreement was $3,000,000 based on the fair market value at the time of the agreement.  The Company recognized $999,996 in expense related to the stock grant during the year ended December 31, 2012.

Mine Tailings Project

On January 26, 2012, the Company, acting through a newly-formed subsidiary, entered into a Joint Venture Agreement (the “JV Agreement”) with Miguel Angel Jaramillo Tapia (“Jaramillo”), a resident of Mexico. Under the JV Agreement, Amiko Kay, S. de R.L. de C.V., a company organized under the laws of Mexico (“Amiko Kay”), and Jaramillo formed a joint venture to process 1,200,000 tons of mine tailings located in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico (the “Tailings”), and, after processing, to use, market and sell any minerals extracted from the Tailings. The Company owns 99% of the issued and outstanding membership interests of Amiko Kay.

The Tailings consist of approximately 1.2 million tons of mine tailings from previous mining activity in the Chihuahua area over the last 100 years or more. Mine tailings represent the refuse remaining after ore has been processed. The JV Agreement between Amiko Kay and Jaramillo has been formed to re-process the mine tailings heap to extract minerals that were not extracted during the initial processing, and to market and sell any minerals extracted from the Tailings.

As consideration for Jaramillo’s contribution of the right to process the Tailings to the Joint Venture, the Company paid Jaramillo $25,000 when it signed a letter of intent for a proposed acquisition of an interest in the Tailings on December 5, 2011, and another $75,000 when it signed the JV Agreement.  The Company agreed to pay Jaramillo an additional $200,000 no later than January 26, 2013.  In January 2013, the Company and Jaramillo entered into a verbal agreement to delay the payment, and as of the date of this filing the payment has not been made.

F-18

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

In addition, the Company or Amiko Kay will fund an amount up to $1,000,000 (the “Work Commitment”) for the benefit of the JV Agreement over its first two years, as follows:

(a)    $250,000 within the first year of the JV Agreement for the purchase of used heavy equipment, miscellaneous equipment and materials for processing the Tailings, and taxes, permits, and general operating expenses.

(b)    $750,000 within the second year of the JV Agreement for the construction of a heap leach system and floatation plant on the Property.

The Company may make an additional $250,000 available to the JV Agreement, if additional processing equipment is justified and required to maximize the liberation of precious metals in the Tailings material.

As further consideration, the Company is obligated to issue 600,000 shares of the Common Stock to Jaramillo as follows:

(a)    100,000 shares of Common Stock, which have been issued to Jaramillo.

(b)    200,000 shares of Common Stock within 6 months of signing the JV Agreement, which was issued in June 2012.

(c)    300,000 shares of Common Stock within 12 months of signing the JV Agreement (these shares will be issued in April 2013).

The shares of Common Stock will be restricted shares and carry current and appropriate legends to that effect.

Jaramillo will manage the day-to-day affairs associated with processing the Tailings, selling the minerals extracted from the Tailings (“Extracted Minerals”), and other activities of the JV Agreement. Jaramillo will pay all expenses associated with the processing of the Tailings, the sale of any Extracted Minerals from the Tailings, and other obligations of the JV Agreement from the funds received under the Work Commitment and, eventually, from revenues from operations. All net revenues from the sale of any Extracted Minerals or other sources, after deducting expenses, will be distributed and paid monthly, with 65% of the net revenues paid to Amiko Kay and 35% of the net revenues paid to Jaramillo. It is anticipated that the portion to be paid to Amiko Kay will be paid directly to the Company. Jaramillo will provide a monthly accounting of all revenues and expenses associated with the operations of the JV Agreement.

Title to the Property and the Tailings will remain in Jaramillo’s name. Jaramillo will be responsible for obtaining all permits, approvals and authorizations associated with the processing of the Tailings. He is also responsible for causing the project to comply with all applicable laws, rules and regulations, and to maintain insurance on the Property. Amiko Kay will have access to the Property and the Tailings at all times during the term of the JV Agreement.

Amiko Kay and Jaramillo will mutually develop plans and programs to process the Tailings. Jaramillo will prepare a detailed budget setting forth the expenses to be paid under the Work Commitment, which will be approved by Amiko Kay. Finally, Jaramillo will provide quarterly financial reports to Amiko Kay.

If either party defaults under the JV Agreement, the defaulting party’s rights to participate in the JV Agreement will be immediately suspended, and the defaulting party will have no right to share in the revenues of the JV Agreement until the breach is cured. If the defaulting party is Jaramillo, then Amiko Kay may perform the duties of Jaramillo under the Agreement. The nondefaulting party may also sue for damages incurred as a result of the event of default.

The JV Agreement will terminate upon completion of processing the Tailings, as determined by Amiko Kay in its sole discretion.  If Jaramillo materially breaches the JV Agreement, Amiko Kay may terminate the JV Agreement upon 30 days notice to Jaramillo.   Jaramillo has no right to terminate the JV Agreement before the processing of the Tailings is complete.

Jaramillo provides independent consulting services to the Company on the La Candelaria project. He acts as Vice President of Exploration on the La Candelaria project (although he is not an executive officer, or an employee, of the Company, Metales or the Subsidiary).

F-19

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

The Company is obligated to fund $250,000 for the benefit of the operations under the JV Agreement before January 26, 2013, under the Work Commitment established for the Tailings Project. For the year ended December 31, 2012, the Company made payments totaling $250,000 pursuant to the Work Commitment.  See “Results of Operations”.

Approximately 6,000 tons of the Tailings material has been sent to the processing plant in Parral, Mexico. As of the date of this Quarterly Report, this shipment has not been fully processed and the Company has no revenues from Tailings project. In addition, the Parral processing plant has undergone a change of management and has indicated that it will not accept further material for processing. The Company has identified another processing plant in the area that it anticipates will process future shipments of Tailings material.

The Company is constructing a basic wash plant and jig circuit on the property on which the Tailings are located.  The cost of the wash plant and jig circuit, if completed, is expected to be approximately $80,000.

No Proven or Probable Reserves

We are a start-up, exploration-stage company engaged in the search for gold and related minerals. No proven (measured) or probable (indicated) reserves have been established with respect to the La Candelaria project or the Tailings project, and the proposed program of exploration and development for the La Candelaria project and the Tailings project is exploratory in nature. There is no assurance that a commercially viable mineral deposit, or reserve, exists on the property covered by the Concessions or the Tailings project or can be shown to exist until sufficient and appropriate exploration is done, and a comprehensive evaluation of such work concludes that the extraction of such a mineral deposit, if found, can be economically and legally feasible.

Fairhills Investment Agreement

In connection with the Deer Valley Investment Agreement, the Company and the Investor entered into a Registration Rights Agreement. Under the Registration Rights Agreement, the Company will use its commercially reasonable efforts to file, within twenty-one (21) days of the date of the Agreement, a Registration Statement on Form S-1 covering the resale of the Common Stock subject to the Investment Agreement. The Company intends to initially register 30,000,000 shares of Common Stock for resale. The Company has agreed to use all commercially reasonable efforts to have the Registration Statement declared effective by the SEC within one hundred and twenty (120) calendar days after the date of the Registration Rights Agreement.  On October 16, 2012, the Company filed a Registration Statement on Form S-1 covering the resale of 19,000,000 shares of Common Stock subject to the Investment Agreement.  The Deer Valley Investment Agreement was assigned to Deer Valley Management in November 2012.

Ocampo Property

On September 29, 2011, the Company entered into a 90-day exclusivity letter of intent (the “Ocampo LOI”) with Antonio Aguirre Rascon (“Rascon”) to acquire a 70% interest in mining concessions covering approximately 570 hectares located in the municipality of Ocampo in the state of Chihuahua, Mexico.  The Company paid Rascon $12,500 upon signing of the Ocampo LOI.  The Ocampo LOI is to serve as the basis for a definitive agreement (the “Definitive Agreement”) to be negotiated between the parties.  In December 2011, the Company elected to allow the Ocampo LOI to lapse without entering into a Definitive Agreement.

F-20

Lone Star Gold Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

12.

Subsequent Events

Common Stock On five occasions in January, February and March 2013, the Company exercised its right pursuant to the Investment Agreement with Deer Valley to require Deer Valley to purchase additional shares of the Company’s Common Stock, per the Company’s filing on Form S-1 in December 2012.  The total amount of these puts is $270,000.  There was an additional put exercised in December 2012, the amount of which is $15,000 whose shares were not issued until 2013 as well.  The total of these six put shares issuances resulted in 9,510,000 shares being issued in 2013. Notes Payable In March 2013, the Company paid $25,000 to Fairhills Capital Offshore Ltd. to pay down the outstanding balance on its loan.  The remaining balance on the loan is $25,000 and is due on December 24, 2013 (see Note 6 - Notes Payable).

F-21

26,100,000 SHARES OF COMMON STOCK

LONE STAR GOLD, INC.

PROSPECTUS

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

Until _____________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II — INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item. 13 Other Expenses Of Issuance And Distribution.

Securities and Exchange Commission registration fee	$	121.04*
Federal Taxes	$	0
State Taxes and Fees	$	0
Transfer Agent Fees	$	0
Accounting fees and expenses	$	1,500
Legal fees and expense	$	10,000
Blue Sky fees and expenses	$	0
Miscellaneous	$	0
Total	$	11,621.04

* Previously paid

All amounts are estimates other than the Commission’s registration fee and Legal fees and expenses. KVM is paying all expenses of the offering listed above.

Item. 14 Indemnification Of Directors And Officers.

Nevada Revised Statute 78.037 permits a corporation to eliminate or limit the personal liability of a director or officer to the corporation or its stockholders for damages relating to breach of fiduciary duty as a director or officer, but such a provision must not eliminate or limit the liability of a director or officer for (a) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law or (b) the payment of distributions in violation of Nevada Revised Statute 78.300.

Nevada Revised Statutes 78.7502 provides as follows with respect to indemnification of directors, officers, employees and agents:

(a) We may indemnify any person who was or is a party or is threatened to be made a party to any action, except an action by us, by reason of the fact that he is or was our director, officer, employee or agent, or is or was serving as a director, officer, employee or agent of any other person at our request, against expenses actually and reasonably incurred by him in connection with the action, suit or proceeding if he: (i) is not liable for breach of his fiduciary duties as a director or officer pursuant to Nevada Revised Statutes 78.138; and (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

(b) We may indemnify any person who was or is a party or is threatened to be made a party to any action by us, by reason of the fact that he is or was our director, officer, employee or agent, or is or was serving as a director, officer, employee or agent of any other person at our request, against expenses actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he: (i) is not liable for breach of his fiduciary duties pursuant to Nevada Revised Statutes 78.138; and (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to our best interest.  We may not indemnify him for any claim, issue or matter as to which he has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to us or for amounts paid in settlement to us, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, he is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

(c) To the extent that our director, officer, employee or agent has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, we are required to indemnify him against expenses, including attorneys’ fees actually and reasonably incurred by him in connection with the defense.

43

Our Articles of Incorporation and Bylaws provide for elimination of any liability of our directors and officers and indemnity of our directors and officers to the fullest extent permitted by Nevada law.

The above-described provisions relating to the exclusion of liability and indemnification of directors and officers are sufficiently broad to permit the indemnification of such persons in certain circumstances against liabilities arising under the Securities Act.  Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors and officers and to persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Item. 15 Recent Sales of Unregistered Securities.

Set forth below is information regarding securities sold by us within the past three years that were not registered under the Securities Act:

On September 14, 2012, the Company issued 653,595 share of common stock to Fairhills pursuant to the Securities Purchase Agreement, as amended by Amendment No. 1 to Securities Purchase Agreement dated being effective as of September 14, 2012. Such shares were transferred to Deer Valley subsequently.

On July 11, 2012, the Company issued 1,000,000 shares of common stock to Dan Ferris, the President of the Company, pursuant to the terms of his Employment Agreement.

On June 29, 2012, we issued 200,000 shares of common stock to Jaramillo pursuant to the JV Agreement dated January 26, 2012.

On March 21, 2012, we completed a private placement of sale of 625,000 shares of our common stock to North American. We sold the shares at a price of $0.40 per share, resulting in total proceeds of approximately $250,000 to the Company. The sale of the shares to North American represents the fifth sale of common stock under the North American Investment Agreement.

On February 13, 2012, we completed a private placement of sale of 625,000 shares of our common stock to North American. We sold the shares at a price of $0.48 per share, resulting in gross proceeds of approximately $300,000 to the Company. The sale of shares to North American represents the fourth sale of common stock under the North American Investment Agreement.

A portion of the proceeds of both private placements have been or will be used to fund the exploration and development of the Concessions, according to a work plan established for the La Candelaria project, and to make the annual payments for the property and concession taxes associated with the project. The Company will also use the proceeds to commence payments in connection with the JV Agreement, such as shipping, trucking and on-site wash plant construction, and other expenses under the work plan established for the Tailings project. Finally, a portion of the proceeds will be used for general corporate expenses associated with the Company’s exploration and development activities.

44

On January 30, 2012, we issued 100,000 shares of common stock to Jaramillo pursuant to the JV Agreement dated January 26, 2012.

On December 27, 2011, we sold 273,972 shares of our common stock to North American for gross proceeds of $200,000 pursuant to a put notice delivered under the North American Investment Agreement. The proceeds were used to fund the Work Plan related to the La Candelaria project, for expenses related to the letter of intent for the Ocampo Property, and other operating expenses incurred by the Company.

On October 31, 2011, we entered into an agreement with a consultant to perform certain consulting services. The contract calls for the consultant to receive $15,000 upon execution of the agreement, $5,000 per month through the term of the agreement, and a one-time grant of 150,000 restricted shares of our common stock. The fair market value of the common stock on the date of grant was $124,500. The term of agreement is one year and it will automatically renew if not cancelled in writing 30 days prior to the end of the annual period.

On October 24, 2011, we sold 204,081 shares of our common stock to North American for gross proceeds of $200,000 pursuant to a put notice delivered under the North American Investment Agreement. The proceeds were used to fund the Work Plan related to the La Candelaria project, for expenses related to the letter of intent for the Ocampo Property, and other operating expenses incurred by the Company.

On September 14, 2011, we issued 238,095 shares of our common stock to North American for gross proceeds of $200,000 pursuant to a put notice delivered under the North American Investment Agreement.

On August 17, 2011, we entered into an agreement to issue 300,000 shares of our common stock to Gonzalez in accordance with certain option agreement. The fair market value of the common stock was $303,000 on the date of issuance.

On August 17, 2011, we entered into an agreement to issue 125,000 shares of our common stock to American Gold as repayment of the $125,000 that American Gold paid to Gonzalez in connection with certain option agreement. The shares were issued in the name of North American with the agreement of American Gold. The fair market value of the common stock was $126,250 on the date of issuance, September 15, 2011.

On August 29, 2011, we entered into an agreement to issue 100,000 units to North American in a private placement, with each unit consisting of one share of our common stock and one warrant to purchase an equal amount of share of our common stock at $1.20 per share exercisable at any time until August 29, 2014, for cash proceeds of $100,000. The relative fair market value of the warrants on the date of issuance was $44,000.

On June 30, 2011, we entered into an agreement to issue 100,000 units to North American Gold Corp. in a private placement, for $1.00 per unit, with each unit consisting of one share of common stock and one warrant to purchase an equal amount of share of common stock at $1.20 per share exercisable at any time until June 30, 2014, for cash proceeds of $100,000. The fair market value of the Warrants on the date of issuance was $15,467.

On April 13, 2011, the Company and New World executed a Redemption Agreement, whereby we redeemed all of the shares of common stock and the warrants that New World owned (consisting of the 12,000,000 shares of common stock and warrants to purchase 12,000,000 shares of common stock obtained in private placements of Units), and in consideration for the common stock and warrants assigned to New World the four Promissory Notes. As a result of the Redemption Agreement, the Company no longer holds the Promissory Notes, and New World owns no shares of common stock or other securities of the Company.

On January 3, 2011, we issued 3,000,000 units to New World in a private placement, with each unit consisting one share of our common stock and one warrant to purchase a share of our common stock at $0.0625 per share exercisable at any time until January 3, 2014, for cash proceeds of $150,000. On January 6, 2011, the Company completed a private placement of an additional 3,000,000 units to New World on similar terms, for cash proceeds of $150,000. The relative fair value of the warrants issued was $46,000. All shares of common stock and warrants issued to New World have been redeemed.

45

On December 3, 2010, we issued 6,000,000 units to New World in a private placement, with each unit consisting of one share of our common stock and one warrant to purchase a share of our common stock at $0.0625 per share exercisable at any time within 3 years, for cash proceeds of $300,000. The relative fair value of the warrants issued was $46,500.

The above securities were not registered under the Securities Act.  These securities qualified for exemption under Regulation S promulgated under the Securities Act. We made this determination based on the representations of the investors, which included, in pertinent part, that such shareholders were not a “U.S. person” as that term is defined in Rule 902(k) of Regulation S under the Act, and that such shareholders were acquiring our common stock, for investment purposes for their own respective accounts and not as nominees or agents, and not with a view to the resale or distribution thereof, and that the shareholders understood that the shares of our common stock may not be sold or otherwise disposed of without registration under the Securities Act or an applicable exemption therefrom.

Item 16. Exhibits and Financial Statement Schedules

Exhibit No.	Description
3.1	Certificate of Incorporation of Keyser Resources Incorporated (1)
3.2	By-laws of Keyser Resources Incorporated (1)
3.3	Amended and Restated Articles of Incorporation (2)
5.1	Legal Opinion of Szaferman, Lakind, Blumstein & Blader, P.C.
10.1	Declaration of Trust (1)
10.2	Option Agreement with Bearclaw Capital Corporation  (1)
10.3	Assignment Agreement by and among the Company, American Gold Holdings, Ltd. and Homero Bustillos Gonzalez dated as of June 10, 2011 (3)
10.4	Employment Agreement dated July 12, 2011, between the Company and Dan M. Ferris (3)
10.6	Investment Agreement between North American Gold Corp. and the Company dated August 29, 2011(4)
10.7	Press Release dated August 29, 2011(4)
10.8	Option Agreement between American Gold Holdings, Ltd. and Homero Bustillos Gonzales dated January 11, 2011 (5)
10.9	Consulting Agreement between the Company and Adam Whyte dated October 31, 2011 (5)
10.10	First Amendment to the Investment Agreement dated November 9, 2011, between the Company and North American Gold Corp. (5)
10.11	Amendment Agreement dated January 10, 2012, between the Company and Homero Bustillos Gonzales (6)
10.12	Joint Venture Agreement between Amiko Kay, S. de R.L. de C.V. and Miguel Angel Jaramillo Tapia dated January 26, 2012 (7)
10.13	Investment Agreement dated April 27, 2012, between Lone Star Gold, Inc. and Fairhills Capital Offshore Ltd. (executed on April 30, 2012) (8)
10.14	Registration Rights Agreement dated April 30, 2012 between Lone Star Gold, Inc. and Fairhills Capital Offshore Ltd. (8)
10.15	Amendment No. 1 to Investment Agreement dated June 25, 2012, between Lone Star Gold, Inc. and Fairhills Capital Offshore Ltd. (9)
10.16	Amendment No. 2 to Investment Agreement dated September 21, 2012, between Lone Star Gold, Inc. and Fairhills Capital Offshore Ltd. (9)
10.17	2% Secured Note, dated June 25, 2012 (9)
10.18	Securities Purchase Agreement dated September 14, 2012, between Lone Star Gold, Inc. and Fairhills Capital Offshore Ltd. (9)
10.19	Amendment No. 1 to Securities Purchase Agreement dated September 14, 2012, between Lone Star Gold, Inc. and Fairhills Capital Offshore Ltd. (10)
10.20	Assignment and Assumption Agreement among Lone Star Gold, Inc., Fairhills Capital Offshore Ltd, and Deer Valley Management, LLC dated to be effective as of November 12, 2012. (11)

46

10.21 Amendment No. 3 to Investment Agreement dated November 26, 2012, between Lone Star Gold, Inc. and Deer Valley Management, LLC.(12)

10.22	Investment Agreement dated June 27, 2013 by and between Lone Star Gold, Inc. and KVM Capital Partners, LLC. (13)
10.23	Registration Rights Agreement dated June 27, 2013 by and between Lone Star Gold, Inc. and KVM Capital Partners, LLC. (13)

21.1	List of Subsidiaries of the Registrant (9)
23.1 (i)	Consent of LBB & Associates Ltd., LLP
23.1(ii)	Consent of Seale and Beers, CPAs
23.2	Consent of Anslow & Jaclin, LLP (included in Exhibit 5.1)
101	Interactive Data File [incorporated by reference to Exhibit 101 filed with the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2011 filed on September 5, 2012 and the Quarterly Report on Form 10-Q for the nine months ended September 30, 2012 filed on November 19, 2012]

(1) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed on May 28, 2009.

(2) Incorporated by reference to the Company’s 10-Q filed on May 12, 2011.

(3) Incorporated by reference to the Company’s 10-Q filed August 22, 2011.

(4) Incorporated by reference to the Company’s Current Report on Form 8-K filed on August 29, 2011.

(5) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2011.

(6) Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 17, 2012.

(7) Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 1, 2012.

(8) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 14, 2012.

(9) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed on October 16, 2012.

(10) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A filed on November 21, 2012.

(11) Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 21, 2012.

(12) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed on November 28, 2012.

(13) Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 3, 2013.

Item 17. Undertakings.

Undertaking Required by Item 512 of Regulation S-K.

(a) The undersigned registrant hereby undertakes:

                    (1) to file, during any period in which it offers or sells securities are being made, a post-effective amendment to this Registration Statement to:

                           (i) include any prospectus required by Section 10(a)(3) of the Securities Act;

                              (ii) reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

                              (iii) include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this rule do not apply if the registration statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Exchange Act that are incorporated by reference in the registration statement; and paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is not part of the registration statement.

47

                              Provided further, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is for an offering of asset-backed securities on Form S-1 or Form S-3, and the information required to be included in a post-effective amendment is provided pursuant to item 1100(c) of Regulation AB.

                    (2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

                    (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

(b) For determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the registrant undertakes that in a primary offering of securities of the registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

                    (1) Any preliminary prospectus or prospectus of the registrant relating to the offering required to be filed pursuant to Rule 424;

                    (2) Any free writing prospectus relating to the offering prepared by or on behalf of the registrant or used or referred to by the registrant;

                    (3) The portion of any other free writing prospectus relating to the offering containing material information about the registrant or its securities provided by or on behalf of the registrant; and

                    (4) Any other communication that is an offer in the offering made by the registrant to the purchaser.

(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(d) That, for the purpose of determining liability under the Securities Act to any purchaser:

          If the registrant is relying on Rule 430B:

                    (i) Each prospectus filed by the registrant pursuant to 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

                    (ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

48

          If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of a registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

          If the registrant is relying on Rule 430A:

                    (i) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

                    (ii) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Albuquerque, State of New Mexico, on September 23, 2013.

LONE STAR GOLD, INC.
By:	/s/ Daniel M. Ferris
	Name: Daniel M. Ferris
	Title: President, Chief Executive Officer and
	Chief Financial Officer
	(Principal Executive and Accounting Officer)

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Daniel M. Ferris	President, Chief Executive Officer	September 23, 2013
Daniel M. Ferris	Chief Financial Officer and Director
	(Principal Executive and Accounting Officer)

49

EX-5.1

Exhibit 5.1

Szaferman, Lakind, Blumstein & Blader, P.C. Attorneys at Law   101 Grovers Mill Road, Suite 200 Lawrenceville, NJ 08648 P: 609.275.0400 F: 609.275.4511 www.szaferman.com     Arnold C. Lakind Barry D. Szaferman Jeffrey P. Blumstein Steven Blader Brian G. Paul+ Craig J. Hubert++ Michael R. Paglione* Lionel J. Frank** Jeffrey K. Epstein+ Stuart A. Tucker Scott P. Borsack*** Daniel S. Sweetser* Robert E. Lytle Janine G. Bauer*** Daniel J. Graziano Jr. Nathan M. Edelstein** Ryan A. Marrone Bruce M. Sattin*** Gregg E. Jaclin** Of Counsel Stephen Skillman Linda R. Feinberg Paul T. Koenig, Jr. Robert A. Gladstone Janine Danks Fox* Richard A. Catalina Jr.*† (45,372) Robert P. Panzer Robert G. Stevens Jr.** Michael D. Brottman** Benjamin T. Branche* Lindsey Moskowitz Medvin** Mark A. Fisher Tracey C. Hinson** Robert L. Lakind*** Thomas J. Manzo** Melissa A. Ruff +Certified Matrimonial Attorney ++Certified Civil and Criminal Trial Attorney *NJ & PA Bars **NJ & NY Bars ***NJ, NY & PA Bars †U.S. Patent & Trademark Office

September 23, 2013

Lone Star Gold, Inc.

6565 Americas Parkway NE, Suite 200

Albuquerque, NM 87110

Gentlemen:

You have requested our opinion, as counsel for Lone Star Gold, Inc., a Nevada corporation (the “Company”), in connection with the registration statement on Form S-1 (the “Registration Statement”), under the Securities Act of 1933, as amended (the “Act”), filed by the Company with the Securities and Exchange Commission.

The Registration Statement relates to an offering of 26,100,000 shares of the Company’s common stock.

We have examined such records and documents and made such examination of laws as we have deemed relevant in connection with this opinion. It is our opinion that the common stock to be sold by the selling stockholder, issuable upon the conditions contemplated in the Registration Statement, will be duly authorized and legally issued, fully paid and non-assessable upon issuance.

No opinion is expressed herein as to any laws other than the laws of the State of Nevada. This opinion opines upon Nevada law including the statutory provisions, all applicable provisions of the statutes and reported judicial decisions interpreting those laws.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the caption “Legal Matters” in the Registration Statement. In so doing, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.

Very truly yours,

/s/ Szaferman, Lakind, Blumstein & Blader

Szaferman, Lakind, Blumstein & Blader, PC

Lawrenceville, New Jersey

EX-23.1

Exhibit 23.1(i)

LBB & ASSOCIATES LTD., LLP

10260 Westheimer Road, Suite 310

Houston, TX 77042

Phone: (713) 800-4343 Fax: (713) 456-2408

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement of Lone Star Gold, Inc. on Form S-1(Amendment No. 1) to be filed with the commission on or about September 20, 2013 of our report dated April 12, 2013, relating to the financial statements of Lone Star Gold, Inc., which appears in such Registration Statement.  We also consent to the reference to us under the heading “Experts” in this registration statement.

/s/ LBB & Associates Ltd., LLP

LBB & Associates Ltd., LLP

Houston, Texas

September 20, 2013

EX-23.1

Exhibit 23.1(ii)

SEALE AND BEERS, CPAs

PCAOB & CPAB REGISTERED AUDITORS

www.sealebeers.com

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use, in the registration statement on Form S-1, Amendment No. 1, of Lone Star Gold, Inc. (FKA: Keyser Resources, Inc.), of our report dated April 12, 2010 on our audit of the financial statements of Keyser Resources, Inc. (A Development Stage Company) as of December 31, 2009, and the related statements of operations, stockholders’ equity and cash flows since inception on November 26, 2007 through December 31, 2009, and the reference to us under the caption “Experts.”

/s/ Seale and Beers, CPAs

Seale and Beers, CPAs

Las Vegas, Nevada

August 16, 2013

Seale and Beers, CPAs PCAOB & CPAB Registered Auditors

50 S. Jones Blvd Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351

XML

Common Stock

12 Months Ended

Dec. 31, 2012

Common Stock

Common Stock

8. Common Stock

On January 19, 2008, the Company issued 60,000,000 shares of Common Stock at $0.00005 per share for cash proceeds of $3,000.

On April 28, 2008, the Company issued 32,699,920 shares of Common Stock at $0.00075 per share for cash proceeds of $24,525.

On December 24, 2008, the Company issued 22,600,000 shares of Common Stock at $0.0025 per share for cash proceeds of $56,500.

On December 3, 2010, the Company issued 6,000,000 Units to New World in a private placement, with each Unit consisting of one share of Common Stock and one warrant to purchase a share of Common Stock at $0.0625 at any time within 3 years, for cash proceeds of $300,000. The relative fair value of the warrants issued was $46,500.

On January 3, 2011, the Company issued 3,000,000 Units to New World in a private placement, with each Unit consisting one share of Common Stock and one warrant to purchase a share of Common Stock at $0.0625 at any time until January 3, 2014, for cash proceeds of $150,000. On January 6, 2011, the Company completed a private placement of an additional 3,000,000 Units to New World on similar terms, for cash proceeds of $150,000. The relative fair value of the warrants issued was $46,000.  All shares of Common Stock and warrants issued to New World have been redeemed.

On April 13, 2011, the Company and New World executed a Redemption Agreement, whereby the Company redeemed all of the shares of Common Stock and the Warrants that New World owned (consisting of the 12,000,000 shares of Common Stock and Warrants to purchase 12,000,000 shares of Common Stock obtained in private placements of Units), and in consideration for the Common Stock and Warrants assigned to New World the four Promissory Notes described above. As a result of the Redemption Agreement, the Company no longer holds the Promissory Notes, and New World owns no shares of Common Stock or other securities of the Company.

On June 30, 2011, the Company entered into an agreement to issue 100,000 Units to North American Gold Corp. in a private placement, for $1.00 per Unit, with each Unit consisting of one share of Common Stock and one Warrant to purchase a share of Common Stock at $1.20 at any time until June 30, 2014, for cash proceeds of $100,000.  The fair market value of the Warrants on the date of issuance was $15,467.

On August 29, 2011, the Company entered into an agreement to issue 100,000 Units to North American in a private placement, with each Unit consisting of one share of Common Stock and one warrant to purchase a share of Common Stock at $1.20 at any time until August 29, 2014, for cash proceeds of $100,000.  The relative fair market value of the warrants on the date of issuance was $44,000.

On August 17, 2011, the Company entered into an agreement to issue 300,000 shares of its Common Stock to Homero Bustillos Gonzalez (“Gonzalez”) in accordance with the Option Agreement discussed more fully in Note 11 below.  The fair market value of the Common Stock was $303,000 on the date of issuance.

On August 17, 2011, the Company entered into an agreement to issue 125,000 shares of its Common Stock to American Gold Holdings, Ltd. ("American Gold") as repayment of the $125,000 that American Gold paid Gonzalez in connection with the Option Agreement discussed more fully in Commitments below.  The shares were issued in the name of North American with the agreement of American Gold. The fair market value of the Common Stock was $126,250 on the date of issuance, September 15, 2011.

On September 14, 2011, the Company issued 238,095 shares of its Common Stock to North American for gross proceeds of $200,000 pursuant to a Put Notice delivered under the Investment Agreement.

On October 24, 2011, the Company sold 204,081 shares of its Common Stock to North American for gross proceeds of $200,000 pursuant to a Put Notice delivered under the Investment Agreement.  The proceeds will be used to fund the Work Plan related to the La Candelaria project, for expenses related to the Ocampo LOI, and other operating expenses incurred by the Company.

On October 31, 2011, the Company entered into an agreement with a consultant to perform consulting services as requested by the Company. The contract calls for the consultant to receive $15,000 upon execution of the agreement, $5,000 per month through the term of the agreement, and a one-time grant of 150,000 restricted shares Common Stock.  The fair market value of the Common Stock on the date of grant was $124,500. The term of agreement is one year and it will automatically renew if not cancelled in writing 30 days prior to the end of the annual period.

On December 27, 2011, the Company sold 273,972 shares of its Common Stock to North American for gross proceeds of $200,000 pursuant to a Put Notice delivered under the Investment Agreement.  The proceeds will be used to fund the Work Plan related to the La Candelaria project, for expenses related to the Ocampo LOI, and other operating expenses incurred by the Company.

On January 13, 2012, the Company redeemed certain shares of Common Stock held by two of its principal shareholders. The Company redeemed 7,500,000 shares of Common Stock owned by Dan Ferris, for total consideration of $1.00.  In addition, the Company redeemed 22,500,000 shares of Common Stock held by John G. Rhoden, for total consideration of $1.00.  The redeemed shares of Common Stock were retired and restored to the status of authorized and unissued shares, and not held in treasury. (See Note 3)

On January 30, 2012, the Company issued 100,000 shares of its Common Stock to Miguel Angel Jaramillo Tapia in accordance with the JV agreement (See Note 11). The fair market value of the shares on the date of issuance was $46,000.

On February 13, 2012, the Company sold 625,000 shares of its Common Stock to North American for gross proceeds of $300,000 pursuant to a Put Notice delivered under the Investment Agreement.    The proceeds will be used to fund the Work Plan related to the La Candelaria project, expenses related to the Tailings Project (See Note 11), and other operating expenses incurred by the Company.

On March 21, 2012, the Company sold 625,000 shares of its Common Stock to North American for gross proceeds of $250,000 pursuant to a Put Notice delivered under the Investment Agreement.

On June 29, 2012, the Company issued 200,000 shares of its Common Stock to Miguel Angel Jaramillo Tapia in accordance with the JV agreement (See Note 11). The fair market value of the shares on the date of issuance was $33,300.

On July 11, 2012, the Company issued 1,000,000 shares of its Common Stock to Dan Ferris in connection with his Employment Agreement (See Note 11).  The shares were valued at the date of grant, which is recognized ratably over the service period.

On September 14, 2012, the Company sold 653,595 shares of its Common Stock to Fairhills Capital Offshore Ltd in connection with its Securities Purchase Agreement (See Note 7).  The fair market value of the shares on the date issuance was $50,000.

XML

Consolidated Statements of Operations (USD $)	3 Months Ended		6 Months Ended		12 Months Ended		61 Months Ended	67 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Jun. 30, 2013
Revenues:
Revenue	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
Operating Expenses
General and administrative	100,768	63,852	205,986	215,916	350,447	486,741	971,693	1,177,679
Exploration costs	0	108,500	24,500	465,196	495,195	530,925	1,048,393	1,072,893
Management fees	303,699	279,999	583,698	559,998	1,119,996	543,974	1,676,450	2,260,148
Total Operating Expenses	(404,467)	(452,351)	(814,184)	(1,241,110)	(1,965,638)	(1,561,640)	(3,696,536)	(4,510,720)
Loss from operations	(404,467)	(452,351)	(814,184)	(1,241,110)	(1,965,638)	(1,561,640)	(3,696,536)	(4,510,720)
Other income (expense)
Interest (expense)	32,869	(22)	32,693	(22)	(274)	0	(274)	32,419
Interest income	0	0	0	0	0	8,647	9,839	9,839
Change in derivative liability	(89,948)	0	(89,948)	0	(9,575)	0	(9,575)	(99,523)
Gain on settlement of note receivable	0	0	0	0	0	5,161	5,161	5,161
Total other income (expense)	(57,079)	(22)	(57,255)	(22)	(9,849)	13,808	5,151	(52,104)
Loss before income taxes	(461,546)	(452,373)	(871,439)	(1,241,132)	(1,975,487)	(1,547,832)	(3,691,385)	(4,562,824)
Provision for income tax	0	0	0	0	0	0	0	0
Net Loss for the period	(461,546)	(452,373)	(871,439)	(1,241,132)	(1,975,487)	(1,547,832)	(3,691,385)	(4,562,824)
Net loss attributable to noncontrolling interest	417	416	833	1,341	1,757	18,181	19,938	20,771
Net loss attributable to Lone Star Gold, Inc.	$ (461,129)	$ (451,957)	$ (870,606)	$ (1,239,791)	$ (1,973,730)	$ (1,529,651)	$ (3,671,447)	$ (4,542,053)
Net Loss Per Share - Basic and Diluted	$ 0.00	$ 0.01	$ 0.01	$ 0.01	$ (0.02)	$ (0.01)
Weighted Average Common Shares Outstanding	100,661,866	88,143,266	97,612,729	89,935,436	89,799,438	118,686,221

XML

Debt

6 Months Ended

Jun. 30, 2013

Debt

Debt

3.    Debt

Debt as of June 30, 2013 and December 31, 2012 consists of the following:

Description	June 30, 2013			December 31, 2012
Notes payable
In June 2012 the Company entered into a secured note agreement with Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (“Fairhills”), in the principal amount of $50,000 at an annual interest rate of 2%. Principal and accrued and unpaid interest was due on December 24, 2012, which was verbally extended until December 24, 2013.  The Note is secured by 3,750,000 shares of Common Stock owned by Dan Ferris, our President and sole director.  On November 12, 2012, Fairhills transferred all rights and obligations under the Note to Deer Valley Management, LLC ("Deer Valley").  In March 2013, the Company paid $25,000 to Deer Valley to pay down the outstanding balance on its loan.  In May 2013, the remaining $25,000 balance due on this loan was rep aid by a shareholder.	$	-		$	50,000
Convertible note payable
In June 2013, the Company borrowed $50,000 from KVM Capital Partners LLC, the repayment of which is to be made on the following terms: (a) the unpaid principal amount accrues interest at the rate of eight percent (8%) per annum, (b) the unpaid principal and all accrued but unpaid interest thereon will be due and payable on December 15, 2013, and (c) any portion of the unpaid principal and accrued but unpaid interest may be prepaid by the Company, without penalty. The proceeds of the loan will be used to make certain payments relating to the Company's mine tailings joint venture in Chihuahua, Mexico, and for general operating expenses.  The note is convertible into 4,761,905 shares of the Company’s common stock.  The Company recorded a discount related to the bifurcation of the derivative liability.  The conversion price shall mean 65% multiplied by the Market Price (as defined herein) (representing a discount rate of 35%).  "Market Price" means the average of the lowes three (3) Trading Price for the Common Stock during the tenth (10) trading day period ending the latest complete trading day prior to the conversion date.	$	50,000		$	-
Less:  Discount		(50,000	)		-
Add:  Amortization of discounts		9,000			-
Total convertible notes payable, net of discount	$	9,000		$	-

XML

Income Tax (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax (Tables):

Effective Income Tax Rate Reconciliation

The Company is subject to United States income taxes at a rate of 34%. The reconciliation of the provision for income taxes at the United States statutory rate compared to the Company’s income tax expense as reported is as follows:

	Year Ended December 31, 2012			Year Ended December 31, 2011
Income tax recovery at statutory rate	$	331,000		$	165,000
Valuation allowance change		(331,000	)		(165,000	)
Provision for income taxes	$	–		$	–

Deferred Tax Assets and Liabilities

The significant components of deferred income tax assets as at December 31, 2012 and 2011 are as follows:

	December 31, 2012			December 31, 2011
Net operating losses carried forward	$	553,360		$	222,360
Valuation allowance		(553,360	)		(222,360	)
Net deferred income tax asset	$	–		$	–

XML

Warrants

12 Months Ended

Dec. 31, 2012

Warrants:

Warrants

9.

Warrants

On June 30, 2011, the Company entered into an agreement to issue 100,000 Units to North American Gold Corp (North American), in a private placement, for $1.00 per Unit, with each Unit consisting of one share of Common Stock and one Warrant to purchase a share of Common Stock at $1.20 at any time until June 30, 2014, for cash proceeds of $100,000.  The fair market value of the Warrants on the date of issuance was $15,467, which was calculated using the Black-Scholes option pricing model.  Variables used in the valuation include (1) discount rate of 1.9%, (2) expected life of 3 years, (3) expected volatility of 386% and (4) zero expected dividends. On August 29, 2011, the Company entered into an agreement to issue 100,000 Units to North American in a private placement, with each Unit consisting of one share of the Company’s Common Stock and one warrant to purchase a share of the Company’s Common Stock at $1.20 at any time until August 29, 2014, for cash proceeds of $100,000.  The relative fair market value of the warrants on the date of issuance was $44,000, which was calculated using the Black-Scholes option pricing model.  Variables used in the valuation include (1) discount rate of 0.49%, (2) expected life of 3 years, (3) expected volatility of 536% and (4) zero expected dividends. A summary of warrant activity for the year ended December 31, 2012 is presented below:

					Weighted
			Weighted		average
			average		remaining		Aggregate
			exercise		contractual		intrinsic
	Warrants		price		life (years)		value
Outstanding December 31, 2011		200,000	$	1.20		2.58	$	59,467
Granted		-		-
Exercised		-		-
Forfeited or cancelled		-		-
Expired		-		-
Outstanding December 31, 2012		200,000	$	1.20		1.58	$	59,467

XML

Commitments and contingencies - Fairhills Investment Agreement (Details)	Oct. 16, 2012
Commitments and contingencies - Fairhills Investment Agreement (Details)
shares of Common Stock Company intends to initially register for resale	30,000,000
Company filed a Registration Statement on Form covering the resale of common stock	19,000,000

XML

Commitments and contingencies - Tailings Project (Details) (USD $)	Dec. 31, 2012	Jan. 26, 2012	Dec. 05, 2011
Commitments and contingencies -Tailings Project:
Ownership interest as per JV Agreement with Jaramillo % of issued and outstanding membership interests of Amiko Kay		99.00%
Amount of mine tailings as per JV Agreement with Jaramillo		$ 1,200,000
Mine tailings previous activity period		100
Payment made to joint venture		200,000	75,000
Work commitment, period		2
Work commitment, within the first year of the Joint Venture		250,000
Work commitment, within the second year of the Joint Venture		750,000
Additional Commitment to joint venture		250,000
Common shares issued		600,000
shares of Common Stock, which have been issued to Jaramillo.		100,000
shares of Common Stock within 6 months of signing the JV Agreement, which was issued in June 2012.		200,000
shares of Common Stock within 12 months of signing the JV Agreement (these shares will be issued in April 2013).		300,000
Joint Venture, net revenues distribution percentage to Amiko Kay		0.6500
Joint Venture, net revenues distribution percentage to Jaramillo		35.00%
Amount funded for the benefit of operations under the JV Agreement	250,000
Approximate tons of the Tailings material has been sent to the processing plant in Parral, Mexico	6,000
The cost of the wash plant and jig circuit, to be approximately .	$ 80,000

XML

Nature of Operations and Continuance of Business - Accumulated Losses (Details) (USD $)	Dec. 31, 2012	Jun. 30, 2012
Nature of Operations and Continuance of Business - Accumulated Losses
Accumulated losses since inception	$ 3,671,447	$ 4,542,053

XML

Nature of Operations and Continuance of Business Parentheticals (Details)	Jun. 10, 2011	May 31, 2011
Nature of Operations and Continuance of Business Parentheticals
Common stock held by the company in Metales HBG, S.A. de C.V. ("Metales"), a company organized under the laws of Mexico,	0.00%	99.00%
Common stock held by Homero Bustillos Gonzalez ("Gonzalez"), an individual resident of Mexico	0.00%	30.00%
Number of gold and solver mining concessions assigned to Metales by Gonzalez	8	0
Number of Hectares related to the "La Candelaria" property located in the town of Guachochi, state of Chihuahua, Mexico (the "Concessions")	800	0
The concessions in acres	1,976	0

XML

Income Taxes - Provision for income tax calculations (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Income Taxes - Provision for income tax calculations
Income tax recovery at statutory rate	$ 331,000	$ 165,000
Valuation allowance change	(331,000)	(165,000)
Provision for income taxes,	$ 0	$ 0

XML

Equity (Details) (USD $)	Jun. 30, 2013	Jun. 27, 2013	Dec. 31, 2012	Apr. 30, 2012
Equity Transactions:
Common Stock for an aggregate purchase price				$ 15,000,000
Total amount of six puts	360,000
Additional put exercised			15,000
Total of these six put shares issuances resulted shares	10,810,000
Issuances resulted shares for proceeds	375,000
KVM agreed to purchase		$ 5,000,000
Shares of common stock for resale		30,000,000

XML

Derivative Liability (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012	Sep. 14, 2012	Dec. 31, 2011
Derivative Liability:
Common stock issued under purchase agreement to Fairhills			653,595
Common stock, par value.	$ 0.001	$ 0.001	$ 0.001	$ 0.001
Aggregate Purchase Price of the common stock			$ 50,000
Additional shares of registered Common Stock			50,000
Derivative Liability, Recorded Amount		20,980
Value of Additional shares		30,000
Derivative liability recorded as of the end of the quarter	$ 120,503

XML

Commitments and contingencies - Ocampo Property (Details) (USD $)	Sep. 29, 2011
Commitments and contingencies - Ocampo Property
Duration of letter of intent	90
To acquire mining concessions covering approximately area	570
To acquire a fixed % interest in mining concessions	70.00%
Amount paid for signing Letter of Intent	$ 12,500

XML

Notes Payable (Details) (USD $)	Jun. 30, 2012
Notes Payable as follows:
Secured Note, principal amount (agreement with Fairhills Capital offshore Ltd)	$ 50,000
Secured Note, interest rate	2.00%
Common stock shares used to secure Note	3,750,000
Company paid $25,000 to Fairhills to pay down the outstanding balance on its loan.	25,000
Remaining balance due onloan was repaid by a shareholder.	$ 25,000

XML

Common Stock Issues (Details) (USD $)	Dec. 27, 2011	Oct. 31, 2011	Oct. 24, 2011	Sep. 14, 2011	Aug. 29, 2011	Aug. 17, 2011	Aug. 07, 2011	Jun. 30, 2011	Apr. 13, 2011	Jan. 06, 2011	Jan. 03, 2011
Common Stock Issues
Number of common stock shares/ options/warrants issues	273,972	150,000	204,081	238,095	100,000	300,000	125,000	100,000		3,000,000	3,000,000
Common stock share par value					$ 1.2			$ 1		$ 0.0625	$ 0.0625
Proceeds from stock issued	$ 200,000		$ 200,000	$ 200,000	$ 100,000			$ 100,000		$ 150,000	$ 150,000
Fair market value of the warrants issues		124,500			44,000	303,000	126,250	15,467		46,000
Redemption of common stock and warrants									$ 12,000,000

XML

Nature of Operations and Continuance of Business (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	May 10, 2011
Nature of Operations and Continuance of Business {2}
costs associated with the collaborative arrangement, which are included in Exploration Costs.	$ 10,000
Increase in authorized shares of common stock to		150,000,000
Number of common stock existing shares held		1
Number of common stock split into		20

XML

Consolidated Statements of Shareholders' Equity (Deficit) (USD $)	Common Stock shares	Common stock amount	Additional paid in capital	Deficit Accumulated during the exploration stage	Non controlling interests	Total Stockholders' Equity
Balance at Nov. 26, 2007	0	0	0	0	0	0
Net loss for the period	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
Balance at Dec. 31, 2007	0	0	0	0	0	0
Common shares issued for cash in private placement at $0.001 per share on January 19, 2008	60,000,000	60,000	(57,000)	0	0	3,000
Common shares issued for cash in private placement at $0.015 per share on April 28, 2008	32,699,920	32,700	(8,175)	0	0	24,525
Common shares issued for cash in private placement at $0.05 per share on December 24, 2008	22,600,000	22,600	33,900	0	0	56,500
Net loss for the year - (Restated)		0	0	(13,983)	0	(13,983)
Balance at Dec. 31, 2008	115,299,920	115,300	(31,275)	(13,983)	0	70,042
Net loss for the year		0	0	(93,034)	0	(93,034)
Balance at Dec. 31, 2009	115,299,920	115,300	(31,275)	(107,017)	0	(22,992)
Sale of common stock for cash and warrants	6,000,000	6,000	294,000	0	0	300,000
Forgiveness of advances - related party		0	17,574	0	0	17,574
Net loss for the year		0	0	(61,049)	0	(61,049)
Balance at Dec. 31, 2010	121,299,920	121,300	280,299	(168,066)	0	233,533
Sale of common stock for cash and warrants	6,916,148	6,916	1,093,084	0	0	1,100,000
Redemption of shares.	(12,000,000)	(12,000)	(588,000)	0	0	(600,000)
Services received in connection with formation of subsidiary		0	0	0	1,500	1,500
Shares issued for exploration costs	425,000	425	428,825	0	0	429,250
Stock based compensation	150,000	150	598,324	0	0	598,474
Net loss for the period		0	0	(1,529,651)	(18,181)	(1,547,832)
Balance at Dec. 31, 2011	116,791,068	116,791	1,812,532	(1,697,717)	(16,681)	214,925
Issuance of common stock for cash	1,903,595	1,904	598,096	0	0	600,000
Stock based compensation	1,000,000	1,000	998,996	0	0	999,996
Shares issued for exploration costs.	300,000	300	79,000	0	0	79,300
Derivative liability of price protection feature.		0	(20,980)	0	0	(20,980)
Cancellation of shares	(30,000,000)	(30,000)	29,998	0	0	(2)
Net loss for the period		$ 0	$ 0	$ (1,973,730)	$ (1,757)	$ (1,975,487)
Balance at Dec. 31, 2012	89,994,663	89,995	3,497,642	(3,671,447)	(18,438)	(102,248)

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Accounting Policies:

Significant Accounting Policies

2. Summary of Significant Accounting Policies

a)	Principles of consolidation
	The consolidated financial statements include the accounts of the Company and its subsidiary.  All intercompany accounts and transactions have been eliminated in consolidation.
b)	Non-controlling interests
	Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in represented in the consolidated balance sheets as a component of stockholders’ equity.  Non-controlling interests in the results of operations of the Company are presented in the face of the consolidated statement of operations as an allocation of the total profit or loss between non-controlling interests and the shareholders of the Company.

c)	Basis of Presentation
	These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.

d)

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

e)	Cash and Cash Equivalents
	The Company considers all highly liquid instruments with an original maturity of three months or less at the time of issuance to be cash equivalents.

f)

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Mexican Pesos and management has adopted ASC 830 Foreign Currency Matters. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

g)

Fair Value of Financial Instruments

The Company’s financial instruments consist principally of cash and accounts payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments the fair value of cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all other financial instruments approximate their current fair values because of their nature and relatively short maturity dates or durations.

h) Basic and Diluted Net Loss Per Share   The Company computes net loss per share in accordance with ASC 260, Earnings Per Share which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

i) Mineral Property Costs   The Company has been in the exploration stage since its formation on November 26, 2007 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition, exploration and development of mineral properties. Mineral properties includes the cost of advance minimum royalty payments, the cost of capitalized mineral property leases, and the cost of property acquired either by cash payment, the issuance of term debt or common shares. Expenditures for exploration on specific properties with no proven reserves are written off as incurred. Mineral property costs will be amortized against future revenues or charged to operations at the time the related property is determined to have an impairment in value. Capitalized acquisition costs are expensed in the period in which it is determined that the mineral property has no future economic value. Capitalized amounts may also be written down if future cash flows, including potential sales proceeds related to the property, are estimated to be less than the carrying value of the property. The Company reviews the carrying value of mineral property interests periodically, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable, reductions in the carrying value of each property would be recorded to the extent the carrying value of the investment exceeds the property’s estimated fair value. In the event that a mineral property is acquired through the issuance of the Company’s shares, the mineral property will be recorded at the fair value of the respective property or the fair value of the common shares, whichever is more readily determinable. When mineral properties are acquired under option agreements with future acquisition payments to be made at the sole discretion of the Company, those future payments, whether in cash or shares, are recorded only when the Company has made or is obliged to make the payment or issue the shares. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and bankable feasibility, the costs incurred to develop such property are capitalized.

j) Long-lived Assets   In accordance with ASC 360, Property Plant and Equipment the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.   Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, two to 10 years; and furniture and equipment, one to five years. Land is not depreciated.

k) Asset Retirement Obligations   The Company follows the provisions of ASC 410 Asset Retirement and Environmental Obligations, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As at December 31, 2012 and 2011, the Company has not recognized any asset retirement obligations.

l) Income Taxes   Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740,  Income Taxes  as of its inception. Pursuant to ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

m) Stock-based Compensation   In accordance with ASC 718, Compensation – Stock Compensation, the Company accounts for share-based payments using the fair value method. The Company has not issued any stock options since its inception. Common shares issued to third parties for non-cash consideration are valued based on the fair market value of the services provided or the fair market value of the Common Stock on the measurement date, whichever is more readily determinable.

n) Comprehensive Income   ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2012 and 2011, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

o) Recent accounting pronouncements   In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or in two separate but consecutive statements. The new guidance was effective for us beginning July 1, 2012 and had presentation changes only.   In May 2011, the FASB issued guidance to amend the accounting and disclosure requirements on fair value measurements.  The new guidance limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, the new guidance expands the disclosures on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. The new guidance was effective for us beginning January 1, 2012.  Other than requiring additional disclosures, there were no  material impacts on our financial statements.   In January 2010, the FASB issued guidance to amend the disclosure requirements related to fair value measurements.  The guidance requires the disclosure of roll forward activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements).  The guidance was effective for us as of January 1, 2012.  The adoption of this new guidance did not have a material impact on our financial statements.

XML

Property and equipment

12 Months Ended

Dec. 31, 2012

Property and equipment:

Property and equipment

4. Property and equipment   Property and equipment consists of a used truck and drill with a cost of $11,100 and $38,077, respectively, being depreciated over 2 and 10 years, respectively.  Total cost of the assets described are $49,177.  Accumulated depreciation at December 31, 2012 was $10,824.  Depreciation expense was $7,972 and $2,852 during the years ended December 31, 2012 and 2011, respectively.

XML

Related Party Transactions

6 Months Ended

12 Months Ended

Jun. 30, 2013

Dec. 31, 2012

Related Party Transations

Related Party Transactions

2.    Related Party Transactions

All related party transactions are recorded at the exchange amount which is the value established and agreed to by the related party.

An advance from Maurice Bideaux, former chief executive officer and director, in the amount of $38,910, remains unpaid.

As of June 30, 2013, the Company’s two largest shareholders, Dan Ferris and John G. Rhoden, own 7,504,954 and 22,500,000 shares of Common Stock, representing 7.45% and 22.32%, respectively, of the issued and outstanding shares of Common Stock.

On January 13, 2012, the Company agreed to redeem 22,500,000 shares of common stock, 0.001 par value, of the Company (“Common Stock”) held by Mr. Rhoden for total consideration of $1.00.  The stock transfer agent has not yet recorded the redemption of the stock formerly owned by Mr. Rhoden due to a delay caused by his inability to locate and deliver one of his stock certificates.  However, the number of issued and outstanding shares reported by the Company in this Quarterly Report gives effect to this redemption.

In May 2013, the holder of a note payable, which was secured by 3,750,000 shares of the Company owned by Mr. Ferris, exercised his right to foreclose on the shares and accept them as repayment of the note and related interest, which had a total remaining balance of $25,540 at the time of notice.

Related Party Transaction.

3.

Related Party Transactions All related party transactions are recorded at the exchange amount which is the value established and agreed to by the related party. A payable to a related party of $17,574 to Maurice Bideaux, the Company’s former chief executive officer and director, was forgiven by Mr. Bideaux in 2010.  An additional advance from Mr. Bideaux of $38,910 remains unpaid.

On January 13, 2012, the Company agreed to redeem certain shares of the Common Stock held by two of its principal shareholders.  The Company redeemed 7,500,000 shares of Common Stock owned by Dan M. Ferris, for total consideration of $1.00.  Mr. Ferris is the sole officer and director of the Company.   In addition, the Company redeemed 22,500,000 shares of Common Stock held by John G. Rhoden, for total consideration of $1.00. After redemption, Mr. Ferris owns 7,500,000 shares of Common Stock, and Mr. Rhoden owns 22,500,000 shares of Common Stock, which will represent 8.33% and 25.00%, respectively, of the issued and outstanding shares of Common Stock.  The redeemed shares of Common Stock will be retired and restored to the status of authorized and unissued shares, and not held in treasury.  The Company, Mr. Ferris and Mr. Rhoden have agreed to effect the redemption transactions in order to reduce the number of issued and outstanding shares of Common Stock. The redemption of the stock formerly owned by Mr. Ferris has been reflected on the books and records of the Company’s stock transfer agent. The stock transfer agent has not yet recorded the redemption of the stock formerly owned by Mr. Rhoden due to a delay caused by his inability to locate and deliver one of his stock certificates.  However, the number of issued and outstanding shares reported by the Company in this Report gives effect to this redemption.

XML

Warrants Activity (Details) (USD $)	Aug. 29, 2011	Jun. 30, 2011
Warrants Activity
Agreement to issue warrants to North American Gold Corp (North American). in a private placement	100,000	100,000
Price per unit	$ 1.00	$ 1.00
One Warrant to purchase a share of Common Stock at	$ 1.20	$ 1.20
Amount of cash proceeds	$ 100,000	$ 100,000
Fair market value of the Warrants on the date of issuance	$ 44,000	$ 15,467
Discount rate on warrants price	0.49%	1.90%
Expected life of warratns	3	3
Expected volatality	536.00%	386.00%
Expected dividends	0.00%	0.00%

XML

Related Party Transactions (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Related Party Transactions {1}
Amount Payable to related party forgiven by Mr. Bideaux, former CEO, Director		$ 17,574
Additional amount payable to Mr.Bideaux	$ 38,910	$ 38,910

XML

Notes payable Parentheticals (Details) (USD $)	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2012
Notes payable Parentheticals
Principal amount of notes payable			$ 50,000
Annual interest rate of notespayable			2.00%
Note is secured by shares of Common Stock owned by Dan Ferris			3,750,000
Amount paid for note payable		25,000
Principal amount of Convertible note payable	$ 50,000
Annual interest rate of Convertible note payable	8.00%

XML

Commitments Employment Agreement (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Jul. 12, 2012
Commitments Employment Agreement:
Employment Agreement, initial term				3
Employment Agreement, automatic renewal period				1
Employment Agreement, base salary per year				$ 120,000
Employment Agreement, shares entitled to receive				3,000,000
Employment Agreement, number of shares issued in three equal increments				1,000,000
Employment Agreement, termination notice period in days				30
Employment Agreement, fair market value of stock				3,000,000
Employment Agreement, expense related to stock grant recognized			999,996
Recognized in expense related to the stock grant during the periods	$ 249,999	$ 499,998

XML

Subsequent events Transactions (Details) (USD $)	Dec. 31, 2012
Subsequent events - Common stock
Total value of puts	$ 270,000
Additional puts exercised value.	15,000
Total of these six put shares issuances resulted in shares to be issued in 2013	10,817,190
Amount paid to Fairhills capital offshore ltd.	25,000
Remaining balance of loan	$ 25,000

XML

Income Taxes Operating Losses (Details) (USD $)	Dec. 31, 2012
Income Taxes Operating Losses
Net operating loss carry forward	$ 1,627,000
Statutory Rate applicable to company	34.00%

XML

CONSOLIDATED BALANCE SHEET PARENTHETICALS (USD $)	Jun. 30, 2013	Dec. 31, 2012	Dec. 31, 2011
Parentheticals
Common Stock, par value	$ 0.001	$ 0.001	$ 0.001
Common Stock, shares authorized	15,000,000	15,000,000	15,000,000
Common Stock, shares issued	100,804,663	89,994,663	116,791,068
Common Stock, shares outstanding	100,804,663	89,994,663	116,791,068

XML

Notes Payable

12 Months Ended

Dec. 31, 2012

Notes Payable {1}

Notes Payable.

6.

Notes Payable

In June 2012 the Company entered into a secured note agreement with Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (“Fairhills”), in the principal amount of $50,000 at an annual interest rate of 2%. Principal and accrued and unpaid interest was due on December 24, 2012, which was verbally extended until December 24, 2013.  The Note is secured by 3,750,000 shares of Common Stock owned by Dan Ferris, our President and sole director.   On November 12, 2012, Fairhills transferred all rights and obligations under the Note to Deer Valley. In March 2013, the Company paid $25,000 to Fairhills Capital Offshore Ltd. to pay down the outstanding balance on its loan (see Note 12 - Subsequent Events).

XML

CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)	6 Months Ended		12 Months Ended		61 Months Ended	67 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Jun. 30, 2013
Operating Activities:
Net loss	$ (871,439)	$ (1,241,132)	$ (1,975,487)	$ (1,547,832)	$ (3,691,385)	$ (4,562,824)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	4,680	4,680	7,972	2,852	10,824	15,504
Stock based compensation expense	499,998	499,998	999,996	599,974	1,599,970	2,099,968
Shares issued for exploration expenses	0	0	0	429,250	429,250	429,250
Amortization of debt discount	(41,000)	0	0	0	0	(41,000)
Change in derivative liability	89,948	0	9,575	0	9,575	99,523
Gain on redemption of common stock	0	0	0	(5,161)	(5,161)	(5,161)
Changes in operating assets and liabilities:
Prepaid expenses	(4,027)	2,087	2,086	(2,238)	(152)	(4,179)
Interest receivable	0	0	0	(8,647)	(9,839)	(9,839)
Accounts payable and accrued liabilities	(78,160)	3,065	165,123	6,739	200,588	122,428
Net Cash Used In Operating Activities	(400,000)	(731,302)	(790,735)	(525,063)	(1,456,330)	(1,856,330)
Investing Activities:
Note receivable extended to Related Party	0	0	0	(295,000)	(585,000)	(585,000)
Purchases of property and equipment	0	0	0	(49,177)	(49,177)	(49,177)
Purchases of mining assets	0	(75,000)	(75,000)	(25,000)	(100,000)	(100,000)
Net Cash Used in Investing Activities	0	(75,000)	(75,000)	(369,177)	(734,177)	(734,177)
Financing Activities:
Proceeds from advances - related party	0	0	0	0	56,484	56,484
Proceeds from sale of common stock	375,000	550,000	600,000	1,100,000	2,084,025	2,459,025
Proceeds from issuance of notes payable	50,000	50,000	50,000	0	50,000	100,000
Repayments of notes payable	(25,000)	0	0	0	0	(25,000)
Redemption of shares	0	(2)	(2)	0	(2)	(2)
Net Cash Provided By Financing Activities	400,000	599,998	649,998	1,100,000	2,190,507	2,590,507
Net change in cash	0	(206,304)	(215,737)	205,760	0	0
Cash - Beginning of Period	0	215,737	215,737	9,977	0	0
Cash - End of Period	0	9,433	0	215,737	0	0
Supplemental Disclosures
Interest paid	0	0	0	0	0	0
Income taxes paid	0	0	0	0	0	0
Non Cash transactions:
Exchange of notes receivable for redemption of common stock	0	0	0	600,000	600,000	600,000
Shares issued for mining assets	0	79,300	79,300	0	79,300	79,300
Forgiveness of advances - related party	0	0	0	0	17,574	17,574
Derivative liability of price protection feature	0	0	20,980	0	20,980	20,980
Issuance of non-controlling interest for subscription receivable	0	0	0	1,500	1,500	1,500
Repayment of note payable and accrued interest by a shareholder	$ 25,540	$ 0	$ 0	$ 0	$ 0	$ 25,540

XML

Consolidated Balance Sheets (USD $)	Jun. 30, 2013	Dec. 31, 2012	Dec. 31, 2011
Current assets:
Cash	$ 0	$ 0	$ 215,737
Prepaid expenses	4,179	152	2,238
Total current assets	4,179	152	217,975
Property and equipment, net	33,673	38,353	46,325
Mining assets	179,300	179,300	25,000
Total assets	217,152	217,805	289,300
Current liabilities:
Accounts payable	86,347	90,372	21,767
Accrued liabilities	35,541	110,216	13,698
Note payable, net	9,000	50,000	0
Derivative liability	120,503	30,555	0
Due to related party	38,910	38,910	38,910
Total current liabilities	290,301	320,053	74,375
Total liabilities	290,301	320,053	74,375
Commitments
Shareholders deficit:
Common stock, 150,000,000 shares authorized, $0.001 par value; 100,804,663 and 89,994,663 shares issued and outstanding as of June 30, 2013, December 31, 2012 and 2011 respectively.	100,805	89,995	116,791
Additional paid-in capital	4,387,370	3,497,642	1,812,532
Deficit accumulated during the exploration stage	(4,542,053)	(3,671,447)	(1,697,717)
Total Lone Star Gold, Inc. Shareholders' deficit	(53,878)	(83,810)	231,606
Noncontrolling interest in subsidiary	(19,271)	18,438	(16,681)
Total Shareholders' deficit	(73,149)	102,248	214,925
Total Liabilities and shareholders' deficit	$ 217,152	$ 217,805	$ 289,300

XML

Related Party Transactions Shares held by principal shareholders (Details) (USD $)	May 31, 2013	Jun. 30, 2012	Jan. 13, 2012
Related Party Transactions Shares held by principal shareholders
Common stock shares Redeemed held by Mr.Dan M Ferris, Sole Officer and Director of the company			7,500,000
Common stock redeemed total consideration			$ 1.00
Common stock shares held by Mr.Ferris after redemption			7,500,000
Percentage of Common stock owned		7.45%	8.33%
Common stock shares Redeemed held by Mr.John G Rhoden			22,500,000
Common stock redeemed total consideration,			1.00
Common stock shares held by Mr.John G Rhoden after redemption			22,500,000
Percentage of Common stock owned,		22.32%	25.00%
Shares of Common Stock held by Dan Ferris		7,504,954
Shares of Common Stock held by John G. Rhoden		22,500,000
Amount payable to Maurice Bideaux		38,910
Note payable,secured by shares of the Company owned by Mr. Ferris	3,750,000
Repayment of the note and related interest total remaining balance	$ 25,540

XML

Summary of warrant activity for the year ended (Table)

6 Months Ended

12 Months Ended

Jun. 30, 2013

Dec. 31, 2012

Summary of warrant activity for the year ended

A Summary of warrant activity

A summary of warrant activity for the six months ended June 30, 2013 is presented below:

					Weighted
			Weighted		average
			Average		remaining		Aggregate
			Exercise		contractual		Intrinsic
	Warrants		Price		life (years)		Value
Outstanding December 31, 2012		200,000	$	1.20
Granted		-		-
Exercised		-		-
Forfeited or cancelled		-		-
Expired		-		-
Outstanding June 30, 2013		200,000	$	1.20		1.08	$	59,467

Summary of warrant activity for the year ended

A summary of warrant activity for the year ended December 31, 2012 is presented below:					Weighted
			Weighted		average
			average		remaining		Aggregate
			exercise		contractual		intrinsic
	Warrants		price		life (years)		value
Outstanding December 31, 2011		200,000	$	1.20		2.58	$	59,467
Granted		-		-
Exercised		-		-
Forfeited or cancelled		-		-
Expired		-		-
Outstanding December 31, 2012		200,000	$	1.20		1.58	$	59,467

XML

Common Stock Transactions (Details) (USD $)	Sep. 14, 2012	Jul. 11, 2012	Jun. 30, 2012	Mar. 21, 2012	Feb. 13, 2012	Jan. 30, 2012	Jan. 13, 2012
Common Stock Transactions
Number of common stock shares/ options/warrants issued in the period	653,595		200,000	625,000	625,000	100,000
Proceeds from Common stock issuance				$ 250,000	$ 300,000
Fair market value of the warrants	50,000		33,300			46,000
Redemption of common stock and warrants in the period							7,500,000
Redemption of stock and warrants							$ 22,500,000
Shares of common stock compensation for serving as President of the Company		1,000,000					0

XML

Equity Line of Credit, (Details) (USD $)	Oct. 16, 2012	Sep. 21, 2012	Aug. 29, 2011
Line of Credit Facility
Amount of investment by agreed to by North Americal Gold Corp as per Investment Agreement			$ 15,000,000
Investment agreement, common stock par value		$ 0.001
Common stock Investment in increments as per agreement			100,000
Share Price is equal to fixed % of the volume weighted average closing price of the Common Stock			90.00%
Investment agreement, amount invested		$ 15,000,000
Number of consecutive trading days immediately prior to date of the applicable put notice		10	10
Number of Trading Days the closing for the sale of the Put Shares pursuant to a Put Notice shall take place after the date on which the Company sends such Put Notice		20	20
Discount percentage to be used in calculation purchase price per share to be paid		24.50%
Open Period for investment agreement		36
Reserved Common Stock shares for issuance to Fairhills under the Investment Agreement		30,000,000
The maximum investment amount per notice shall be no more than fixed percent % of the average daily volume of the Common Stock		200.00%
Resale Of Common Stock Subject To Investment Agreement	19,000,000

XML

Summary of warrant activity presented below (Details) (USD $)	Warrants	Weighted average exercise price	Weighted average remaining contractual life (years)	Aggregate Intrinsic value
Outstanding at Dec. 31, 2011	200,000	1.20	2.58	59,467
Granted	0	0.00	0.00	0
Exercised	0	0.00	0.00	0
Forfeited or cancelled	0	0.00	0.00	0
Expired	0	0.00	0.00	0
Outstanding at Dec. 31, 2012	200,000	1.20	1.58	59,467
Granted	0	0.00	0.00	0
Exercised	0	0.00	0.00	0
Forfeited or cancelled	0	0.00	0.00	0
Expired	0	0.00	0.00	0
Outstanding at Jun. 30, 2013	200,000	1.20	1.08	59,467

XML

Commitments (Details) (USD $)	Dec. 31, 2012	May 31, 2012	Dec. 31, 2011	Oct. 31, 2011	Sep. 30, 2011	Sep. 16, 2011	Jun. 10, 2011	Jan. 11, 2011
Commitments Transactions:
Contract calls for the consultant to receive upon execution of the agreement				$ 15,000
Receive through the term of the agreement per month				5,000
one-time grant				150,000
Restricted shares par value common stock				$ 0.001
Percentage of company ownership in capital stock of Metales		70.00%
Percentage of capital stock issued to Gonzalez		30.00%
Concessions assigned, acres		1,976					1,976
development cost s for three years, for a total								450,000
the Company is obligated to issue shares of its Common Stock to Gonzalez								1,000,000
Issuedshares of its Common Stock to North American as repayment						125,000
Issuedshares of its Common Stock to North American as repayment value						125,000
Recognized as exploration expense during the year					125,000
Company Shares of Common Stock, Issued						300,000
Shares of its Common Stock, with a fair value						303,000
Recognized exploration expense during the year			303,000
Payments made to the work plan	$ 60,195		$ 123,106

XML

Equity Line of Credit

12 Months Ended

Dec. 31, 2012

Equity Line of Credit:

Equity Line of Credit

5.

Equity Line of Credit

On August 29, 2011, the Company and North American Gold Corp., a company organized under the laws of the Marshall Islands (“North American”), executed an Investment Agreement (the “North American Investment Agreement”). Under the North American Investment Agreement, North American agreed to invest up to $15,000,000 to purchase shares of the Common Stock in increments of $100,000 or an integral multiple thereof, at the Company’s option at any time through August 31, 2013 (the “Open Period”).  During the Open Period, the Company has the option to deliver a put notice (a “Put Notice”) to North American that states the number of shares of Common Stock the Company proposes to sell to North American (the “Put Shares”), and the price per share for those Put Shares (the “Share Price”). The Share Price is equal to 90% of the volume weighted average closing price of the Common Stock for the 20 Trading Days immediately preceding the date on which the Company sends the Put Notice. The closing for the sale of the Put Shares pursuant to a Put Notice shall take place no later than 10 Trading Days after the date on which the Company sends such Put Notice. A “Trading Day” is defined as a day in which the NASDAQ stock market or OTC Bulletin Board is open for business.  North American has the right to refuse to close any requested sale of Put Shares because of negative market conditions affecting the Common Stock. The original North American Investment Agreement required the Company to use the net proceeds from the sale of the Put Shares to fund the exploration and development of gold and silver mining concessions in the La Candelaria project in Chihuahua, Mexico. On November 9, 2011, the Company and North American executed a First Amendment to the North American Investment Agreement, which states that the Company shall use the net proceeds from the sale of Put Shares to fund operating expenses, working capital and general corporate activities related to the exploration and development of gold and silver mining concessions held by the Company and/or a subsidiary in relation to the La Candelaria property, the Ocampo property, or any other properties agreed upon in advance by the Company and North American. The Company and North American have further agreed that the Company may use the proceeds of the put shares to fund operations related to the Mine Tailings project.

The sales of Put Shares will not be registered under the Securities Act of 1933, but will be issued under an exemption from the registration requirements of the Securities Act of 1933. Any Put Shares issued and sold to North American will be “restricted securities” and will be subject to applicable restrictions on resale.  However, the Company does not have sufficient available (authorized) capital to be able to draw down on the entirety of these lines.

On April 30, 2012, the Company entered into an Investment Agreement with Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (“Fairhills”), as amended by Amendments No. 1 and No. 2 to Investment Agreement dated June 25, 2012 and September 21, 2012, respectively (as amended, the "Deer Valley Investment Agreement"), pursuant to which Fairhills has agreed to purchase shares of Common Stock for an aggregate purchase price of up to $15,000,000.

The Deer Valley Investment Agreement provides that the Company may, from time to time during the Open Period (defined below), in its sole discretion, deliver a put notice to Fairhills which states the dollar amount that the Company intends to sell to Fairhills on a date specified in the put notice. The maximum investment amount per notice shall be no more than two hundred percent (200%) of the average daily volume of the Common Stock for the ten consecutive trading days immediately prior to date of the applicable put notice. The purchase price per share to be paid by Fairhills will be calculated at a twenty-four and a half percent (24.5%) discount to the lowest trading price of the Common Stock reported by Bloomberg, L.P. during the ten (1 0) consecutive trading days immediately prior to Fairhills receipt of the put notice. The Open Period begins on the trading day after a registration statement is declared effective as to the Common Stock to be subject to the put, and ends thirty-six (36) months after such date, unless earlier terminated in accordance with the Deer Valley Investment Agreement. The Company has reserved 30,000,000 shares of its Common Stock for issuance under the Deer Valley Investment Agreement.

The Company will use the proceeds from the sale of the Common Stock under the Deer Valley Investment Agreement for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors, in its good faith, deem to be in the best interest of the Company.

On October 16, 2012, the Company filed a Registration Statement on Form S-1 covering the resale of 19,000,000 shares of Common Stock subject to the Deer Valley Investment Agreement (Note 11).  Fairhills assigned their interest to Deer Valley Management on November 12, 2012.  The registration statement was declared effective in December 2012.

XML

Debt Consists of the following (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Debt Consists of the following
Notes payable,		$ 50,000
Convertible note payable,	50,000
Discount	(50,000)
Amortization of discounts	9,000
Total convertible notes payable, net of discount	$ 9,000

XML

Common Stock Issued (Details) (USD $)	Dec. 03, 2010	Dec. 24, 2008	Apr. 28, 2008	Jan. 19, 2008
Common Stock Issued
Number of common stock shares/ options/warrants issued	6,000,000	22,600,000	32,699,920	60,000,000
Common stock per share value	$ 0.0625	$ 0.0025	$ 0.00075	$ 0.00005
Proceeds from stock issuance	$ 300,000	$ 56,500	$ 24,525	$ 3,000
Fair market value of the warrants issued	$ 46,500	$ 0	$ 0	$ 0

XML

Derivative Liability,

6 Months Ended

12 Months Ended

Jun. 30, 2013

Dec. 31, 2012

Derivative Liability

Derivative Liability

6.    Derivative Liability

On September 14, 2012, the Company entered into a Securities Purchase Agreement, as amended, (the “Fairhills SPA”) with Fairhills pursuant to which the Company sold 653,595 shares of its $0.001 par value Common Stock (the “Shares”) to Fairhills for an aggregate purchase price of $50,000.  The  Fairhills SPA provides that in the event that the value of the Shares is less than $50,000 at the earlier of (a) the effective date of a registration statement or (b) such time as the Shares can be sold pursuant to Rule 144 (the “Triggering Date”), the Company shall issue additional shares of registered Common Stock to Fairhills (the “Additional Shares’) such that the total value of the Shares and the Additional Shares issued to Fairhills by t he Company shall total $50,000 (the “Price Protection Clause”).

The Price Protection Clause gives rise to a derivative.  We have measured this derivative at fair value and recognize the derivative value as a current liability and recorded the derivative value on our consolidated balance sheet. The derivative is valued primarily using models based on unobservable inputs that are supported by little to no market activity.  These inputs represent management’s best estimate of what market participants would use in pricing the liability at the measurement date and thus are classified as Level 3. Changes in the fair values of the derivative are recognized in earnings in the current period.  During the year ended December 31, 2012, the Company recorded a derivative liability of $20,980 related to the Price Protection Clause.  60; At December 21, 2012, the effective date of the registration statement, the price protection feature was triggered and additional shares were valued at approximately $30,000.  These additional shares have not been issued.  On June 26, 2013, the Fairhills SPA was terminated.

On June 27, 2013, the Company entered into a new Securities Purchase Agreement with KVM Capital Partners, LLC (the “KVM SPA”) with essentially the same terms as the Fairhills SPA.  Accordingly, the Company recorded a derivative liability related to the KVM SPA.  Accordingly, a derivative liability of $120,503 has been recorded as of the end of the quarter ending June 30, 2013. The conversion price shall mean 65% multiplied by the Market Price (as defined herein) (representing a discount rate of 35%).  "Market Price" means the average of the lowes three (3) Trading Price for the Common Stock during the tenth (10) trading day period ending the latest complete trading day prior to the conversion date.

Derivative Liabilities

7.	Derivative Liability
	On September 14, 2012, the Company sold 653,595 shares of its $0.001 par value Common Stock (the “Shares”) to Fairhills for an aggregate purchase price of $50,000.  The Securities Purchase Agreement, as amended, (the “Fairhills SPA”) entered into between the Company and Fairhills provides that in the event that the value of the Shares is less than $50,000 at the earlier of (a) the effective date of a registration statement or (b) such time as the Shares can be sold pursuant to Rule 144 (the “Triggering Date”), the Company shall issue additional shares of registered Common Stock to Fairhills (the “Additional Shares’) such that the total value of the Shares and the Additional Shares i ssued to Fairhills by the Company shall total $50,000 (the “Price Protection Clause”).
	The Price Protection Clause gives rise to a derivative.  We have measured this derivative at fair value and recognize the derivative value as a current liability and recorded the derivative value on our consolidated balance sheet. The derivative is valued primarily using models based on unobservable inputs that are supported by little to no market activity.  These inputs represent management’s best estimate of what market participants would use in pricing the liability at the measurement date and thus are classified as Level 3. Changes in the fair values of the derivative are recognized in earnings in the current period.  During the year ended December 31, 2012, the Company recorded a derivative liabilit y of $20,980 related to the Price Protection Clause.   At December 21, 2012, the effective date of the registration statement, the price protection feature was triggered and additional shares were valued at approximately $30,000.  These additional shares have not been issued.

XML

Equity

6 Months Ended

Jun. 30, 2013

Equity

Equity

4.    Equity

On April 30, 2012, the Company entered into an Investment Agreement (as amended, the “Fairhills Investment Agreement”) with Fairhills pursuant to which Fairhills agreed to purchase shares of Common Stock for an aggregate purchase price of up to $15,000,000.  Fairhills assigned their interest in the Fairhills Investment Agreement to Deer Valley Management, LLC ("Deer Valley") on November 12, 2012. During Q1 and Q2 of 2013, the Company exercised its right pursuant to the Fairhills Investment Agreement with Deer Valley, as successor-in-interest to Fairhills, to require Deer Valley to purchase additional shares of the Company’s Common Stock.  The total amount of these six puts is $360,000.  There was an additional put exercised in December 2012, the amount of which is $15,000 whose shares were not issued until 2013 as well.  The total of these six put shares issuances resulted in 10,810,000 shares being issued in 2013 for proceeds of $375,000.   On June 26, 2013 the Fairhills Investment Agreement was terminated.

On June 27, 2013 the Company entered into an Investment Agreement (the “KVM Investment Agreement”)  with KVM Capital Partners, LLC (“KVM”) whereby KVM agreed to purchase up to $5 million of the Company’s common stock over a period of up to 36 months.  In connection with the KVM Investment Agreement, the Company also entered into a Registration Rights Agreement with KVM pursuant to which the Company was obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) covering the resale of the 30,000,000 shares of common stock underlying the KVM Investment Agreement. The Company filed the registration statement on Form S-1 with the SEC on July 16, 2013 and has agreed to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 120 days after the closing of the transaction and to maintain the effectiveness of such registration statement until termination of the KVM Investment Agreement.

A summary of warrant activity for the six months ended June 30, 2013 is presented below:

					Weighted
			Weighted		average
			Average		remaining		Aggregate
			Exercise		contractual		Intrinsic
	Warrants		Price		life (years)		Value
Outstanding December 31, 2012		200,000	$	1.20
Granted		-		-
Exercised		-		-
Forfeited or cancelled		-		-
Expired		-		-
Outstanding June 30, 2013		200,000	$	1.20		1.08	$	59,467

XML

Nature of Operations and Continuance of Business

6 Months Ended

12 Months Ended

Jun. 30, 2013

Dec. 31, 2012

Nature of Operations and Continuance of Business

Nature of Operations and Continuance of Business

1.    Nature of Operations and Continuance of Business

Lone Star Gold, Inc. (the “Company” or “Lone Star”), formerly known as Keyser Resources, Inc., was incorporated in the State of Nevada on November 26, 2007.  The Company is an Exploration Stage Company as defined by Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 915, Development Stage Entities.

On January 26, 2012, the Company, acting through a  subsidiary, Amiko Kay, S. de R.L. de C.V., a company organized under the laws of Mexico (“Amiko Kay”), entered into a Joint Venture Agreement (the “JV Agreement”) with Miguel Angel Jaramillo Tapia (“Jaramillo”), a resident of Mexico. Under the JV Agreement, Amiko Kay and Jaramillo agreed to process mine tailings located in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico (the “Tailings”), and, after processing, to use, market and sell any minerals extracted from the Tailings. The Company owns 99% of the issued and outstanding membership interests of Amiko Kay. The JV Agreement provides Amiko Kay the right to receive 65% of the net revenues from the sale of any materials extra cted from the Tailings. The Company is accounting for the activities under the JV Agreement as a collaborative arrangement as defined by ASC 808. As a result, acquisition costs related to the JV Agreement have been capitalized and all other expenditures by the Company related to the JV Agreement have been expensed as incurred as exploration costs. This is in accordance with the Company’s Mineral Property Cost Accounting Policy. For the six months ended June 30, 2013, the Company has recognized $10,000 of costs associated with the collaborative arrangement, which are included in Exploration Costs.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenue since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and other investors, the ability of the Company to obtain any necessary financing to continue operations, and the attainment of profitable operations. As at June 30, 2013, the Company has accumulated losses of $4,542,053 since inception. These factors raise substantial doubt regarding the Company’ s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The unaudited financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012, and for the period November 26, 2007 (inception) to June 30, 2013 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of June 30, 2013 and the results of operations and cash flows for the periods ended June 30, 2013 and 2012, and for the period November 26, 2007 (inception) to June 30, 2013.  T he financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited.  The results for the three and six month periods ended June 30, 2013 are not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending December 31, 2013.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2012 as included in our Form 10-K filed with the Securities and Exchange Commission.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany accounts and transactions have been eliminated in consolidation.

Nature of Operation and Continuance of Business.

1. Nature of Operations and Continuance of Business

Lone Star Gold, Inc. (the “Company” or “Lone Star”), formerly known as Keyser Resources, Inc. (“Keyser”), was incorporated in the State of Nevada on November 26, 2007. The Company is an Exploration Stage Company as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915,  Development Stage Entities.

On May 10, 2011, stockholders holding at least a majority of the issued and outstanding shares of Common Stock, acting by written consent, adopted resolutions that approved a change in the Company’s name from “Keyser Resources, Inc.” to “Lone Star Gold, Inc.”, an increase in the number of authorized shares of Common Stock to 150,000,000 and a 20:1 forward stock split.  Share information throughout these financial statements and footnotes have been presented retroactively of the stock split.

On May 31, 2011, Metales HBG, S.A. de C.V. (“Metales”), a company organized under the laws of Mexico, was formed, with the Company owning 70% of the issued and outstanding capital stock.  The remaining 30% of the issued and outstanding capital stock of Metales was issued to Homero Bustillos Gonzalez (“Gonzalez”), an individual resident of Mexico.  On June 10, 2011, Gonzalez assigned to Metales eight (8) gold and silver mining concessions related to the “La Candelaria” property located in the town of Guachochi, state of Chihuahua, Mexico (the “Concessions”).  The Concessions cover 800 hectares, or approximately 1,976 acres.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenue since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and other investors, the ability of the Company to obtain any necessary financing to continue operations, and the attainment of profitable operations. As of December 31, 2012, the Company has accumulated losses of $3,671,447 since inception. These factors raise substantial doubt regarding the Company’ ;s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

XML

Income Taxes - deferred income tax assets (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Income Taxes - deferred income tax assets
Net operating losses carried forward	$ 553,360	$ 222,360
Valuation allowance	(553,360)	(222,360)
Net deferred income tax asset		$ 0

XML

Property and equipment (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Property and equipment consists of:
Property and equipment consists of a used truck with a cost	$ 11,100
Depreciated years	2
Property and equipment consists of drill with a cost	38,077
Depreciated years.	10
Total cost of the assets	49,177
Accumulated Depreciation	10,824
Depreciation expense during the years ended	$ 7,972	$ 2,852

XML

Income Taxes.

12 Months Ended

Dec. 31, 2012

Income Taxes.:

Income Taxes.

10.

Income Taxes

The Company has a net operating loss carry-forward of approximately $1,627,000 available to offset taxable income in future years which commence expiring in fiscal 2028. The Company is subject to United States income taxes at a rate of 34%. The reconciliation of the provision for income taxes at the United States statutory rate compared to the Company’s income tax expense as reported is as follows:

	Year Ended December 31, 2012			Year Ended December 31, 2011
Income tax recovery at statutory rate	$	331,000		$	165,000
Valuation allowance change		(331,000	)		(165,000	)
Provision for income taxes	$	–		$	–

The significant components of deferred income tax assets as at December 31, 2012 and 2011 are as follows:

	December 31, 2012			December 31, 2011
Net operating losses carried forward	$	553,360		$	222,360
Valuation allowance		(553,360	)		(222,360	)
Net deferred income tax asset	$	–		$	–

XML

Commitments

6 Months Ended

12 Months Ended

Jun. 30, 2013

Dec. 31, 2012

Commitments {1}

Commitments

5.    Commitments

On October 31, 2011, the Company entered into an agreement with a consultant to perform consulting services as requested by the Company. The contract calls for the consultant to receive $15,000 upon execution of the agreement, $5,000 per month through the term of the agreement, and a one-time grant of 150,000 restricted shares of the Company's $0.001 par value common stock. The fair market value of the common stock on the date of grant was $124,500. The term of the original agreement was one year and the agreement is currently being renewed on a month to month basis.  This contract was terminated on April 1, 2013.

La Candelaria Property

On May 31, 2011, Metales HBG, S.A. de C.V. (“Metales”), a company organized under the laws of Mexico, was formed.  The Company owns 70% of the issued and outstanding shares of capital stock and the  remaining 30% of the issued and outstanding capital stock of Metales is owned by Homero Bustillo Gonzalez (“Gonzalez”).  On June 10, 2011, Gonzalez assigned to Metales eight gold and silver mining concessions (the “Concessions”) related to the “La Candeleria” property located in the town of Guachochi, in the state of Chihuahua, Mexico.  The Concessions cover 800 hectares, or approximately 1,976 acres.

On August 17, 2011, in connection with its investment in Metales and the exploration and development of the Concessions, the Company, American Gold Holdings, Ltd. (“American Gold”) and Gonzalez executed an Assignment Agreement (the “Assignment Agreement”) pursuant to which American Gold assigned all of its right and interest in and to a Letter of Intent between American Gold and Gonzalez, and an Option to Purchase Agreement between American Gold and Gonzalez dated January 11, 2011 (the “Option Agreement”) and Company assumed all of the duties and obligations of American Gold under the Letter of Intent and the Option Agreement. Pursuant to the Assignment Agreement, the Company, either alone or through Metales, is obligated to fund $150,000 per year of development c osts for three years, for a total of $450,000.  The Company funded $14,500 and $60,195 during the work periods ending January 11, 2014 and 2013, respectively.  In addition, for the six months ended June 30, 2013, the Company did not pay Gonzalez any additional funds, in accordance with its oral agreement with him reached in January 2013.

Gonzalez retains a 2% Net Smelter Returns Royalty on the Concessions. Metales is obligated to undertake work necessary to bring the existing geological survey on the property up to NJ 43-101 standards.  The Company has granted anti-dilution rights to Gonzalez, such that the Company must allow Gonzalez the opportunity to maintain his percentage stock ownership in the Company until the date on which the Company has complied fully with its obligations under the Option Agreement or January 11, 2014, whichever comes first.  Gonzalez has waived the exercise of his anti-dilution rights with respect to issuances of Common Stock to North American under the Option Agreement.  In addition, the Company is obligated to issue 1,000,000 shares of its Common Stock to Gonzalez upon the discovery of a 1 million-ounce equivalent gold deposit, as defined by industry standards as set forth by a recognized exchange in North America.  Finally, if the Company fails to comply with all its obligations under the Option Agreement before January 11, 2014, the Option Agreement will terminate and the Company will be obligated to return the Concessions to Gonzalez.  In January 2013, the Company and Gonzalez verbally agreed to place the work commitments on hold.  Per the verbal agreement between the Company and Gonzalez, all payments have been put on hold until such time as the Company has sufficient capital to continue the project.

Employment Agreement

On July 12, 2011, the Company entered into an Employment Agreement with Dan M. Ferris regarding his position as President of the Company.  The Employment Agreement has an initial term of three years, and after the initial term will automatically renew for successive one-year periods until terminated in accordance with the Agreement (the “Term”).  Mr. Ferris will be paid a base salary of $120,000 per year during the Term.  Mr. Ferris will also be entitled to receive 3,000,000 shares of Common Stock, which will be issued in three equal increments of 1,000,000 shares over the first 3 years of the Term.  The shares of Common Stock will not be registered under the Securities Act, and will be subject to restrictions on transfer.  Therefore, Mr. Ferris will receive 1,000,000 shares of Common Stock on July 12 of each of the years 2012, 2013, and 2014.  The Employment Agreement may be terminated voluntarily by either party upon 30 days written notice, upon Mr. Ferris’ death or disability, by mutual agreement at the end of the Term, or at any time for “cause” by the Company.  If Mr. Ferris’ employment is terminated for “cause”, or if he voluntarily resigns, then he will not be entitled to receive any shares of Common Stock that have not been issued as of the date of resignation or termination.  If Mr. Ferris’ employment is terminated for any other reason, he will be entitled to receive the full 3,000,000 shares of Common Stock.  The Employment Agreement defines “cause” as the willful and continued failure by Ferris to perform his duties under the Employment Agreement, conviction of a felony, or engaging in conduct that is contrary to the best interests of the Company or adversely affects the Company’s reputation.  The fair market value of the stock grant on the date of the Employment Agreement was $3,000,000 based on the fair market value at the time of the agreement.  The Company recognized $249,999 and $499,998 in expense related to the stock grant during the three and six month periods ended June 30, 2013, respectively.

Tailings Project

On January 26, 2012, the Company, acting through its subsidiary, Amiko Kay, entered into the JV Agreement Jaramillo. Under the JV Agreement, Amiko Kay and Jaramillo agreed to process the Tailings and, after processing, to use, market and sell any minerals extracted from the Tailings. The Company owns 99% of the issued and outstanding membership interests of Amiko Kay.

The Tailings consist of approximately 1.2 million tons of mine tailings from previous mining activity in the Chihuahua area over the last 100 years or more. Mine tailings represent the refuse remaining after ore has been processed. Through the JV Agreement, Amiko Kay and Jaramillo intend re-process the mine tailings heap to extract minerals that were not extracted during the initial processing, and to market and sell any minerals extracted from the Tailings.

As consideration for Jaramillo’s contribution of the right to process the Tailings to the Joint Venture, the Company has paid Jaramillo $100,000 to date.  In addition, the Company agreed to pay Jaramillo an additional $200,000 no later than January 26, 2013.  In January 2013, the Company and Jaramillo entered into a verbal agreement to delay the payment, and as of the date of this filing the payment has not been made.

In addition, the Company or Amiko Kay has agreed to fund an amount up to $1,000,000 (the “Work Commitment”) for the benefit of the JV Agreement over its first two years, as follows:

(a)    $250,000 within the first year of the JV Agreement for the purchase of used heavy equipment, miscellaneous equipment and materials for processing the Tailings, and taxes, permits, and general operating expenses.

(b)    $750,000 within the second year of the JV Agreement for the construction of a heap leach system and floatation plant on the property.

The Company may make an additional $250,000 available to the JV Agreement, if additional processing equipment is justified and required to maximize the liberation of precious metals in the Tailings material. As of June 30, 2013, none of the aforementioned funds have been paid.

As further consideration, the Company is obligated to issue 600,000 shares of the Common Stock to Jaramillo.  To date, the Company has issued 300,000 shares of Common Stock to Jaramillo and anticipates issuing the remaining 300,000 shares in the second half of 2013. The shares of Common Stock will be restricted shares and carry current and appropriate legends to that effect.

Jaramillo manages the day-to-day affairs of processing the Tailings, selling the minerals extracted from the Tailings (“Extracted Minerals”), and other activities contemplated by the JV Agreement. Jaramillo will pay all expenses associated with the processing of the Tailings, the sale of any Extracted Minerals from the Tailings, and other obligations of the JV Agreement, initially, from the funds received under the Work Commitment and, eventually, from revenues from operations. All net revenues from the sale of any Extracted Minerals or other sources, after deducting expenses, will be distributed and paid monthly, with 65% of the net revenues paid to Amiko Kay and 35% of the net revenues paid to Jaramillo. It is anticipated that the portion to be paid to Amiko Kay will be paid directly t o the Company. Jaramillo will provide a monthly accounting of all revenues and expenses associated with the operations of the JV Agreement.

Title to the property and the Tailings will remain in Jaramillo’s name. Jaramillo will be responsible for obtaining all permits, approvals and authorizations associated with the processing of the Tailings. He is also responsible for causing the project to comply with all applicable laws, rules and regulations, and to maintain insurance on the property. Amiko Kay will have access to the property and the Tailings at all times during the term of the JV Agreement.

Amiko Kay and Jaramillo will mutually develop plans and programs to process the Tailings. Jaramillo will prepare a detailed budget setting forth the expenses to be paid under the Work Commitment, which will be approved by Amiko Kay. Finally, Jaramillo will provide quarterly financial reports to Amiko Kay.

If either party defaults under the JV Agreement, the defaulting party’s rights to participate in the JV Agreement will be immediately suspended, and the defaulting party will have no right to share in the revenues of the JV Agreement until the breach is cured. If the defaulting party is Jaramillo, then Amiko Kay may perform the duties of Jaramillo under the Agreement. The nondefaulting party may also sue for damages incurred as a result of the event of default.

The JV Agreement will terminate upon completion of processing the Tailings, as determined by Amiko Kay in its sole discretion.  If Jaramillo materially breaches the JV Agreement, Amiko Kay may terminate the JV Agreement upon 30 days notice to Jaramillo.   Jaramillo has no right to terminate the JV Agreement before the processing of the Tailings is complete.

Jaramillo provides independent consulting services to the Company on the La Candelaria project and acts as Vice President of Exploration on the La Candelaria project (although he is not an executive officer or employee, of the Company, Metales or the Amiko Kay).

Under the JV Agreement, the Company is obligated to fund $250,000 for the benefit of the operations under the JV Agreement before January 26, 2013, under the Work Commitment established for the Tailings Project. For the year ended December 31, 2012, the Company made payments totaling $250,000 pursuant to the Work Commitment.  For the three and six months ended June 30, 2013, the Company made payments totaling $10,000 and $0 towards the second year Work Commitment, respectively.

Approximately 6,000 tons of the Tailings material has been sent to the processing plant in Parral, Mexico (the "Parral Plant").  As of the date of this Quarterly Report, this shipment has not been fully processed.  The Parral Plant closed unexpectedly during the third quarter of 2012 and reopened in March 2013.  It has operated sporadically since March 2013 and had not been able to operate on a consistent basis.  Accordingly, the Company estimates that the Parral Plant has accumulated a one year backlog of tailings to process, and the Company does not believe it can rely on the Parral Plant to process a significant amount of the tailings in the foreseeable future.  The Company has developed plans to build its own plant capable of processing 150 tons of tailings per day.  The cost to build such a plant is estimated to be $1,000,000.  The Company is actively seeking investors to fund the construction of a plant.  Accordingly, the Company has no revenues from Tailings as of the date of this filing.

The Company is constructing a basic wash plant and jig circuit on the property on which the Tailings are located.  The cost of the wash plant and jig circuit, if completed, is expected to be approximately $80,000.

Commitments.

11.

Commitments

La Candelaria Property On May 31, 2011, Metales was formed, with the Company owning 70% of the issued and outstanding shares of capital stock.  The remaining 30% of the issued and outstanding capital stock of Metales was issued to Gonzalez.  On June 10, 2011, Gonzalez assigned the Concessions to Metales.  The Concessions cover 800 hectares, or approximately 1,976 acres. Gonzalez transferred the Concessions to Metales pursuant to an agreement with American Gold.    On August 17, 2011, in connection with its investment in Metales and the exploration and development of the Concessions, the Company, American Gold, and Gonzalez executed an Assignment Agreement (the “Assignment Agreement”) pursuant to which (a) American Gold assigned all of its right and interest in and to a Letter of Intent between American Gold and Gonzalez, and an Option to Purchase Agreement between American Gold and Gonzalez dated January 11, 2011 (the “Option Agreement”), (b) the Company accepted the assignment of all of the rights and interest of American Gold in and to the Letter of Intent and the Option Agreement, and (c) the Company assumed all of the duties and obligations of American Gold under the Letter of Intent and the Option Agreement with Gonzalez. Pursuant to the Assignment Agreement (which has an effective date of June 10, 2011), the Company has taken or will take the following actions in connection with transfer of the Concessions from Gonzalez to Metales:

1. The Company issued 125,000 shares of its Common Stock to North American as repayment of the $125,000 that American Gold paid Gonzalez in connection with Option Agreement (the “American Gold Shares”) in September 2011.  The $125,000 was recognized as exploration expense during the year ended December 31, 2011.

2.	The Company issued 300,000 shares of its Common Stock, with a fair value of $303,000, to Gonzalez on September 16, 2011.  The $303,000 was recognized as exploration expense during the year ended December 31, 2011.
3.	The Company, either alone or through Metales, is obligated to fund $150,000 per year of development costs for three years, for a total of $450,000 (the “Work Plan”).  In the years ended December 31, 2012 and 2011, the Company made payments totaling $60,195 and $123,106, respectively, pursuant to the Work Plan.

4. The Company has paid Gonzalez an additional $125,000 in 2012.

The American Gold Shares were issued in the name of North American, with the agreement of American Gold.

Gonzalez retains a 2% Net Smelter Returns Royalty on the Concessions. Metales is obligated to undertake work necessary to bring the existing geological survey on the Property up to NJ 43-101 standards.  The Company has granted anti-dilution rights to Gonzalez, such that the Company must allow Gonzalez the opportunity to maintain his percentage stock ownership in the Company until the date on which the Company has complied fully with its obligations under the Option Agreement or January 11, 2014, whichever comes first.  Gonzalez has waived the exercise of his anti-dilution rights with respect to issuances of Common Stock to North American under the Investment Agreement.  In addition, the Company is obligated to issue 1,000,000 shares of its Common Stock to Gonzalez upon the discovery of a 1 million-ounce equivalent gold deposit, as defined by industry standards as set forth by a recognized exchange in North America.  Finally, if the Company fails to comply with all its obligations under the Option Agreement before January 11, 2014, the Option Agreement will terminate and the Company will be obligated to return the Concessions to Gonzalez.  In January 2013, the Company and Gonzalez verbally agreed to place the work commitments on hold.  Per the verbal agreement between the Company and Gonzalez the payment has been put on hold until such time as the Company has sufficient capital to continue to project.

Employment Agreement

On July 12, 2011, the Company entered into an Employment Agreement with Dan M. Ferris regarding his position as President of the Company.  The Employment Agreement has an initial term of three years, and after the initial term will automatically renew for successive one-year periods until terminated in accordance with the Agreement (the “Term”).  Mr. Ferris will be paid a base salary of $120,000 per year during the Term.  Mr. Ferris will also be entitled to receive 3,000,000 shares of Common Stock, which will be issued in three equal increments of 1,000,000 shares over the first 3 years of the Term.  The shares of Common Stock will not be registered under the Securities Act, and will be subject to restrictions on transfer.  Therefore, Mr. Fe rris will receive 1,000,000 shares of Common Stock on July 12 of each of the years 2012, 2013, and 2014.  The Employment Agreement may be terminated voluntarily by either party upon 30 days written notice, upon Mr. Ferris’ death or disability, by mutual agreement at the end of the Term, or at any time for “cause” by the Company.  If Mr. Ferris’ employment is terminated for “cause”, or if he voluntarily resigns, then he would not be entitled to receive any shares of Common Stock that have not been issued as of the date of resignation or termination.  If Mr. Ferris’ employment is terminated for any other reason, he would receive the full 3,000,000 shares of Common Stock.  The Employment Agreement defines “cause” as the willful and continued failure by Ferris to perform his duties under the Employment Agreement, conviction of a felony, or engaging in conduct that is contrary to the best interests of the Company or adversely affects the Company’s reputation.  The fair market value of the stock grant on the date of the Employment Agreement was $3,000,000 based on the fair market value at the time of the agreement.  The Company recognized $999,996 in expense related to the stock grant during the year ended December 31, 2012.

Mine Tailings Project

On January 26, 2012, the Company, acting through a newly-formed subsidiary, entered into a Joint Venture Agreement (the “JV Agreement”) with Miguel Angel Jaramillo Tapia (“Jaramillo”), a resident of Mexico. Under the JV Agreement, Amiko Kay, S. de R.L. de C.V., a company organized under the laws of Mexico (“Amiko Kay”), and Jaramillo formed a joint venture to process 1,200,000 tons of mine tailings located in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico (the “Tailings”), and, after processing, to use, market and sell any minerals extracted from the Tailings. The Company owns 99% of the issued and outstanding membership interests of Amiko Kay.

The Tailings consist of approximately 1.2 million tons of mine tailings from previous mining activity in the Chihuahua area over the last 100 years or more. Mine tailings represent the refuse remaining after ore has been processed. The JV Agreement between Amiko Kay and Jaramillo has been formed to re-process the mine tailings heap to extract minerals that were not extracted during the initial processing, and to market and sell any minerals extracted from the Tailings.

As consideration for Jaramillo’s contribution of the right to process the Tailings to the Joint Venture, the Company paid Jaramillo $25,000 when it signed a letter of intent for a proposed acquisition of an interest in the Tailings on December 5, 2011, and another $75,000 when it signed the JV Agreement.  The Company agreed to pay Jaramillo an additional $200,000 no later than January 26, 2013.  In January 2013, the Company and Jaramillo entered into a verbal agreement to delay the payment, and as of the date of this filing the payment has not been made.

In addition, the Company or Amiko Kay will fund an amount up to $1,000,000 (the “Work Commitment”) for the benefit of the JV Agreement over its first two years, as follows:

(a)    $250,000 within the first year of the JV Agreement for the purchase of used heavy equipment, miscellaneous equipment and materials for processing the Tailings, and taxes, permits, and general operating expenses.

(b)    $750,000 within the second year of the JV Agreement for the construction of a heap leach system and floatation plant on the Property.

The Company may make an additional $250,000 available to the JV Agreement, if additional processing equipment is justified and required to maximize the liberation of precious metals in the Tailings material.

As further consideration, the Company is obligated to issue 600,000 shares of the Common Stock to Jaramillo as follows:

(a)    100,000 shares of Common Stock, which have been issued to Jaramillo.

(b)    200,000 shares of Common Stock within 6 months of signing the JV Agreement, which was issued in June 2012.

(c)    300,000 shares of Common Stock within 12 months of signing the JV Agreement (these shares will be issued in April 2013).

The shares of Common Stock will be restricted shares and carry current and appropriate legends to that effect.

Jaramillo will manage the day-to-day affairs associated with processing the Tailings, selling the minerals extracted from the Tailings (“Extracted Minerals”), and other activities of the JV Agreement. Jaramillo will pay all expenses associated with the processing of the Tailings, the sale of any Extracted Minerals from the Tailings, and other obligations of the JV Agreement from the funds received under the Work Commitment and, eventually, from revenues from operations. All net revenues from the sale of any Extracted Minerals or other sources, after deducting expenses, will be distributed and paid monthly, with 65% of the net revenues paid to Amiko Kay and 35% of the net revenues paid to Jaramillo. It is anticipated that the portion to be paid to Amiko Kay will be paid directly to the Compa ny. Jaramillo will provide a monthly accounting of all revenues and expenses associated with the operations of the JV Agreement.

Title to the Property and the Tailings will remain in Jaramillo’s name. Jaramillo will be responsible for obtaining all permits, approvals and authorizations associated with the processing of the Tailings. He is also responsible for causing the project to comply with all applicable laws, rules and regulations, and to maintain insurance on the Property. Amiko Kay will have access to the Property and the Tailings at all times during the term of the JV Agreement.

Amiko Kay and Jaramillo will mutually develop plans and programs to process the Tailings. Jaramillo will prepare a detailed budget setting forth the expenses to be paid under the Work Commitment, which will be approved by Amiko Kay. Finally, Jaramillo will provide quarterly financial reports to Amiko Kay.

If either party defaults under the JV Agreement, the defaulting party’s rights to participate in the JV Agreement will be immediately suspended, and the defaulting party will have no right to share in the revenues of the JV Agreement until the breach is cured. If the defaulting party is Jaramillo, then Amiko Kay may perform the duties of Jaramillo under the Agreement. The nondefaulting party may also sue for damages incurred as a result of the event of default.

The JV Agreement will terminate upon completion of processing the Tailings, as determined by Amiko Kay in its sole discretion.  If Jaramillo materially breaches the JV Agreement, Amiko Kay may terminate the JV Agreement upon 30 days notice to Jaramillo.   Jaramillo has no right to terminate the JV Agreement before the processing of the Tailings is complete.

Jaramillo provides independent consulting services to the Company on the La Candelaria project. He acts as Vice President of Exploration on the La Candelaria project (although he is not an executive officer, or an employee, of the Company, Metales or the Subsidiary).

The Company is obligated to fund $250,000 for the benefit of the operations under the JV Agreement before January 26, 2013, under the Work Commitment established for the Tailings Project. For the year ended December 31, 2012, the Company made payments totaling $250,000 pursuant to the Work Commitment.  See “Results of Operations”.

Approximately 6,000 tons of the Tailings material has been sent to the processing plant in Parral, Mexico. As of the date of this Quarterly Report, this shipment has not been fully processed and the Company has no revenues from Tailings project. In addition, the Parral processing plant has undergone a change of management and has indicated that it will not accept further material for processing. The Company has identified another processing plant in the area that it anticipates will process future shipments of Tailings material.

The Company is constructing a basic wash plant and jig circuit on the property on which the Tailings are located.  The cost of the wash plant and jig circuit, if completed, is expected to be approximately $80,000.

No Proven or Probable Reserves

We are a start-up, exploration-stage company engaged in the search for gold and related minerals. No proven (measured) or probable (indicated) reserves have been established with respect to the La Candelaria project or the Tailings project, and the proposed program of exploration and development for the La Candelaria project and the Tailings project is exploratory in nature. There is no assurance that a commercially viable mineral deposit, or reserve, exists on the property covered by the Concessions or the Tailings project or can be shown to exist until sufficient and appropriate exploration is done, and a comprehensive evaluation of such work concludes that the extraction of such a mineral deposit, if found, can be economically and legally feasible.

Fairhills Investment Agreement

In connection with the Deer Valley Investment Agreement, the Company and the Investor entered into a Registration Rights Agreement. Under the Registration Rights Agreement, the Company will use its commercially reasonable efforts to file, within twenty-one (21) days of the date of the Agreement, a Registration Statement on Form S-1 covering the resale of the Common Stock subject to the Investment Agreement. The Company intends to initially register 30,000,000 shares of Common Stock for resale. The Company has agreed to use all commercially reasonable efforts to have the Registration Statement declared effective by the SEC within one hundred and twenty (120) calendar days after the date of the Registration Rights Agreement.  On October 16, 2012, the Company filed a Registration Statement on Fo rm S-1 covering the resale of 19,000,000 shares of Common Stock subject to the Investment Agreement.  The Deer Valley Investment Agreement was assigned to Deer Valley Management in November 2012.

Ocampo Property

On September 29, 2011, the Company entered into a 90-day exclusivity letter of intent (the “Ocampo LOI”) with Antonio Aguirre Rascon (“Rascon”) to acquire a 70% interest in mining concessions covering approximately 570 hectares located in the municipality of Ocampo in the state of Chihuahua, Mexico.  The Company paid Rascon $12,500 upon signing of the Ocampo LOI.  The Ocampo LOI is to serve as the basis for a definitive agreement (the “Definitive Agreement”) to be negotiated between the parties.  In December 2011, the Company elected to allow the Ocampo LOI to lapse without entering into a Definitive Agreement.

XML

Debt Consists Of The Following (Tables)

6 Months Ended

Jun. 30, 2013

Debt Consists Of The Following

Debt Consists Of The Following

Debt as of June 30, 2013 and December 31, 2012 consists of the following:

Description	June 30, 2013			December 31, 2012
Notes payable
In June 2012 the Company entered into a secured note agreement with Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (“Fairhills”), in the principal amount of $50,000 at an annual interest rate of 2%. Principal and accrued and unpaid interest was due on December 24, 2012, which was verbally extended until December 24, 2013.  The Note is secured by 3,750,000 shares of Common Stock owned by Dan Ferris, our President and sole director.  On November 12, 2012, Fairhills transferred all rights and obligations under the Note to Deer Valley Management, LLC ("Deer Valley").  In March 2013, the Company paid $25,000 to Deer Valley to pay down the outstanding balance on its loan.  In May 2013, the remaining $25,000 balance due on this loan was rep aid by a shareholder.	$	-		$	50,000
Convertible note payable
In June 2013, the Company borrowed $50,000 from KVM Capital Partners LLC, the repayment of which is to be made on the following terms: (a) the unpaid principal amount accrues interest at the rate of eight percent (8%) per annum, (b) the unpaid principal and all accrued but unpaid interest thereon will be due and payable on December 15, 2013, and (c) any portion of the unpaid principal and accrued but unpaid interest may be prepaid by the Company, without penalty. The proceeds of the loan will be used to make certain payments relating to the Company's mine tailings joint venture in Chihuahua, Mexico, and for general operating expenses.  The note is convertible into 4,761,905 shares of the Company’s common stock.  The Company recorded a discount related to the bifurcation of the derivative liability.  The conversion price shall mean 65% multiplied by the Market Price (as defined herein) (representing a discount rate of 35%).  "Market Price" means the average of the lowes three (3) Trading Price for the Common Stock during the tenth (10) trading day period ending the latest complete trading day prior to the conversion date.	$	50,000		$	-
Less:  Discount		(50,000	)		-
Add:  Amortization of discounts		9,000			-
Total convertible notes payable, net of discount	$	9,000		$	-

XML

Subsequent Events

12 Months Ended

Dec. 31, 2012

Subsequent Events

Subsequent Events

12.

Subsequent Events

Common Stock On five occasions in January, February and March 2013, the Company exercised its right pursuant to the Investment Agreement with Deer Valley to require Deer Valley to purchase additional shares of the Company’s Common Stock, per the Company’s filing on Form S-1 in December 2012.  The total amount of these puts is $270,000.  There was an additional put exercised in December 2012, the amount of which is $15,000 whose shares were not issued until 2013 as well.  The total of these six put shares issuances resulted in 9,510,000 shares being issued in 2013. Notes Payable In March 2013, the Company paid $25,000 to Fairhills Capital Offshore Ltd. to pay down the outstanding balance on its loan.  The remaining balance on the loan is $25,000 and is due on December 24, 2013 (see Note 6 - Notes Payable).

XML

Document and Entity Information (USD $)	6 Months Ended
	Jun. 30, 2013	Sep. 23, 2013	Jun. 30, 2012
Document and Entity Information
Entity Registrant Name	Lone Star Gold, Inc.
Document Type	S-1
Document Period End Date	Jun. 30, 2013
Amendment Flag	true
Entity Central Index Key	0001464865
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		26,100,000
Entity Public Float			$ 9,917,982
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Amendment Description	TRUE

XML

Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies (Policies)

Principles of Consolidation

a)  Principles of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary.  All intercompany accounts and transactions have been eliminated in consolidation.

Noncontrolling Interests

b)

Non-controlling interests

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in represented in the consolidated balance sheets as a component of stockholders’ equity.  Non-controlling interests in the results of operations of the Company are presented in the face of the consolidated statement of operations as an allocation of the total profit or loss between non-controlling interests and the shareholders of the Company.

Basis of Presentation

c)	Basis of Presentation
	These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.

Use of Estimates

d)

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents, Policy

e)	Cash and Cash Equivalents
	The Company considers all highly liquid instruments with an original maturity of three months or less at the time of issuance to be cash equivalents.

Foreign Currency Translations Policy

f)

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Mexican Pesos and management has adopted ASC 830 Foreign Currency Matters. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Fair Value of Financial Instruments, Policy

g)

Fair Value of Financial Instruments

The Company’s financial instruments consist principally of cash and accounts payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments the fair value of cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all other financial instruments approximate their current fair values because of their nature and relatively short maturity dates or durations.

Basic and Diluted Net Loss Per Share

h) Basic and Diluted Net Loss Per Share   The Company computes net loss per share in accordance with ASC 260, Earnings Per Share which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

Mineral Property Costs

i) Mineral Property Costs   The Company has been in the exploration stage since its formation on November 26, 2007 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition, exploration and development of mineral properties. Mineral properties includes the cost of advance minimum royalty payments, the cost of capitalized mineral property leases, and the cost of property acquired either by cash payment, the issuance of term debt or common shares. Expenditures for exploration on specific properties with no proven reserves are written off as incurred. Mineral property costs will be amortized against future revenues or charged to operations at the time the related property is determined to have an impairment in value. Capitalized acquisition costs are expensed in the period in which it is determined that the mineral property has no future economic value. Capitalized amounts may also be written down if future cash flows, including potential sales proceeds related to the property, are estimated to be less than the carrying value of the property. The Company reviews the carrying value of mineral property interests periodically, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable, reductions in the carrying value of each property would be recorded to the extent the carrying value of the investment exceeds the property’s estimated fair value. In the event that a mineral property is acquired through the issuance of the Company’s shares, the mineral property will be recorded at the fair value of the respective property or the fair value of the common shares, whichever is more readily determinable. When mineral properties are acquired under option agreements with future acquisition payments to be made at the sole discretion of the Company, those future payments, whether in cash or shares, are recorded only when the Company has made or is obliged to make the payment or issue the shares. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and bankable feasibility, the costs incurred to develop such property are capitalized.

Long-Lived Assets

j) Long-lived Assets   In accordance with ASC 360, Property Plant and Equipment the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.   Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, two to 10 years; and furniture and equipment, one to five years. Land is not depreciated.

Asset Retirement Obligations, Policy

k) Asset Retirement Obligations   The Company follows the provisions of ASC 410 Asset Retirement and Environmental Obligations, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As at December 31, 2012 and 2011, the Company has not recognized any asset retirement obligations.

Income Tax, Policy

l) Income Taxes   Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740,  Income Taxes  as of its inception. Pursuant to ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

Share-based Compensation, Policy

m) Stock-based Compensation   In accordance with ASC 718, Compensation – Stock Compensation, the Company accounts for share-based payments using the fair value method. The Company has not issued any stock options since its inception. Common shares issued to third parties for non-cash consideration are valued based on the fair market value of the services provided or the fair market value of the Common Stock on the measurement date, whichever is more readily determinable.

Comprehensive Income, Policy

n) Comprehensive Income   ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2012 and 2011, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

Recent accounting pronouncements

o) Recent accounting pronouncements   In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or in two separate but consecutive statements. The new guidance was effective for us beginning July 1, 2012 and had presentation changes only.   In May 2011, the FASB issued guidance to amend the accounting and disclosure requirements on fair value measurements.  The new guidance limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, the new guidance expands the disclosures on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. The new guidance was effective for us beginning January 1, 2012.  Other than requiring additional disclosures, there were no  material impacts on our financial statements.   In January 2010, the FASB issued guidance to amend the disclosure requirements related to fair value measurements.  The guidance requires the disclosure of roll forward activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements).  The guidance was effective for us as of January 1, 2012.  The adoption of this new guidance did not have a material impact on our financial statements.