Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]
 

 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act ). Yes x    No [ ]
 
State issuer's revenues for its most recent fiscal year.   $0
 

State the aggregate market value of the common stock held by non-affiliates of the Registrant: $2,920,700 as of April 21, 2008based on the average bid and asked price of $0.058 per share as of April 21, 2008.

State the number of shares outstanding of each of the registrant's classes of common equity, as of the latest practicable date: 57,106,909 shares issued and outstanding as of May 14, 2008.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
None. 
 
INDEX
 
 
PART I
      
Item 1.
Description of Business.
 
  
Item 2.
Description of Property.
 
 
Item 3.
Legal Proceedings.
 
  
Item 4.
Submission of Matters to a Vote of Security Holders.
 
  
PART II
      
Item 5.
Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of  Equity Securities.
 
  
Item 6.
Managements’ Discussion and Analysis or Plan of Operation.
 
  
Item 7.
Financial Statements.
 
  
Item 8.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
 
  
Item 8A.
Controls and Procedures.
 
  
Item 8B.
Other Information.
 
  
PART III
      
Item 9.
Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance With Section 16(a) of the Exchange Act
    
.
 
    
Item 10.
Executive Compensation.
 
  
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
.
 
    
Item 12.
Certain Relationships and Related Transactions, and Director Independence.
 
  
Item 13.
Exhibits.
 
  
Item 14.
Principal Accounting Fees and Services.
 
  
SIGNATURES
 
    
       

 



 
 
 
PART I
 

Item 1.
Description of Business.
 
This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
 
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common shares" refer to the common shares in our capital stock.
 
As used in this annual report, the terms "we", "us", "our", and "Tao" mean Tao Minerals Ltd., unless the context clearly requires otherwise.
 
Corporate Overview
 
The address of our principal executive office is Officina 618, Empresarial Mall Ventura, Cra.32 #1B Sur 51, Medellin, Columbia. Our telephone numbers are (305) 726-0602 and 011-574-311-0720.
 
Our common stock is quoted on the OTC Bulletin Board under the symbol "TAOL".
 
Corporate History
 
We were incorporated in the State of Nevada on September 23, 2004 with authorized capital of 69,000,000 shares of common stock with a par value of $0.001 and 1,000,000 shares of preferred stock with a par value of $0.001.
 
On March 13, 2006, our board of directors approved an eight (8) for one (1) forward stock split of our authorized, issued and outstanding common stock. The forward stock split became effective with the Secretary of State of Nevada on March 24, 2006. As a result, our authorized capital increased from 69,000,000 shares of common stock with a par value of $0.001 and 1,000,000 Preferred “A” stock with a par value of $0.001 to 552,000,000 shares of common stock with a par value of $0.001 and 1,000,000 Preferred “A” stock with a par value of $0.001. Our issued and outstanding share capital increased from 7,739,500 shares of common stock to 51,816,000 shares of common stock. Effective March 24, 2006 our trading symbol on the OTC Bulletin Board was changed from “TAOM” to “TAOL” in connection with the forward stock split.
 
From inception on September 23, 2004 to present, we have engaged in no significant operations other than organizational activities, acquiring and staking our properties, preparing the registrations of our securities and planning Phase 1 of the exploration work on our Golondria Gold-Silver Project.
 
We are a start-up, exploration stage company and have not yet generated or realized any revenues from our business operations. We must raise cash in order to implement our plan and stay in business.
 
 Our Current Business
 
We are in the mineral resource business. This business generally consists of three stages: exploration, development and production. Mineral resource companies that are in the exploration stage have not yet found mineral resources in commercially exploitable quantities, and are engaged in exploring land in an effort to discover them. Mineral resource companies that have located a mineral resource in commercially exploitable quantities and are preparing to extract that resource are in the development stage, while those engaged in the extraction of a known mineral resource are in the production stage. Our company is in the exploration stage.
 
 
 
 
Mineral resource exploration can consist of several stages. The earliest stage usually consists of the identification of a potential prospect through either the discovery of a mineralized showing on that property or as the result of a property being in proximity to another property on which exploitable resources have been identified, whether or not they are or have in the past been extracted.
 
 
After the identification of a property as a potential prospect, the next stage would usually be the acquisition of a right to explore the area for mineral resources. This can consist of the outright acquisition of the land or the acquisition of specific, but limited, rights to the land (e.g., a license, lease or concession). After acquisition, exploration would probably begin with a surface examination by a prospector or professional geologist with the aim of identifying areas of potential mineralization, followed by detailed geological sampling and mapping of this showing with possible geophysical and geochemical grid surveys to establish whether a known trend of mineralization continues through un-exposed portions of the property (i.e., underground), possibly trenching in these covered areas to allow sampling of the underlying rock. Exploration also commonly includes systematic regularly spaced drilling in order to determine the extent and grade of the mineralized system at depth and over a given area, as well as gaining underground access by ramping or shafting in order to obtain bulk samples that would allow one to determine the ability to recover various commodities from the rock. Exploration might culminate in a feasibility study to ascertain if the mining of the minerals would be economic. A feasibility study is a study that reaches a conclusion with respect to the economics of bringing a mineral resource to the production stage.
 
 
Our mineral resource properties consist of exploration claims located in Nevada (“Whale Mine property”) and in Columbia (“Risaldo La Golondrina D14-082 mineral property located in Narino, Colombia”). There is no assurance that a commercially viable mineral deposit exists on any of our properties; further exploration is required before we can evaluate whether any exist and, if so, whether it would be economically and legally feasible to develop or exploit those resources. Even if we complete an exploration program and we are successful in identifying a mineral deposit, we would be required to spend substantial funds on further drilling and engineering studies before we could know whether that mineral deposit would constitute a reserve (a reserve is a commercially viable mineral deposit). Please refer to the section entitled ‘Risk Factors’, beginning at page 5 of this annual report on Form 10-KSB, for additional information about the risks of mineral exploration.
 
Employees
 
As of January 31, 2008, we had no employees other than our directors and officers.
 
We also engage contractors from time to time to supply work on specific corporate business and exploration programs.
 
Consultants are retained on the basis of ability and experience. Except as set forth above, there is no preliminary agreement or understanding existing or under contemplation by us (or any person acting on our behalf) concerning any aspect of our operations pursuant to which any person would be hired, compensated or paid a finder’s fee.
 
Competition
 
There is aggressive competition within the mineral industry to discover and acquire properties considered to have commercial potential. We compete for the opportunity to participate in promising exploration projects with other entities, many of which have greater resources than us. In addition, we compete with others in efforts to obtain financing to explore and develop mineral properties.
 
Compliance with Government Regulation
 
We are committed to complying and, to our knowledge, are in compliance with all governmental and environmental regulations. Permits from a variety of regulatory authorities are required for many aspects of mine operation and reclamation. We do not currently own or operate any mines and are not required to comply with the requirements of these regulatory authorities. We cannot predict the extent to which these requirements will affect our company or our property if we identify the existence of minerals in commercially exploitable quantities. In addition, future legislation and regulation could cause additional expense, capital expenditures, restrictions, and delays in the exploration of our property.
 
We are prepared to engage professionals, if necessary, to ensure regulatory compliance but in the near term expect our activities to require minimal regulatory oversight. If we expand the scope of our activities in the future it is reasonable to expect expenditures on compliance to rise.
 
Intellectual Property
 
We do not own, either legally or beneficially, any patent or trademark.
 
 
 
RISK FACTORS
 
Much of the information included in this annual report includes or is based upon estimates, projections or other “forward-looking statements”. Such forward-looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.
 
Such estimates, projections or other “forward-looking statements” involve various risks and uncertainties as outlined below. We caution readers of this transitional annual report that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward-looking statements”. In evaluating us, our business and any investment in our business, readers should carefully consider the following factors.
 
Risks Associated With Our Business
 
We have a limited operating history and as a result there is no assurance we can operate on a profitable basis.
 
We have a limited operating history and must be considered in the exploration stage. Our company's operations will be subject to all the risks inherent in the establishment of an exploration stage enterprise and the uncertainties arising from the absence of a significant operating history. Potential investors should be aware of the difficulties normally encountered by mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in the exploration of the mineral claims may not result in the discovery of mineral deposits. Problems such as unusual or unexpected formations of rock or land and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our claims and acquire new claims for new exploration or cease operations. The acquisition of additional claims will be dependent upon us possessing capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations. No assurance can be given that we may be able to operate on a profitable basis.
 
If we do not obtain additional financing, our business will fail and our investors could lose their investment.
 
We had cash in the amount of $1,563 and working capital deficit of $979,182 as of our year ended January 31, 2008. We currently do not generate revenues from our operations. Our business plan calls for substantial investment and cost in connection with the acquisition and exploration of our mineral properties currently under lease and option. Any direct acquisition of the claim under lease or option is subject to our ability to obtain the financing necessary for us to fund and carry out exploration programs on the properties. The requirements are substantial. We do not currently have any arrangements for additional financing and we can provide no assurance to investors that we will be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including market prices for minerals, investor acceptance of our properties, and investor sentiment. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. The most likely source of future funds presently available to us is through the sale of equity capital and loans. Any sale of share capital will result in dilution to existing shareholders.
 
Because there is no assurance that we will generate revenues, we face a high risk of business failure.
 
We have not earned any revenues as of the date of this annual report and have never been profitable. We do not have an interest in any revenue generating properties. We were incorporated in September 2004 and to date have been involved primarily in organizational activities and limited exploration activities. Prior to our being able to generate revenues, we will incur substantial operating and exploration expenditures without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We have limited operating history upon which an evaluation of our future success or failure can be made. Our net loss from inception to our year ended January 31, 2008 is $1,341,729. We recognize that if we are unable to generate significant revenues from our activities, we will not be able to earn profits or continue operations. Based upon current plans, we also expect to incur significant operating losses in the future. We cannot guarantee that we will be successful in raising capital to fund these operating losses or generate revenues in the future. We can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail and our investors could lose their investment.
 
Because of the speculative nature of the exploration of natural resource properties, there is substantial risk that this business will fail.
 
There is no assurance that any of the claims we explore or acquire will contain commercially exploitable reserves of minerals. Exploration for natural resources is a speculative venture involving substantial risk. Hazards such as unusual or unexpected geological formations and other conditions often result in unsuccessful exploration efforts. We may also become subject to significant liability for pollution, cave-ins or hazards, which we cannot insure or which we may elect not to insure.
 
 
 
Our foremost project is located in Colombia where mineral exploration activities may be affected in varying degrees by political and government regulations which could have a negative impact on our ability to continue our operations.
 
Certain projects in which we have interests are located in Colombia. Mineral exploration activities in Colombia may be affected in varying degrees by political instabilities and government regulations relating to the mining industry. Any changes in regulations or shifts in political conditions are beyond our control and may adversely affect our business. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriations of property, environmental legislation and mine safety. The status of Colombia as a developing country may make it more difficult for us to obtain any required financing for our projects. The effect of all these factors cannot be accurately predicted. Notwithstanding the progress achieved in restructuring Colombia political institutions and revitalizing its economy, the present administration, or any successor government, may not be able to sustain the progress achieved. While the Colombian economy has experienced growth in recent years, such growth may not continue in the future at similar rates or at all. If the economy of Colombia fails to continue its growth or suffers a recession, we may not be able to continue our operations in that country. We do not carry political risk insurance.
 
If we cannot compete successfully for financing and for qualified managerial and technical employees, our exploration program may suffer.
 
Our competition in the mining industry 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 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 program may be slowed down or suspended.
 
 There are no known reserves of minerals on our mineral claims and we cannot guarantee that we will find any commercial quantities of minerals.
 
We have not found any mineral reserves on our claims and there can be no assurance that any of the mineral claims we are exploring contain commercial quantities of any minerals. Even if we identify commercial quantities of minerals in any of our claims, there can be no assurance that we will be able to exploit the reserves or, if we are able to exploit them, that we will do so on a profitable basis.
 
If we are unable to hire and retain key personnel, we may not be able to implement our business plan.
 
Our success is also largely dependent on our ability to hire highly qualified personnel. This is particularly true in highly technical businesses such as mineral exploration. These individuals are in high demand and we may not be able to attract the personnel we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Failure to hire key personnel when needed, or on acceptable terms, would have a significant negative effect on our business.
 
Inability of our officers and directors to devote sufficient time to the operation of the business may limit our company's success.
 
Presently our officers and directors allocate only a portion of their time to the operation of our business. If the business requires more time for operations than anticipated or the business develops faster than anticipated, the officers and directors may not be able to devote sufficient time to the operation of the business to ensure that it continues as a going concern. Even if this lack of sufficient time of our management is not fatal to our existence, it may result in limited growth and success of the business.
 
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 exploration of 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.
 
Our independent certified public accounting firm, in their Notes to the audited financial statements for the year ended January 31, 2008 states that there is a substantial doubt that we will be able to continue as a going concern.
 
Our independent certified public accounting firm, Larry Wolfe/Certified Public Accountant, stated in their Notes to the audited financial statements for the year ended January 31, 2008, that we have experienced significant losses since inception. Failure to arrange adequate financing on acceptable terms and to achieve profitability would have an adverse effect on our financial position, results of operations, cash flows and prospects, there is a substantial doubt that we will be able to continue as a going concern.
 

 
We are subject to various government regulations and environmental concerns.
 
We are subject to various government and environmental regulations. Permits from a variety of regulatory authorities are required for many aspects of exploration, mining operations and reclamation. We cannot predict the extent to which future legislation and regulation could cause additional expense, capital expenditures, restrictions, and delays in the development of our U.S. or Colombian properties, including those with respect to unpatented mining claims.
 
 Our activities are not only subject to extensive federal, state and local regulations controlling the exploration and mining of mineral properties, but also the possible effects of such activities upon the environment. Future legislation and regulations could cause additional expense, capital expenditures, restrictions and delays in the development of our properties, the extent of which cannot be predicted. Also, as discussed above, permits from a variety of regulatory authorities are required for many aspects of mine operation and reclamation. In the context of environmental permitting, including the approval of reclamation plans, we must comply with known standards, existing laws and regulations that may entail greater or lesser costs and delays, depending on the nature of the activity to be permitted and how stringently the regulations are implemented by the permitting authority. We are not presently aware of any specific material environmental constraint affecting our properties that would preclude the economic development or operation of any specific property.
 
If we become more active on our properties, it is reasonable to expect that compliance with environmental regulations will increase our costs. Such compliance may include feasibility studies on the surface impact of the our proposed operations; costs associated with minimizing surface impact, water treatment and protection, reclamation activities, including rehabilitation of various sites, on-going efforts at alleviating the mining impact on wildlife, and permits or bonds as may be required to ensure our compliance with applicable regulations. It is possible that the costs and delays associated with such compliance could become so prohibitive that we may decide to not proceed with exploration, development, or mining operations on any of our mineral properties.
 
Risks Associated with Our Common Stock
 
Trading on the OTC Bulletin Board may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.
 
Our common stock is quoted on the OTC Bulletin Board service of the National Association of Securities Dealers. Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like Amex. Accordingly, shareholders may have difficulty reselling any of the shares.
 
Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and the NADSD’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our stock.
 
Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
 
In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.
 
 
 
Other Risks
 
Because some of our officers and directors are located in non-U.S. jurisdictions, you may have no effective recourse against the non U.S. officers and directors for misconduct and may not be able to enforce judgment and civil liabilities against our officers, directors, experts and agents.
 
Some of our directors and officers are nationals and/or residents of countries other than the United States, specifically Canada and Colombia, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.
 
Trends, Risks and Uncertainties
 
 

Item 2.
Description of Property.
 
Executive Offices
 
Our principal offices are located at Officina 618, Empresarial Mall Ventura, Cra.32#1B Sur 51, Medellin, Columbia. Our telephone number at our principal office is 011-574-311-0720. Our office is donated rent free by our President. We believe that our office space and facilities are sufficient to meet our present needs and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to us.
 
Mineral Properties
 
There is no assurance that a commercially viable mineral deposit exists on our properties, or that we will be able to identify any mineral resource on our properties that can be developed profitably. Even if we do discover commercially exploitable levels of mineral resources on our properties, there can be no assurance that we will be able to enter into commercial production of our mineral properties.
 
Golondria Gold-Silver Project  
 
Acquisition, Location and Access
 
On February 1, 2006 we executed a letter agreement with Primecap Resources and Nueva California S.A., concerning the acquisition of an interest in the Risaraldo La Golondrina D14-082 property located in Narino, Colombia.
 
On March 5, 2006, we entered into an Assignment Agreement dated effective February 28, 2006 (the “Definitive Agreement”), with Primecap Resources Inc., of Las Vegas, Nevada, (Primecap), concerning the acquisition of Primecap’s option (the “Option”), to acquire a 100% interest in the Risaldo La Golondrina D14-082 mineral property located in Narino, Colombia (the “Property”). Primecap had been granted the Option by Nueva California S.A., of Medellin, Colombia, pursuant to the terms and conditions of a Heads of Agreement dated August 23, 2004 (the “HOA”).
 
 The Definitive Agreement provides for the assignment of the Option for the following consideration:
 
1.
Payment of US$150,000, payable on or before March 15, 2006 and upon execution of the Definitive Agreement; and
 
2.
The issuance of 2,500,000 common shares in the capital stock of the company, subject to applicable trading restrictions, to Nueva California which will be issued either contemporaneous with the payment of US$150,000 or within 14 days of the execution of a Definitive Agreement, whichever is the earlier.
 
3.
The issuance of 600,000 shares of common stock as follows:
300,000 as of August 23,2006 and 300,000 shares as of August 23, 2007.
     
 
In addition, we will assume Primecap’s financial obligations under the HOA.
 
On March 15, 2006, we entered into an amending agreement (the “Amending Agreement”) which agreement amended certain terms of the Definitive Agreement. The Amending Agreement provides for an extension to the payment terms such that the $150,000 payment time of March 15, 2006 was extended to April 15, 2006. The payment was made on April 10, 2006. On April 21, 2006 we issued 2,500,000 common shares to Nueva California SA pursuant to the terms of the Definitive Agreement.
 
 
 
 
On May 9, 2008 we entered into a second amending agreement which agreement amended certain terms of the Definitive Agreement. The second agreement modifies payments of $280,000 which would have to been made from August 23, 2005 through August 23, 2009 to two payments of $100,000 each on or before July 1, 2006 and on or before August 1, 2008. The first payment of $100,000 has been made. As of May 9, 2008 the company has not issued the 600,000 shares of common stock and has not received any notice of default from non issuance.
 
The property is located within a mixture of small-scale mining and small-scale agricultural lands. Limited accommodations and supplies are available in Sotomayor, while Pasto acts as the main supply centre. The property is accessible from Sotomayor by a one-lane gravel road for the first four kilometres and then by a 1 kilometre ATV trail. Access to Sotomayor is from Pasto by a secondary gravel road, with travel time estimated to be 4 hrs. Transportation to Sotomayor is available in Pasto. The gravel roads are suitable for movement of heavy equipment.
 
ESTIMATED BUDGET, PHASE 1 PROGRAM
Chronological Schedule

   
Weeks
Item
Labour
Historical data
X
                  
Environmental Review
  
X
  
X
  
X
        
Regional Geological Mapping
    
X
              
Stream Sediment Geochemistry
      
X
            
Detailed Geological Mapping
        
X
X
X
      
Underground Sampling
          
X
X
      
Soil Geochemistry
      
X
            
Trench Sampling
              
X
    
Rock Sampling (Prospecting)
    
X
              
Sample Preparation/Analysis