As filed with the Securities and Exchange Commission on December 24, 2009

Registration No. 333-                    

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

MEXORO MINERALS LTD.

Colorado		1041		84-1431797
(State or other jurisdiction of		(Primary Standard Industrial		(I.R.S. Employer
incorporation or organization)		Classification Code number)		Identification No.)

C. General Retana
#706 Col. San Felipe
Chihuahua, Chih. Mexico 31203
52 (614) 426 5505
(Address and telephone number of principal executive offices)

George Young, President
Mountain View Center
12303 Airport Way
Suite 200
Broomfield, CO 80021
(303) 327-1587
(Name, address and telephone number of agent for service)

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.

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. þ

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

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

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

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

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

CALCULATION OF REGISTRATION FEE

Proposed maximum

Proposed maximum

Title of each class of

Amount to be

offering price per

aggregate offering

Amount of

securities to be registered

registered (1)

share (2)

price (2)

registration fee

Common stock, no par value

12,500,000

$0.42

$5,250,000

$375

(1)		Pursuant to Rule 416 under the Securities Act of 1933, as amended, this registration statement also covers such additional shares as may hereafter be offered or issued with respect to the shares registered hereby resulting from stock splits, stock dividends, recapitalizations or similar capital adjustments.
(2)		Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended based upon the average bid and asked price of the common stock on December 23, 2009.

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 this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

SUBJECT TO COMPLETION, DATED DECEMBER 24, 2009

Mexoro Minerals Ltd.

12,500,000 Shares of Common Stock

     This prospectus relates to the resale of up to 12,500,000 shares of common stock, no par value, of Mexoro Minerals Ltd. (the “Common Stock”) by the selling stockholders (the “selling stockholders”) described herein. The selling stockholders may sell such shares of common stock from time to time in the principal market on which the shares of common stock are traded at the prevailing market price or in negotiated transactions.

     We will not receive proceeds from the sale of our shares by the selling stockholders. We will pay the expenses of registering the shares of Common Stock. The selling stockholders and any brokers executing selling orders on behalf of the selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended. Commissions received by a broker executing selling orders may be deemed to be underwriting commissions under the Securities Act.

     The securities are being registered to permit the selling stockholders to sell the securities from time to time in the public market. The selling stockholders may sell the securities through ordinary brokerage transactions or through any other means described in the section titled “Plan of Distribution.” We do not know when or in what amount the selling stockholders may offer the securities for sale. The selling stockholders may sell any, all or none of the securities offered by this prospectus.

     Our Common Stock is quoted on the OTC Bulletin Board (the “OTCBB”) administered by the Financial Industry Regulatory Authority, Inc. (“FINRA”) under the symbol “MXOM.OB” and on the Frankfurt Stock Exchange under the symbol “OYA1”. The last reported sale price of our Common Stock on the OTCBB on December 23, 2009, was $0.44 per share.

     Investing in our Common Stock involves substantial risks. See “Risk Factors” beginning on page 6.

     We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.

     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 _________, 2009.

     MEXORO MINERALS LTD. HAS NOT REGISTERED THE SHARES FOR SALE BY THE SELLING SHAREHOLDERS UNDER THE SECURITIES LAWS OF ANY STATE. BROKERS OR DEALERS EFFECTING TRANSACTIONS IN THE SHARES SHOULD CONFIRM THAT THE SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES LAWS OF THE STATE OR STATES IN WHICH SALES OF THE SHARES OCCUR AS OF THE TIME OF SUCH SALES, OR THAT THERE IS AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES LAWS OF SUCH STATES.

     THIS PROSPECTUS IS NOT AN OFFER TO SELL ANY SECURITIES OTHER THAN THE SHARES. THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH AN OFFER IS UNLAWFUL.

MEXORO MINERALS LTD.

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS			ii
PROSPECTUS SUMMARY			1
RISK FACTORS			6
USE OF PROCEEDS			18
MARKET FOR COMMON EQUITY			18
DIVIDEND POLICY			18
SELLING STOCKHOLDER			19
PLAN OF DISTRIBUTION			22
DESCRIPTION OF SECURITIES			24
INTERESTS OF NAMED EXPERTS AND COUNSEL			26
DESCRIPTION OF BUSINESS			27
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			55
DIRECTORS AND EXECUTIVE OFFICERS			69
EXECUTIVE AND DIRECTOR COMPENSATION			73
EQUITY COMPENSATION PLAN			77
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			78
RELATED PERSON TRANSACTIONS			79
WHERE YOU CAN FIND MORE INFORMATION			82
FINANCIAL STATEMENTS			F-1
ANNEX A : GLOSSARY OF CERTAIN MINING TERMS			A-1
EX-4.4
EX-5.1
EX-23.1
EX-23.2
EX-23.3

     You may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized anyone to provide you with different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the common stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any common stock in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made in connection with this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus or that the information contained by reference to this prospectus is correct as of any time after its date. In this prospectus, references to “Mexoro,” “the Company,” “we,” “us,” and “our,” refer to Mexoro Minerals Ltd.

 i 

FORWARD-LOOKING STATEMENTS

     This prospectus and the exhibits referenced herein contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could,” “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

	•		the timing and outcome of our feasibility study on our Cieneguita Project;
	•		the costs and results of our initial production activities on our Cieneguita Project;
	•		the timing and possible outcome of the sale of our Guazapares Project;
	•		the future financial and operating performances of our projects;
	•		the estimation of mineral resources and the realization of mineral reserves, if any, on our existing and any future projects;
	•		the timing of exploration, development, and production activities and estimated future production, if any;
	•		estimates related to costs of production, capital, operating and exploration expenditures;
	•		requirements for additional capital and our ability to raise additional capital on a timely basis and on acceptable terms;
	•		government regulation of mining operations, environmental risks, reclamation and rehabilitation expenses;
	•		title disputes or claims against our existing and any future projects; and
	•		the future price of gold, silver, or other minerals.

     This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors”, “Description of the Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this prospectus. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

 ii 

(1)		The number of shares of our common stock outstanding is based on the number of shares of our common stock outstanding as of the date of this prospectus, including the shares held by the selling stockholders. This number does not include:

RISK FACTORS

     You should carefully consider the risks described below as well as other information provided to you in this document, including information in the section of this document entitled “Forward Looking Statements.” The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also impair our business, financial condition or results of operations. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Business and Industry

We have a limited operating history; therefore, it is difficult to evaluate our financial performance and prospects.

     We have only completed the initial stages of exploration on our mineral concessions and have no way to evaluate the likelihood that we will be able to operate and develop a successful business. We are considered to be a development stage corporation because we are currently engaged in the search for and extraction of mineral deposits. We will be in the development stage until we exploit commercially viable mineral deposits on our properties. Our limited operating history makes it difficult to evaluate our financial performance and prospects. We have earned minimal revenues from our mineral extraction activities to date, and we have not emerged from being a development stage to a production stage corporation. Because of our limited financial history, we believe that period-to-period comparisons of our results of operations will not be meaningful in the short term and should not be relied upon as indicators of future performance.

Because of our recurring operating losses, stockholder’s deficit, working capital deficit and negative cash flows, our auditor has raised substantial doubt about our ability to continue our business.

     We have received a report from our independent auditors on our financial statements for the fiscal years ended February 28, 2009 and February 29, 2008, in which our auditors have included explanatory paragraphs indicating that our recurring operating losses, working capital deficiency, and cumulative losses during our development stage cause substantial doubt about our ability to continue as a going concern. By issuing this opinion, our auditors have indicated that they are uncertain as to whether we have the capability to continue our operations.

     On September 21, 2009, we entered into private placement subscription agreements, as thereafter amended, with certain U.S. accredited investors and certain non-U.S. investors for the private placement of 12,500,000 unregistered shares of the common stock with 100% warrant coverage at a purchase price of $0.20 per unit. The warrants have an exercise price of $0.30 per share, a two-year term and will not be exercisable until twelve months after their date of issuance. As of the filing of this registration statement, the Company has completed the sale of all of the unregistered shares, and the Company had received aggregate gross proceeds, prior to any expenses, from the Private Placement of $2,500,000.

     On July 8, 2009, we entered into an Agreement for the Assignment of Mining Agreements with Paramount Gold and Silver Corp., a Delaware corporation (“Paramount”), and its subsidiary, Paramount Gold de Mexico S.A. de C.V., a Mexican corporation (“Paramount Gold de Mexico”). Pursuant to the terms of the agreement, we agreed to sell our Guazapares Project to Paramount Gold de Mexico. The closing of the sale is subject to the satisfaction of various conditions precedent prior to closing, and the purchase price will be paid in two stages. The first payment of $3.7 million was deposited into an escrow account in conjunction with the execution of the agreement, and will be released to us at the closing. An additional payment of $1.6 million will be due and payable to Mexoro if, within thirty six (36) months following the execution of the agreement, either: (i) Paramount Gold de Mexico is sold by Paramount, either through a stock sale or a sale of substantially all of its assets; or (ii) the Guazapares project is put into commercial production.

     Notwithstanding the Private Placement, our future is dependent upon our ability to obtain additional financing and upon future acquisition, exploration and development of profitable operations from our mineral properties. We plan to continue to seek additional financing in private and/or public equity offerings to secure funding for our operations. Assuming we receive the $3.7 million of proceeds from the sale of the Guazapares property, we believe we can fund our ongoing obligations for the next twelve months.

We have a history of incurring net losses. We expect our net losses to continue as a result of planned increases in operating expenses, and therefore, may never achieve profitability.

     We have a history of operating losses and have incurred significant net losses in each fiscal quarter since our inception. Prior to completion of our development stage, we anticipate that we will incur increased operating expenses without realizing significant revenues. For the year ended February 28, 2009, we did not generate revenues and incurred a net loss of $8,036,208 and for the six month period ending on August 31, 2009, we generated $392,084 in revenues and incurred a net loss of $1,982,869. We expect to continue to incur net losses and negative cash flows for the foreseeable future. Our ability to generate and sustain significant revenues or to achieve profitability will depend upon numerous factors outside of our control, including the precious metals market and the economy. We have no history upon which to base any assumption as to the likelihood that we will prove successful, and we may not be able to generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business, financial condition or results of operations could be materially adversely affected and the business will most likely fail.

If we do not obtain financing when needed, our business will fail.

     As of November 30, 2009, we had cash on hand in the amount of approximately $299,861, including the proceeds received to date as a result of the Private Placement. In order for us to perform any further exploration or extensive testing, we will need to obtain additional financing. We will require additional financing if the costs of the exploration of our mineral concessions are greater than anticipated. We also will need supplementary financing to sustain our business operations if we are not successful in earning revenues once exploration is complete. If our exploration and development programs are successful in discovering and extracting ore of commercial tonnage and grade, we will require a significant amount of additional funds in order to place our mineral concessions into commercial production. We currently do not have any arrangements for additional financing, and we may not be able to obtain financing when required. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustment to reflect the possible future effect on the recoverability and classification of the assets or the amounts and classification of liabilities that may result should we cease to continue as a going concern. If we are unable to obtain additional financing when sought, we will be required to curtail our business plan. Any additional equity financing may involve substantial dilution to our then existing shareholders. There is a significant risk to investors who purchase shares of our common stock because there is a risk that we may not be able to generate and/or raise enough resources to remain operational for an indefinite period of time.

If we are required for any reason to repay our outstanding promissory notes, we would be required to deplete our working capital, if available, or raise additional funds.

     As of November 30, 2009, we have promissory notes outstanding in the amount of $775,299, including outstanding principal and interest. We do not have a sinking fund available to repay this debt. These promissory notes are in default and could require the immediate repayment of the promissory notes. If we are required to repay the promissory notes, we would be required to use our limited working capital and would also be required to raise additional funds to fully repay the promissory notes. If we were unable to repay the promissory notes when required, the noteholders could commence legal action against us. Any such action would require us to curtail or cease operations.

Our success is dependent on retaining key personnel and on hiring and retaining additional personnel.

     Our ability to continue to explore and develop our mineral concessions is, in large part, dependent upon our ability to attract and maintain qualified key personnel. There is competition for such personnel, and there can be no assurance that we will be able to attract and retain them. Our development now and in the future will depend on the efforts of key management figures, such as George Young, our president; Salil Dhaumya, our chief financial officer; and Manuel Flores, our operations manager. The loss of any of these key people could have a material adverse effect on our business, financial condition or results of operations. We do not currently maintain key-man life insurance on any of our key employees.

     We may not be able to find qualified geologists and mining engineers on a timely basis or at all to further expand our business plan. Furthermore, if we are able to find qualified employees, the cost to hire them may be too great as there may be other opportunities elsewhere at a higher rate than we are able to pay.

As we undertake exploration and development of our mineral claims, we will be subject to compliance with government regulations that may increase the anticipated cost of our exploration program.

     There are several governmental regulations that materially restrict mineral exploration or exploitation. We expect to be subject to Mexican federal, state and local laws and regulations regarding environmental matters, the abstraction of water, and the discharge of mining wastes and materials and other similar laws and regulations. Amendments to current laws, regulations and permits governing operations and activities of exploration and development companies, or more stringent implementation thereof, could have a material adverse impact on us and our operating, increase our expenditures and costs and require abandonment or delays in developing new mining properties. Environmental laws and regulations change frequently, and the implementation of new, or the modification of existing, laws or regulations could harm our business, financial condition or results of operations. We cannot predict how agencies or courts in Mexico will interpret existing laws and regulations or the effect that these adoptions and interpretations may have on our business, financial condition or results of operations. We may be required to make significant expenditures to comply with governmental laws and regulations.

     Any significant mining operations that we undertake in the future will have some environmental impact, including land and habitat impact, arising from the use of land for mining and related activities, and certain impact on water resources near the project sites, resulting from water use, rock disposal and drainage run-off. No assurances can be given that such environmental issues will not have a material adverse effect on our business, financial condition or results of operations in the future. While we believe we do not currently have any material environmental obligations, exploration and development activities may give rise in the future to significant liabilities on our part to the government and third parties and may require us to incur substantial costs of remediation.

     Additionally, we do not maintain insurance against environmental risks. As a result, any claims against us may result in liabilities we will not be able to afford, resulting in the failure of our business. Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in exploration and development operations may be required to compensate those suffering loss or damage by reason of the exploration and development activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws.

Because our directors and officers may serve as directors or officers of other companies, they may have a conflict of interest in making decisions for our business.

     Our directors and officers may serve as directors or officers of other companies or have significant shareholdings in other resource companies and, to the extent that such other companies may participate in ventures in which we may participate, our directors or officers may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that such a conflict of interest arises at a meeting of our directors, we expect that the director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. Our directors are required to act honestly, in good faith and in our best interests. In determining whether or not we will participate in a particular program and the interest therein to be acquired by us, we expect that the directors and officers will be guided by their fiduciary duties and take into account such matters as they deem relevant, including considering the degree of risk to which we may be exposed and our financial position at that time.

Because our officers and directors may allocate their time to other business interests or may be employed by other companies, they may not be able or willing to devote a sufficient amount of time to our business operations, which may adversely affect our business, financial condition or results of operations and cause our business to fail.

     It is possible that the demands on our officers and directors, from their existing employment and from other obligations could increase with the result that they would no longer be able to devote sufficient time to the management of our operations and business. While George Young, our president, is a full time employee, Salil Dhaumya, our chief financial officer currently devotes 70% of his time to the Company. This conflict of interest could adversely affect our business, financial condition or results of operations and cause our business to fail.

We are controlled by our directors and officers, and, as such, you may have no effective voice in our management.

     Our current directors and officers beneficially own approximately 21.63% of our issued and outstanding shares of common stock. Accordingly, for the foreseeable future, we expect that our directors and officers will exercise control over all matters requiring shareholder approval, including the possible election of additional directors and approval of significant corporate transactions. If you purchase shares of our common stock, you may have no effective voice in our management.

U.S. investors may experience difficulties in attempting to enforce judgments based upon U.S. federal securities laws against us and our non-U.S. resident directors.

     All of our operations are conducted through a subsidiary corporation organized and located outside the United States, all of our assets are located outside of the U.S. and certain of our directors and officers are resident outside of the U.S. As a result, it may be difficult or impossible for U.S. investors to enforce judgments of U.S. courts for civil liabilities against us or against any of our individual directors or officers. In addition, U.S. investors should not assume that courts in the countries in which our subsidiary is incorporated or where the assets of our subsidiary are located (i) would enforce judgments of U.S. courts obtained in actions against us or our subsidiary based upon the civil liability provisions of applicable U.S. federal and state securities laws or (ii) would enforce, in original actions, liabilities against us or our subsidiary based upon these laws.

We do not carry title insurance and do not plan to secure any in the future. We are therefore, vulnerable to loss of title.

     We do not maintain insurance against title. Title on mineral properties and mining rights involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history characteristic of many mining properties. We cannot give any assurance that title to our properties and claims will not be challenged or impugned and cannot be certain that we will have or will acquire valid title to these mining properties and claims. We cannot assume that counterparties to our title transfer agreements will meet their contractual obligations and transfer title on a timely basis. Furthermore, there is a risk that the Mexican government may in the future grant additional titles in excess of our expectations to currently illegal miners or that disputes may arise as to existing title ownership or planned acquisitions. Furthermore, although we believe that mechanisms exist to integrate the titles of mineral properties currently not owned by us, there is a risk that this process could be time consuming and costly. The possibility also exists that title to existing properties or future prospective properties may be lost due to an omission in the claim of title. As a result, any claims against us may result in liabilities we may not be able to afford resulting in the failure of our business.

In the event that we are unable to successfully compete within the mineral exploration and development business, we may not be able to achieve profitable operations.

     The mineral exploration and development business is highly competitive. This industry has a multitude of competitors and many competitors dominate this industry. Many of our competitors have greater financial resources than us. As a result, we may experience difficulty competing with other businesses when conducting mineral exploration and development activities or in the retention of qualified personnel. No assurances can be given that we will be able to compete effectively.

While we believe we have adequate internal control over financial reporting, we will be required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002, and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on the price of our shares of common stock.

     Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, beginning with our annual report on Form 10-K for the fiscal year ended February 28, 2011, we will be required to furnish a report by management on our internal controls over financial reporting. Such report will contain, among other matters, an assessment of the effectiveness of our internal control over financial reporting, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by our management. For our annual report on Form 10-K for the fiscal year ended February 28, 2011, such report must also contain a statement that our auditors have issued an attestation report on our management’s assessment of such internal controls. Public Company Accounting Oversight Board Auditing Standard No. 5 provides the professional standards and related performance guidance for auditors to attest to, and report on, our management’s assessment of the effectiveness of internal control over financial reporting under Section 404.

     Failure to comply with the new rules may make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage and/or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors, or as executive officers.

There are no known reserves on the Cieneguita concessions and we have made a production decision at our Cieneguita property without a feasibility study.

     We intend to put the Cieneguita Property into production without completing a feasibility study. A feasibility study would determine if the property has ore reserves and where such reserves are located; the information for such study would come from a completed drill program. We have not completed a drill program to determine the exact location of ore reserves, if any. There is a high degree of risk involved in making a production decision without indicated or measured mineral resources, without a basis for economic analysis, and without an indication of favorable metallurgy by appropriate test work. There are no known reserves on the Cieneguita concessions. The expenditures we may make in the exploration of the mineral concessions on the Cieneguita property may not result in the discovery and development of commercial quantities of ore.

Because of the speculative nature of exploration and development of mineral concessions and the unique difficulties and uncertainties inherent in the mineral exploration and development business, there is substantial risk that no commercially exploitable minerals will be found and developed and our business will fail.

     Exploration for and development of minerals is a speculative venture involving substantial risk. Any figures presented in this prospectus relating to gold deposits adjacent to our properties do not indicate that we will be successful in searching for and extracting gold deposits on our properties. New mineral exploration and development companies encounter difficulties, and there is a high rate of failure of such enterprises. The expenditures we may make in the exploration of the mineral concessions may not result in the discovery and development of commercial quantities of ore. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration and development of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration and development and additional costs and expenses that may exceed current estimates. In addition, problems such as unusual or unexpected mineral formations and other geological conditions often result in unsuccessful exploration and development efforts. In such a case, we would be unable to complete our business plan. The search for and development of valuable minerals also involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins, the use of explosives, waste disposal, worker safety 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.

The figures for our reserves and resources are estimates based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated.

     Unless otherwise indicated, mineralization figures presented in this prospectus and in our filings with securities regulatory authorities, press releases and other public statements that may be made from time to time are based upon estimates made by independent geologists and our internal geologists. When making determinations about whether to advance any of our projects to development, we must rely upon such estimated calculations as to the mineral reserves and grades of mineralization on our properties. Until ore is actually mined and processed, mineral reserves and grades of mineralization must be considered as estimates only. These estimates are imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. We cannot assure you that:

•

these estimates will be accurate;

•

reserve, resource or other mineralization estimates will be accurate; or

•

this mineralization can be mined or processed profitably.

     Any material changes in mineral reserve estimates and grades of mineralization will affect the economic viability of placing a property into production and a property’s return on capital. In addition, the grade of ore ultimately mined, if any, may differ from that indicated by our technical reports and drill results. There can be no assurance that minerals recovered in small scale tests will be duplicated in large-scale tests under on-site conditions or in production scale.

     The resource estimates contained in this prospectus have been determined and valued based on assumed future prices, cut-off grades and operating costs that may prove to be inaccurate. Extended declines in market prices for gold and silver may render portions of our mineralization, reserve (if any) and resource estimates uneconomic and result in reduced reported mineralization or adversely affect the commercial viability of our properties. Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have a material adverse effect on our results of operations or financial condition.

The amount of our working capital could be adversely affected in the event claims are made against us alleging that certain shares we previously issued pursuant to Form S-8 registration statements constituted an illegal public offering because the company was a “shell company” at the time and, as a result, was not eligible to use Form S-8 for registration of shares under the Securities Act of 1933.

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

Due to numerous factors beyond our control which could affect the marketability of gold and silver, including their respective market price, we may have difficulty selling any gold or silver if commercially viable deposits are found to exist.

     The availability of markets and the volatility of market prices are beyond our control and represent a significant risk. Even if commercially viable deposits of gold or silver are found to exist on our property interests, a ready market may not exist for the sale of the reserves. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. These factors could inhibit our ability to sell the gold or silver in the event that commercially viable deposits are found to exist.

Our due diligence activities with respect to our property interests cannot assure that these properties will ultimately prove to be commercially viable.

     Our due diligence activities have been limited, and to a great extent, we have relied upon information provided to us by third-party advisors. Accordingly, no assurances can be given that the properties or mining rights we possess will contain adequate amounts of gold, silver and base metals for commercialization. Further, even if we recover gold, silver and base metals from such mining properties, we cannot guarantee that we will make a profit. If we cannot acquire or locate commercially exploitable precious metal deposits, or if it is not economical to recover the precious metal deposits, our business and operations will be materially adversely affected. At present, none of our properties have proven or probable reserves and the proposed programs are an exploratory search for proven or probable reserves. The mining areas presently being assessed by us may not contain economically recoverable volumes of minerals or metals. We have relied and may continue to rely, upon consultants and others for operating expertise.

Non-payment of our obligations under the agreement with Corporativo Minero could result in Corporativo Minero retaining ownership of the Cieneguita concessions.

     MRT entered into an agreement with Corporativo Minero on January 12, 2004 by which it acquired the right to explore and exploit the Cieneguita Property and purchase it for $2,000,000. This agreement gave MRT the exclusive right and option, but not the obligation, to purchase, during the term of the mining concessions of the property, an undivided 100% title to the mining concessions and the exclusive right to carry out mining activities on any portion of the mining concessions. Under our agreements with MRT, MRT has assigned this agreement and all of its rights and obligations to us.

     If the Cieneguita Property is put into production, of which there is no assurance, then our contract calls for any remaining payments to be paid from the sale of gold, up to the total of $2,000,000. The payments, if the property should go into production, would be as follows: the remainder of the $2,000,000 payment would be paid out of production from the Cieneguita Property at a rate of $20 dollars per ounce of gold sold. However, in the event that the price of gold exceeds $400, then we would be required to pay an additional $0.10 per each ounce for every dollar the spot price of gold trades over $400. Once $2,000,000 is paid, there is no further obligation to Corporativo Minero. Non-payment of any portion of the $2,000,000 total payment will constitute a default. In such case, Corporativo Minero would retain ownership of the concessions, but we will not incur any additional default penalty.

We may be required to pay up to a 7% Net Smelter Royalty fee on any production from many of our concessions. If so, our cost of operations will increase, which will decrease any potential profits we might have.

     We entered into an agreement with Corporativo Minero in regard to the mineral concessions on the Cieneguita Property. Corporativo Minero has the obligation to pay, from the funds they receive from us, any royalties that may be outstanding on the properties from prior periods. Corporativo Minero has informed us that various former owners of the property owned royalties of up to a 7% Net Smelter Return. They have also informed us that the corporations holding those royalties have been dissolved and that there is no further legal requirement to make these royalty payments. We can make no assurance that we will not ultimately be responsible to pay all or some of the 7% Net Smelter Return to these former royalty holders if the property was ever put into production and Corporativo Minero did not make the payments to the royalty holders. If we have to make these royalty payments, any profits from production would be reduced.

If we are unable to obtain all of our required governmental permits, our operations could be negatively impacted.

     Our future operations, including exploration and development activities, required permits from various governmental authorities. Such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that we will be able to acquire all required licenses or permits or to maintain continued operations at economically justifiable costs.

Our financial position and results are subject to fluctuations in foreign currency values.

     Any mining operations we undertake outside of the United States will be subject to currency fluctuations. Fluctuations in the exchange rate between the U.S. dollar and any foreign currency may adversely impact our operations. We do not anticipate that we will enter into any type of hedging transactions to offset this risk. In addition, with respect to commercial operations in Mexico or other countries, it is possible that material transactions incurred in local currency, such as engagement of local contractors for major projects, will be settled at a U.S. dollar value that is different from the U.S. dollar value of the transaction at the time it was incurred. This could have the effect of undermining profits from operations in that country.

Our property interests in Mexico are subject to risks from instability in that country.

     We have property interests in Mexico which may be affected by risks associated with political or economic instability in that country. The risks with respect to Mexico or other developing countries include, but are not limited to: military repression, extreme fluctuations in currency exchange rates, criminal activity, lack of personal safety or ability to safeguard property, labor instability or militancy, mineral title irregularities and high rates of inflation.

     In addition, changes in mining or investment policies or shifts in political attitude in Mexico may adversely affect our business. We may be affected in varying degrees by government regulation with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. The effect of these factors cannot be accurately predicted but may adversely impact our proposed operations in any foreign jurisdiction.

We are in competition with companies that are larger, more established and better capitalized than we are.

     Many of our potential competitors have:

•

greater financial and technical resources;

•

longer operating histories and greater experience in mining;

•

greater awareness of the political, economic and governmental risks in operating in Mexico.

We rely on independent analysis to analyze our drilling results and planned exploration activities.

     We rely on independent geologists to analyze our drilling results and to prepare resource reports on several of our mining concessions. While these geologists rely on international standards established by various professional associations, there can be no assurance that their estimates or results will be accurate. Analyzing drilling results and estimating reserves or targeted drilling sites is not a certainty. Miscalculations and unanticipated drilling results may cause the geologists to alter their estimates. If this should happen, we would have devoted resources to areas where resources could have been better allocated.

Risks Relating to Our Common Stock

There are a large number of shares underlying our warrants that may be available for future sale and the sale of these shares may depress the market price of our common stock.

     As of the date of this prospectus, we had 54,340,493 shares of common stock issued and outstanding and warrants that may be convertible into 27,087,233 shares of common stock. Each warrant may be exercised to purchase one share of common stock. The sale of these shares may adversely affect the market price of our common stock.

There is a limited trading market for our common stock and if an active market for our common stock does not develop, our investors may not be unable to sell their shares.

     Our common stock is presently quoted on the National Association of Securities Dealers Inc.’s Over the Counter Bulletin Board (the “OTC Bulletin Board”) and the Frankfurt Stock Exchange. Quotations and trading volume of our common stock on the OTC Bulletin Board has been sporadic. There is currently very little active trading in the market for our common stock and an active public market may not develop or be sustained in the future. Also, we cannot provide our investors with any assurance that our common stock will continue to be traded on the OTC Bulletin Board or the Frankfurt Stock Exchange. If our common stock is not quoted on the OTC Bulletin Board or Frankfurt Stock Exchange or if an active public market for our common stock does not develop, then investors may not be able to resell the shares of our common stock that they have purchased and may lose all of their investment.

Shares of our common stock are subject to the “penny stock” rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

     Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges or quoted on the over-the-counter bulletin board administered by FINRA). 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 that 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, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” 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. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares.

     The trading market for our common stock is currently subject to rules adopted by the Securities and Exchange Commission which regulates broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00, except for securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to make a special written determination that the penny stock is a suitable investment for the purchaser and to receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock and making it more difficult for holders of our stock to sell their shares, as long as the shares are subject to the penny stock rules.

Because our common stock is quoted and traded on the OTC Bulletin Board and the Frankfurt Stock Exchange, short selling could increase the volatility of our stock price.

     Short selling occurs when a person sells shares of stock which the person does not yet own and promises to buy stock in the future to cover the sale. The general objective of the person selling the shares short is to make a profit by buying the shares later, at a lower price, to cover the sale. Significant amounts of short selling, or the perception that a significant amount of short sales could occur, could depress the market price of our common stock. In contrast, purchases to cover a short position may have the effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on over-the-counter bulletin board or any other available markets or exchanges. Such short selling if it were to occur could impact the value of our stock in an extreme and volatile manner to the detriment of our shareholders.

Because we do not expect to pay dividends for the foreseeable future, investors seeking cash dividends should not purchase shares of our common stock.

     We have never declared or paid any cash dividends on shares of our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any 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 but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. Accordingly, investors must rely on sales of their own common stock after price appreciation, which may never occur, as the only way to realize their investment. Investors seeking cash dividends should not purchase our common stock.

Because our stock price can be volatile, investors may not be able to recover any of their investment.

     Stock prices in general, and stock prices of mineral exploration companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance or any specifics of the company. Factors that may influence the market price of our common stock include:

	(i)		actual or anticipated changes or milestones in our operations;
	(ii)		our ability or inability to acquire mining properties or interests in such properties in Mexico;
	(iii)		our ability or inability to generate revenues;
	(iv)		increased competition within Mexico and elsewhere;
	(v)		government regulations, including mineral exploration regulations that affect our operations;
	(vi)		predictions and trends in the gold mining exploration industry;
	(vii)		volatility of the gold and silver market prices;
	(viii)		sales of common stock by “insiders”; and
	(ix)		announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors.

     Our stock price may also be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuation, as well as general economic, political and market conditions, such as, but not limited to, armed hostilities or acts of terrorism, recessions, acts of God, interest rates or international currency fluctuations, may adversely affect the market price of our common stock.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

     If our stockholders sell substantial amounts of our common stock in the public market, including shares being offered for sale pursuant to this prospectus or upon the expiration of any statutory holding period, under Rule 144, or upon expiration of lock-up periods applicable to outstanding shares, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. Recent revisions to Rule 144 may result in shares of our common stock that we may issue in the future becoming eligible for resale into the public market without registration in as little as six months after their issuance.

USE OF PROCEEDS

     All shares of our common stock offered by this prospectus are being registered for the account of the selling stockholder. We will not receive any of the proceeds from the sale of these shares.

MARKET FOR COMMON EQUITY

     Our common stock is approved for quotation on the OTC Bulletin Board under the trading symbol “MXOM.OB” and on the Frankfurt Stock Exchange under the symbol “OYA1”. The OTC Bulletin Board is a regulated quotation service that displays real-time quotes, last-sale prices and volume information in over-the-counter equity securities. The OTC Bulletin Board securities are traded by a community of market makers that enter quotes and trade reports. This market is extremely limited and any prices quoted may not be a reliable indication of the value of our common stock.

     On December 23, 2009 the last reported sales price of our common stock as reported by the OTC Bulletin Board was $0.44 per share. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not reflect actual transactions. The high and low sales prices of our common stock, as reported by OTC Bulletin Board for each quarter during fiscal years 2010, 2009 and 2008, are reported below:

		High				Low
Fiscal Year Ending February 28, 2010
First Quarter		$	0.40				0.26
Second Quarter			0.40			$	0.25

		High				Low
Fiscal Year Ending February 28, 2009
First Quarter		$	0.76			$	0.33
Second Quarter		$	0.60				0.31
Third Quarter		$	0.50				0.12
Fourth Quarter		$	0.20				0.11

		High				Low
Fiscal Year Ending February 29, 2008
First Quarter		$	1.50			$	1.00
Second Quarter		$	1.50			$	0.72
Third Quarter		$	1.85			$	0.96
Fourth Quarter		$	1.08			$	0.73

     As of November 30, 2009, there were approximately 239 stockholders of record of the Company’s common stock. We believe that the number of beneficial owners is greater than the number of record holders because a large portion of our common stock is held of record through brokerage firms in “street name.”

DIVIDEND POLICY

     There have been no cash dividends declared or paid on the shares of common stock, and management does not anticipate payment of dividends in the foreseeable future.

SELLING STOCKHOLDER

     The table below sets forth information concerning the resale of the shares of common stock by the selling stockholders. We will not receive any proceeds from the resale of the common stock by the selling stockholders.

     The selling stockholders may sell some, all or none of their shares. We do not know how long the selling stockholders will hold the shares offered hereunder before selling them. We currently have no agreements, arrangements or understandings with the selling stockholders regarding the sale of any of the shares by them other than the registration rights agreement referenced above. Under the private placement subscription agreements, a registration statement must be declared effective by the SEC by the seven month anniversary of the second closing under the Private Placement. If the registration statement is not declared effective on a timely basis, we must issue to the selling stockholders at no cost additional shares of our common stock equal to ten percent of the subscriber’s investment on the seven month anniversary of the second closing, and on every thirty days thereafter until the registration statement is declared effective.

     The shares offered by this prospectus may be offered from time to time by the selling stockholders. As used in this prospectus, the term “selling stockholder” includes each of the selling stockholders listed below, and any donee, pledgee, transferee or other successor in interest selling shares received after the date of this prospectus from a selling stockholder as a gift, pledge, or other non-sale related transfer. The selling stockholders may have sold or transferred, in transactions exempt from the registration requirements of the Securities Act, some or all of their shares since the date on which the information in the table is presented. Information about the selling stockholders may change over time.

     For the purposes of the following table, the number of shares of our common stock beneficially owned has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such information is not necessarily indicative of beneficial ownership for any other purpose. Under Rule 13d-3, beneficial ownership includes any shares as to which a selling stockholder has sole or shared voting power or investment power and also any shares which that selling stockholder has the right to acquire within 60 days of the date of this prospectus through the exercise of any stock option, restricted stock unit, warrant or other rights.

     The following table also sets forth the name of each person who is offering the resale of shares of common stock by this prospectus, the number of shares of common stock beneficially owned by each person, the number of shares of common stock that may be sold in this offering and the number of shares of common stock each person will own after the offering, assuming they sell all of the shares offered.

		Shares Beneficially
		Owned Before This
		Offering (1)				Shares to be				Ownership After This Offering (3)
Name		Shares				Offered (2)				Shares				Percentage
Andean Invest Limited (4) (10)			1,620,000				1,550,000				70,000					*
Christopher Anderson			125,000				125,000				0					*
Wan Hung Jung			100,000				100,000				0					*
Alexander Becker			500,000				500,000				0					*
Joachim Brunner			50,000				50,000				0					*
Randy Buchamer			110,000				100,000				10,000					*
Cat Brokerage AG (5)			100,000				100,000				0					*
Derrick Petroleum Ltd. (6)			100,000				100,000				0					*
Dynastar Investment Limited (7)			250,000				250,000				0					*
Andrea Egger			100,000				100,000				0					*
Brian Fagan			50,000				50,000				0					*
Daniel Freidi			50,000				50,000				0					*
Scott Foster Gibson (8)			100,000				100,000				0					*
Shaun Gibson (8)			100,000				100,000				0					*
Robin Goncalves (9)			100,000				100,000				0					*
Victor A. Goncalves (9)			100,000				100,000				0					*
Richard Brent Granholm			100,000				100,000				0					*
Roger Hardaker			100,000				100,000				0					*
Barry Maedel (10)			100,000				100,000				0					*
Robin Maedel (10)			50,000				50,000				0					*
Sarah Maedel (10)			50,000				50,000				0					*
John Martin			100,000				100,000				0					*
Mike McKnight			911,000				250,000				661,000				1.22	%
Medig Placements (11)			150,000				150,000				0					*
Navaheel Consortium LLC (12)			2,500,000				2,500,000				0					*
William Brent Peters			130,000				100,000				30,000					*
Providence Securities Ltd. (13)			125,000				125,000				0					*
Sabrina Natalie Reid			10,000				10,000				0					*
Christian Russenberger			300,000				300,000				0					*
Catherine Severs			20,000				20,000				0					*
Robert Simpson			50,000				50,000				0					*
Stanley W. J. Steed			208,000				100,000				108,000					*
Carolyn Townsend			200,000				200,000				0					*
VP Bank (Schweiz) AG (14)			1,700,000				1,700,000				0					*
Woodstone Capital Ltd. (15)			200,000				200,000
Conrad Weiss			1,060,000				1,000,000				60,000					*
Yingchun Ye			50,000				50,000				0					*
George Young (16)			95,000				95,000				0					*

PLAN OF DISTRIBUTION

     The selling stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of the 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 stockholders 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;
	•		settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
	•		broker-dealers may agree with the selling stockholder to sell a specified number of such shares at a stipulated price per share;
	•		a combination of any such methods of sale;
	•		through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or
	•		any other method permitted pursuant to applicable law.

     The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

     Broker dealers engaged by the selling stockholders may arrange for other brokers dealers to participate in sales. Broker dealers may receive commissions or discounts from the selling stockholders (or, if any broker dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with NASD Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with NASD IM-2440.

     In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out its short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

     The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. 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. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed customary fees and commissions.

     The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

     The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

     The Company will pay certain fees and expenses incurred by the Company incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the common stock by the selling stockholders.

     Because selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. Each selling stockholder has advised us that they have not entered into any written or oral agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the resale shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the selling stockholders.

     The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

     Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. We have advised each selling stockholder that it may not use shares registered under this registration statement to cover short sales of common stock made prior to the date on which this registration statement shall have been declared effective by the Securities and Exchange Commission. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.

DESCRIPTION OF SECURITIES

Common Stock

     We are authorized to issue up to 200,000,000 shares of common stock, no par value. As of the date of this prospectus, there were 54,340,493 shares of common stock outstanding. Each holder of our common stock is entitled to one vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors. Stockholders do not have any right to cumulate votes in the election of directors.

     Subject to preferences that may be granted to the holders of preferred stock, each holder of our common stock is entitled to share ratably in distributions to stockholders and to receive ratably such dividends as may be declared by our board of directors out of funds legally available therefor. In the event of our liquidation, dissolution or winding up, the holders of our common stock will be entitled to receive, after payment of all of our debts and liabilities and of all sums to which holders of any preferred stock may be entitled, the distribution of any of our remaining assets. Holders of our common stock have no conversion, exchange, sinking fund, redemption or appraisal rights (other than such as may be determined by our board of directors in its sole discretion) and have no preemptive rights to subscribe for any of our securities.

     All of the outstanding shares of our common stock are, and the shares of common stock issued upon the conversion of any securities convertible into our common stock will be, fully paid and non-assessable. The shares of common stock issued upon the exercise of the warrants, when issued and paid for, will also be, fully paid and non-assessable.

Securities Exchange Listing

     Our common stock is listed on the Over-the-Counter Bulletin Board under the symbol “MXOM and on the Frankfurt Stock Exchange under the symbol “OYA1”.

Transfer Agent

     We have appointed Corporate Stock Transfer, 3200 Cherry Creek Drive South, Ste. 430, Denver, CO 80209 with a telephone number of (303) 282-4800, as transfer agent for our shares of common stock.

Preferred Stock

     We are authorized to issue 20,000,000 shares of preferred stock, no par value. Our board of directors is authorized to classify or reclassify any unissued portion of our authorized shares of preferred stock to provide for the issuance of shares of other classes or series, including preferred stock in one or more series. We may issue preferred stock from time to time in one or more class or series, with the exact terms of each class or series established by our board of directors. Our board of directors may issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of our common stock without seeking stockholder approval. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of the common stock and may adversely affect the voting power of holders of common stock and reduce the likelihood that common stockholders will receive dividend payments and payments upon liquidation. The issuance of preferred stock may delay, deter or prevent a change in control.

Warrants

     As of the date of this prospectus, we had outstanding warrants to purchase 27,087,233 shares of our common stock at exercise prices ranging from $0.30 to $2.00. The 12,500,000 warrants issued in the Private Placement have an exercise price of $0.30 per share, a two-year term and will not be exercisable until twelve months after their date of issuance.

Registration Rights

     The holders of 12,500,000 shares of our common stock which were issued pursuant to the Private Placement and the holders of 12,500,000 shares of our common stock issuable upon exercise of warrants which were issued pursuant to the Private Placement are entitled to rights with respect to the registration of their shares under the Securities Act. These registration rights are contained in our private placement subscription agreements, as amended. Under the private placement subscription agreements, a registration statement must be declared effective by the SEC by June 5, 2010, the seven month anniversary of the second closing. If the registration statement is not declared effective on a timely basis, the Company must issue to the subscribers at no cost additional shares of our common stock equal to ten percent of the subscriber’s investment on the seven month anniversary of the second closing, and on every thirty days thereafter until the registration statement is declared effective.

INTERESTS OF NAMED EXPERTS AND COUNSEL

Legal Matters

     The validity of the issuance of securities offered by this prospectus will be passed upon for us by DLA Piper LLP (US), San Diego, California.

Experts

     Our consolidated financial statements as of February 29, 2009 and February 28, 2008, and the related consolidated statements of operations, stockholders’ equity (deficit) and comprehensive loss and cash flows for the years then ended have been incorporated by reference herein and in the registration statement of which this prospectus forms a part in reliance upon the report of Meyler & Company LLC, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

DESCRIPTION OF BUSINESS

Background

     We are a development stage company focused on mineral exploration and development activities in Mexico. Through our wholly owned Mexican subsidiary, Sunburst Mining de Mexico, S.A. de C.V., or Sunburst de Mexico, we are currently engaged in the exploration and development of three gold and silver projects, each made up of several mining concessions, located in the Sierra Madre region of the State of Chihuahua, Mexico. The term “mining concession” refers to an area of land for which the owner of the concession has the right to explore for and develop mineral deposits. The rights to and ownership of the minerals in the concessions were granted, in our case, originally by the Mexican Government to the former concession owner(s) and then to us from those owners. In Canada and the United States, the term is commonly referred to as “mineral rights” or “mining claims.” These projects are referred to as the Cieneguita Project, the Encino Gordo Project and the Sahuayacan Project. We previously had a fourth project, known as the Guazapares Project, which we agreed to sell pursuant to the terms of a definitive agreement, dated July 10, 2009, to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount Gold and Silver Corp., for a total consideration of up to $5.3 million. As of the date of this report, we have engaged in the search for and extraction of mineral deposits but have not engaged in the exploitation of mineral deposits.

Market Overview

     The Sierra Madre gold belt in the Chihuahua region of Mexico is currently attracting significant mineral exploration, development and mining activities. Propelled by advances in mining technology and a resurgence of the global gold markets, a number of intermediate and major companies have returned to or commenced mining activities in this region.

Our Strategy

     We are currently focused on mineral exploration and development activities in the Sierra Madre region of Chihuahua, Mexico. We have mineral concession rights at three projects in this region: Cieneguita, Encino Gordo and Sahuayacan, all of which are located near pre-existing operations of large mining corporations and have available mining and transportation infrastructures. Our strategy is to advance each of these projects to the drilling stage as aggressively as prudent financing will allow to determine the presence of gold, silver or other precious mineral reserves. If we are successful in doing so, we believe we can attract the attention of the existing mining companies already operating in the area or new mining companies to either enter into development agreements with us or to acquire the projects from us outright.

     Our goal is to establish a pipeline of two new drill-stage or near-to-drill stage projects per year. Our proposed exploration and development program consists of four main components:

	•		Create a pipeline of quality properties providing a steady stream of new prospects and/or projects to explore, contract-out and/or enter into development agreements with another mining company.
	•		Identify and acquire at low cost (whenever possible) early to mid-stage properties in selected locations along the main gold-silver belts in Mexico.
	•		Focus on small to medium-sized gold and/or silver deposits (minimum deposits containing 500,000 ounces gold-equivalent).
	•		Target initially the Sierra Madre Occidental and Central Mexico regions, and potentially extend further south into Mexico and other countries if conditions and the project’s potential warrant such development.

     The proposed exploration and development program is being undertaken by our exploration and development team using in-house knowledge along with the support and guidance of consultants with expertise in the region. We believe our existing management team and key advisors have the necessary exploration and mining expertise to locate, evaluate and bring mining properties to production.

Cieneguita Project

Summary

     The Cieneguita Project is located in the Baja Tarahumara in Cieneguita Lluvia De Oro, an area of canyons in the Municipality of Urique, in southwest Chihuahua, Mexico. The Cieneguita Project is currently owned by Corporativo Minero. The concessions on the Cieneguita Project cover a total area of 822 hectares (approximately 2,031 acres). A new gold discovery was made by Sunburst de Mexico in early 2008. The initial metallurgical testing on the mineralized material at the Cieneguita Project show a recovery, on average, of 90% to 92% of the gold and 85% to 90% of the silver using a flotation process. There are no known reserves on the Cieneguita Project.

     MRT assigned to Sunburst de Mexico, with the permission of Corporativo Minero, all of its rights and obligations to the Cieneguita Project, including the exclusive option to acquire the Cieneguita property for $2 million. We are required to make yearly payments on May 6th of each year in the amount of $120,000 until the outstanding balance owed on the $2 million is paid in full to keep the option in good

standing. To date, we have paid $830,000 to Corporativo Minero. Once the full $2 million payment has been made, we will own the Cieneguita property. In the alternative, if the Cieneguita property is put into production, of which there is no guarantee, we must pay Corporativo Minero $20 per ounce of gold produced, if any, from the Cieneguita Project up to the total $2 million due. In the event that the price of gold is above $400 per ounce, the payments payable from production will be increased by $0.10 for each dollar increment the spot price of gold trades over $400 per ounce. The total payment of $2 million does not change with fluctuations in the price of gold. Non-payment of any portion of the $2 million total payment will constitute a default, in which case we will lose our rights to the Cineguita property and the associated concessions, but we will not incur any additional default penalty. Once we pay $2 million there is no further obligation to Corporativo Minero. Corporativo Minero has the obligation to pay, from the funds they receive from us, any royalties that may be outstanding on the properties from prior periods. Corporativo Minero has informed us that there were royalties of up to 7% NSR owned by various former owners of the Cieneguita property. They have informed us that the corporations holding those royalties have been dissolved and that there is no further legal requirement to make these royalty payments. We can make no assurance that these former owners will not contend that we are ultimately responsible to pay all or some of the 7% NSR to these former royalty holders if the Project was ever put into production and Corporativo Minero did not make the payments to the royalty holders. MRT no longer has any ownership interest or payment obligations with respect to the Cieneguita property. There is no affiliation between Corporativo Minero and Mexoro or its officers, directors or affiliates.

     In February 2009, we entered into a development agreement with MRT, which we amended in December 2009. Pursuant to the terms of the development agreement, as amended, MRT has agreed to invest up to $8 million to put the first phase of the Cieneguita Project into production and to complete a feasibility study. The first phase of production is limited to the mining of the mineralized material that is available from the surface to a depth of 15 meters (“First Phase Production”). In exchange, we assigned MRT an interest to 74% of the net cash flows from First Phase Production and a 54% ownership interest in the Cieneguita Project.

     To fund our continued operations, we issued $1.5 million of convertible debentures in March 2009, of which an aggregate of $880,000 was issued to Mario Ayub, a director of Mexoro, and to his affiliated entity, MRT. Pursuant to the terms of the convertible debentures, the holders irrevocably converted the debentures into a 10% ownership interest in the Cieneguita Project and a 10% interest in the net cash flows from First Phase Production. In December 2009, Mario Ayub and MRT agreed to resell an aggregate 4% ownership interest in the Cieneguita Project back to us, along with 4% of the net cash flows from First Phase Production, in return for $550,000. In a private transaction not involving the Company, the other holders contributed their remaining 6% ownership interest in the Cieneguita Project to a newly formed entity, Marje Minerals SA.

     As a result of our amended development agreement and our agreements with the debenture holders, the ownership interest in the Cieneguita Project and the net cash flows from the First Phase Production are held by the Company, MRT and Marje Minerals as follows:

						Net Cash Flow Interest				Net Cash Flow Interest
						From First Phase				Following First Phase
Holder		Ownership Percentage				Production				Production
MRT			54	%			74	%			54	%
Marje Minerals			6	%			6	%			6	%
Mexoro			40	%			20	%			40	%

     Any additional costs for the First Phase Production and the feasibility study for the Cieneguita Project, after MRT invests $8 million, will be shared by the Company, MRT and Marje Minerals on a pro-rata basis based on their respective ownership percentages in the Cieneguita Project.

     The major terms of the development agreement, as amended, with MRT and Marje Minerals are as follows:

	•		MRT purchased $1 million of secured convertible debentures at 8% interest (payable in stock or cash). The proceeds from this investment were used for continued exploration and development of the Cieneguita Project and general working capital. On November 5, 2009, MRT exercised its conversion rights on the debenture and MRT was issued 3,333,333 common shares and a warrant to purchase 1,666,667 shares of common stock at an exercise price of $0.50 per share.
	•		MRT agreed to provide the necessary working capital to begin and maintain mining operations, estimated to be $3 million, to put the first phase of the Cieneguita Project into production. In exchange for these funds, we assigned MRT an interest to 74% of the net cash flow from First Phase Production. The agreement limits the mining during First Phase Production to the mineralized material that is available from the surface to a depth of 15 meters.
	•		MRT committed to spend up to $4 million to take the Cieneguita Project through the feasibility stage. In doing so, we assigned MRT a 54% interest in our rights to the Cieneguita Project. After the expenditure of the $4 million, all costs will be shared on a pro rata ownership basis (i.e. 54% to MRT, 40% to the Company and 6% to Marje Minerals). If any party cannot pay its portion of the costs after the $4 million has been spent, then their ownership position in the Cieneguita Project will be reduced by 1% for every $100,000 invested by the other owners. Our ownership interest in the Cienguita Project, however, cannot be reduced below 25%. In addition, we have the right to cover Marje Minerals’ pro rata portion of costs if they cannot pay their portion of the costs. In return, we will receive 1% of Marje Minerals’ ownership position in the Cieneguita Project for every $100,000 we invest on their behalf.
	•		The MRT agreement was contingent on our repaying a debenture to Paramount Gold and Silver Corp. In March 2009, we repaid $1 million, or approximately two thirds of the debt, and Paramount released a security interest it had on the Cieneguita Project. In October 2009, we repaid the remaining amount of the debt, and Paramount released its security interests on the Sahuayacan, Guazapares and Encino Gordo properties.

Property Location

     Cieneguita is located in the Baja Tarahumara in Cieneguita Lluvia De Oro, an area of canyons in the Municipality of Urique, in southwest Chihuahua State, Mexico. The property is located within one half mile of the small village of Cieneguita Lluvia de Oro. Access to the property is by an all weather dirt road. There is available electrical power for the property provided by the Mexican public utility. We also have four diesel generators at the production site as back up and supplemental electrical power.

Claim Status and Licensing

     The concessions of this project cover a total area of 822 Hectares (approximately 2,031 acres).

     In April 2006, we applied to the Mexican government for a change of use of land permit for 30 hectares of the La Maravilla concession. The La Maravilla concession is the concession that contains the mineralized rock that is the interest of our exploration. We are currently extracting mineralized material from the La Maravilla concession as well as our ongoing exploration program. The purpose of the change of use permit was to allow us, if necessary, to extract the rock from this concession for the purposes of

processing the rock to extract the precious metals that it may contain. Because the permitting process takes a period of time, we made the application in advance of any known reserves being discovered on the property. We cannot assure you that we will have sufficient ore reserves, if any, to continue extraction. This permit required negotiations with the government and municipality concerning such things as the removal of timber, building and maintaining roads, and reclamation. The government agency responsible for this permit met with representatives of the Company and toured our property in May 2006 as part of the permit process. The application fee for this permit was approximately $800, but there was an additional negotiated fee charged for the permit in the approximate amount of $67,000 (720,000 Mexican Pesos). In January 2007, the government agency issued the change of use permit, and we subsequently made the required payment of approximately $67,000 (720,000 Mexican Pesos).

     In July 2006, we submitted an environmental impact study and a risk analysis study to the Mexican government for a permit to build a heap leach mining operation on the Aurifero concession of our Cieneguita property. The purpose of this permit is to allow us to construct an ore processing facility through heap leach mining methods. We do not have any ore reserves on our Cieneguita property and applied for permits in advance of any conclusive results. In January 2007, the necessary permits to allow for the building and operation of a heap leach operation were granted to the Company. Currently, the permit has been updated to allow us to build a crushing and floatation mining operation. The permit is valid until 2016 as long as we continue to provide yearly reports to SEMERNANT (the governing Mexican environmental agency responsible for permitting).

     The Cieneguita Property is currently owned by Corporativo Minero, and our wholly-owned subsidiary, Sunburst de Mexico, has the option of purchasing the concessions under the payment plan discussed below. The following table is a summary of the concessions on the Cieneguita Property:

Lot Name		Title Number				Area (Ha)				Term of Validity				Royalties and Payments
Aurifero			196356				492.00			7/16/1993 to 7/15/2043					(1	)
Aurifero Norte			196153				60.00			7/16/1993 to 7/15/2043					(1	)
La Maravilla			190479				48.00			4/29/1991 to 4/24/2041					(1	)
Aquilon Uno			208339				222.00			9/23/1998 to 9/22/2048					(1	)

History

     The Cieneguita mines were in limited production in the 1990s. Over a four-year period, the Cieneguita Gold Mine was operated by Mineral Glamis La Cieneguita S. De R.L. De C.V. (“Glamis”), a subsidiary of the Canadian company Glamis Gold Ltd. (“Glamis Gold”). According to Glamis’ records, Glamis mined and processed ore on the property in 1995. Glamis stopped production in the mid-1990s. At that time, Corporativo Minero, the operator of the mine for Glamis, acquired the property. MRT entered into an agreement with Corporativo Minero on January 12, 2004 pursuant to which MRT acquired all of the mineral rights from Corporativo Minero to explore and exploit the Cieneguita concessions and to purchase them for $2,000,000. Under our agreements with MRT, MRT has assigned this agreement to us. As of the date of this prospectus, $830,000 of the $2,000,000 has been paid to Corporativo Minero. We are obligated to make yearly payments on these concessions to Corporativo Minero until the $2,000,000 has been paid. As production on this property is starting in December 2009, we currently believe that the remaining payments will be made from net cash flow to Corportivo Minero as per the royalty formula defined in our agreements with them, however there is no assurance that production will commence or yield positive net cash flow.

Geology

     Our exploration work shows that the geology in the mineralization in the zone of sulfides includes pyrite, galena, sphalerite, tennantite and tetrahedrite, pirargirite and traces of chalcopyrite and pyrhotite. These minerals mainly occur as uniform disseminations and as micro-veins. The previous exploration drilling by Cominco and Glamis Gold delineated a zone of altered volcanics, represented by silica, sericite and argillite that are believed to be 1,000 meters long (strike length) and up to 200 meters wide. Within this zone, the oxidation has been shallow and reaches a maximum depth of 20 meters.

     Glamis Gold performed a test pilot heap leach operation on the property in the mid 1990’s. The exploration on the property is still in its early stages and significant work needs to be completed before any type of ore reserve calculations, if any, could be made. Our operations are currently exploratory. We have done some initial sampling on the La Maravilla concessions as described below.

     A total of 51 diamond drill holes (6,700 meters) drilled by Cominco (now Teck Cominco Ltd.) defined an auriferous zone approximately 1,000 meters long by 200 wide. On such a zone, two mineralized structures were drilled during their exploration program in 1981 and 1982. Later, two drilling programs were performed by Glamis: 135 holes were drilled during 1994 and 62 holes were drilled during 1997. Both programs confirmed the delineation of the two mineralized ore bodies. We have had access to these reports from Cominco and Glamis. The initial exploration conducted by our company will focus on further delineating the oxide mixed mineralized structures and the sulphide structures.

     We used the original data from Cominco and Glamis to delineate the mineralized zone and to plan our present trenching and sampling programs. In April 2006, we completed a sampling of the property that included more than 500 meters of deep trenches from which we took comprehensive channel sampling. The trenches comprised 8 trenches approximately 200 meters long and 2 to 10 meters deep spaced equally along the 1,000 meters strike length of the property. From the walls of these

trenches, we took approximately 550 rock samples. One half of these samples have been sent to ALS Chemex’s laboratory in Chihuahua for assaying. The sampling protocol followed the best mining practices. The purpose of the sampling was to further define the ore grade and potential of the property. We received the results of the sampling program and it suggests gold grades in the mineralized material that our head geologist, in conjunction with management, believes warrants putting the property into production even though we have not conducted any feasibility study on this property. At that time, management believed that the cost of a feasibility study is too expensive to undertake relative to the estimated size of the mineralization. At that time we also determined, based on the results of the sampling, that continued exploration on the property was warranted to further delineate the mineralization to be used in the heap leach open pit mining operation. We conducted further exploration on the property and began the process of putting the mine into production. We have not determined if there are any known reserves on this property to date.

     The other half of the sample was used to complete column tests to determine the leachability of the precious metals from the rock. Subseqeunt drilling, indicated that the mineralized material was much larger than originally anticipated and that the heap leaching process was not the best method for extracting the precious metals from the bulk of the mineralized material. We are currently stripping off the top oxide layer and stock piling that material for future processing (if ever) by the heap leach method. Instead, we have built a floatation circuit to process the mineralized sulphide material.

     The Cieneguita property is without known reserves.

Infrastructure

     The town site near the former mine has the following services: electrical power from the public utility, cellular phone, radio communication (CB), a health center and a school. Because the property was previously in production, it has existing infrastructure such as power, water, railroad transportation (within 20 kilometers), and all weather road access year round. We have an existing source of well water for our milling process we are initiating. This water is pumped to the mill site from a source approximately 2.4 miles away. There are all weather roads to the area that was previously mined allowing easy access for production and exploration. Also, the haul roads to the milling area have been significantly upgraded and are in good condition. It is our intention to use the existing heap leach pad area to build the mill site and tailings site to reduce our costs to re-open the mine. Because some of the infrastructure exists, such as roads and pads, we believe that the investment needed to put this mine into production would be smaller than the investment which would be needed for a mine that was never in production. Because other operating mines exist in the area, infrastructure, such as roads, already exists. The roads are public, and we do not have to pay a fee to use them. There is no other equipment or facilities available to us on the property. Further study needs to be done on the feasibility of using the existing infrastructure of the old mine.

Current Exploration

     Cieneguita is a new gold-silver and polymetallic discovery made in 2008 by our exploration team. The main activities in the Cieneguita project are set forth below:

	•		100 diamond drillholes completed for a total of 20,215 meters of drilling.
	•		Broad mineralized intercepts including 111.5 meters with 1.24 g/t Au, 99.6 g/t Ag, 0.45% Pb and 0.73% Zn (C-21) and 94 meters with 1.21 g/t Au, 79.8 g/t Ag, 0.78% Pb and 1.2% Zn (CI-30).
	•		Mineralization at Cieneguita has been traced over 900 meters along strike and still remains open to the southwest and to depth.
	•		Exploration ongoing; infill drilling program has been designed to expand the size of the mineralized material.

     We have conducted a series of exploration programs at Cieneguita since March 2007. Our exploration work to date includes 100 diamond core drillholes totaling 20,215 meters of drilling. The drilling exploration program commenced in December 2007 with one drill rig and a second rig was added in July 2008. Due to our financial constraints, one of the drill rigs was removed in October 2008 and drilling continued with one rig until December 19, 2008.

     Mexoro has received analysis results for only 58 holes (CI-01 to CI-54, CI-67, CI-69, CI-71 and CI-74). A complete listing of the drill logs is published at our website, www.mexoro.com. The assay results from the remaining 42 holes are still pending. No assurance may be given, though, that these new holes will have the same values as previously analyzed holes. Two different styles of mineralization have been identified: precious (gold-silver) and base (lead-zinc-silver) metal mineralization, with higher gold-silver grades starting on surface and lead-zinc-silver mineralization intercepted at depth and to the west of the Cieneguita deposit. We interpret the Cieneguita deposit as a diatreme breccia body where disseminated oxide and sulphide mineralization is mainly hosted by quartz-sericite altered diatreme breccias and lapilli tuffs.

     The mineralized body is shaped like a funnel which has been flattened laterally, measuring over 900 meters by 300 meters as defined by the drill results. An independent third party has completed a cross section-based geological model for Mexoro and has calculated inferred mineralized material of 15.249 million tons with 2.62 g/t Au equivalent based on assays that were composited using the sum of the dollar values for Au, Ag, Pb and Zn in each drill interval. Three-year trailing average prices used were: gold = $727.22 per ounce, silver = $13.66 per ounce, lead = $1.00 per pound, zinc = $1.36 per pound. A cutoff of $30 was applied and weighted averages calculated for each above-cutoff interval. These intervals were projected between drill holes and between sections to produce resource blocks, which were then compiled using weighted averages to produce a total tonnage and grade with a dollar value per ton.

     Mineralization intersected in CI-34 (46 meters with 4.68 grams per ton gold, 87.67 grams per ton silver, 0.24% lead and 0.22% zinc) and CI-29 (51 meters with 0.5 grams per ton gold, 55.03 grams per ton silver, 0.34% lead and 0.46% zinc), both collared in the western portion of Cieneguita suggests that mineralization still remains open to west, southwest and to depth in the western part of the Cieneguita deposit. No assurance may be given, though, that additional mineralized material will be found in these areas.

This figure is showing the geological units and distribution of the 100 drillholes.

     Because of the favorable mapping, sampling and drilling results in Cieneguita, we initiated a brownfield exploration program aimed at locating additional mineralization within our properties. The exploration process around the main mineralization zone at Cieneguita has identified two new areas of mineralization 500 meters to south of the current known mineralization. These two areas, known as Piedras Blancas and Piedra Amarilla, are exhibiting the same size, characteristics, and intensity of alteration-mineralization on surface as encountered at Cieneguita. No assurance, though, may be given that any positive exploration results will come from these similarities.

     This brownfield exploration program for the Piedras Blancas area has now been completed. As a result of this mapping and sampling program, we have designed a drilling exploration program consisting initially of 3,000 meters of drilling to test three different targets. The drilling program is anticipated to start in the first quarter of 2010.

     A figure exhibiting main geological and mineralization features on the Piedras Blancas and Piedra Amarilla areas is shown below.

     There are no known reserves on the Cieneguita property.

Planned Exploration

     The recent exploration activities in Cieneguita have shown that additional exploration is warranted. We have made the following determinations to date:

•

Infill drilling displays continuity of mineralization and overall grades.

•

Mineralization extends 900 meters along strike, is up to 300 meters wide and is open to the Southwest and open to depth.

Figure is showing main mineralization zones on the Cieneguita project. Areas in red are exhibiting mineralization areas where grades is >1.5 g/t Au

     The known mineralized material on the Cieneguita property combined with the assay results from drilling and the new areas found 500 meters away from Cieneguita are providing the possibility to increase the size of the mineralized material. No assurance may be given, though, that the size of the mineralized zone will increase. Considering the latest results and findings the proposed work program for Cieneguita will include:

	•		Completing the infill drilling program by doing an additional 10,000 meters of drilling to expand inferred resources;
	•		Continue conducting metallurgical tests;
	•		Complete feasibility study and;
	•		Commencing exploration drilling program at the Piedras Blancas project.

     The proposed exploration budget for the Cieneguita project for the remainder of 2009 will be conducted by our joint venture partner, Minera Rio Tinto. They will be responsible for spending $5,000,000 over the next 36 months to take the property through to feasibility. The feasibility work will also include exploration on the two new areas to the south of the Cieneguita property.

     There are no known reserves on the Cieneguita property.

Sahuayacan Project

Summary

     Our Sahuayacan Project is located near the Chihuahua-Sonora State border approximately 275 kilometers east-southeast of the city of Chihuahua and 50 kilometers south-southwest of the town of Mycoba in the state of Chihuahua, Mexico. There are 14 concessions on the Sahuayacan Project, which total 649 hectares (approximately 1,604 acres). Old mining records indicate that the concessions on the Sahuayacan Project cover an epithermal quartz vein system. We expect to continue our mapping and sampling program and to commence drilling on the Sahuayacan Project in 2010. There are no known reserves on the Sahuayacan Project.

     In May 2006, we entered into an exploration contract Jose Maria Rascon, Sabino Amador Rascon Polanco and Rene Muro Lugo, the holders of Segundo Santo Nino concession on the Sahuayacan Project. These individuals each hold a 33.3% interest in the Segundo Santo Nino concession. We have agreed to pay these individuals a total of $255,000 for this concession, $105,000 of which has been paid to date. To date, we are current in our payments. There is no affiliation between the holders of Segundo Santo Nino concession and us or our officers, directors or affiliates.

     In June 2006, we entered a 5 year exploration agreement with Minera Emilio, the owner of 13 concessions on the Sahuayacan Project. Under the exploration agreement, Minera Emilio granted us the exclusive right to conduct exploration on the Sahuayacan Project. We agreed to pay Minera Emilio $282,000 in the following manner: (i) $30,000 at the execution of the Agreement (which has been paid); (ii) $2,500 per month for 12 months beginning in August 2006 (which have been paid); (iii) $3,500 per month for 12 months beginning in August 2007 (which have been paid); and (iv) $5,000 monthly for 36 months beginning in August 2008 (these payments are in good standing). Non-payment of any of the payments owed would constitute a default under the exploration agreement. To date, we have not been given notice of any default. In the event we were given notice and default was not cured in a timely manner, we would lose the right to explore on the Sahuayacan Project and would lose the option to purchase the mineral concessions. There is no affiliation between Minera Emilio and us or our officers, directors or affiliates.

     We also have an option to purchase the 13 concessions on the Sahuayacan Project held by Minera Emilio. The option expires on June 22, 2011. We must provide Minera Emilio 30 days written notice to exercise the option. The purchase price is $300,000 or the equivalent of $500,000 in restricted shares of common stock of Mexoro based upon the market value of such shares during the 30 days preceding our notice of intent to exercise the option. We must complete a feasibility survey within three years from the date we exercise the option. In addition, we must pay Minera Emilio royalties on any mineral ore that is sold from the concession. The royalty rate varies based on the price of gold on the London Metal Exchange. If the price of gold is less than or equal to $600 per ounce, the royalty due is 3% of net revenue. If the price exceeds $600 per ounce, the royalty due is 4% of net revenue. Net revenue is calculated by subtracting smelting expenses, added value taxes and all other taxes on production sales from revenue.

     In January 2008, we entered into an exploration and option agreement with Maria Luisa Wong Madrigal to purchase the “La Maravilla” concessions, consisting of two separate concessions, on the Sahuayacan Project. We must pay Maria Luisa Wong Madrigal $600,000 in the following manner: (i) $33,000 in January 2008 (paid); (ii) $33,000 in July 2008 (paid); (iii) $34,000 in January 25, 2009 (paid in September 2009); and (iv) the remaining $500,000 is payable upon the earlier of our exercise of the option to purchase the concession or on January 25, 2011. There is no affiliation between Maria Luisa Wong Madrigal and us or our officers, directors or affiliates.

Location

     The Sahauyacan property is located near the Chihuahua-Sonora state border approximately 275 kilometers east-southeast of the city of Chihuahua and 50 kilometers south-southwest of the town of Mycoba in the state of Chihuahua, Mexico. The property is accessible by all weather dirt road running through the center of the property.

Claim Status

     The Company has recently optioned 14 mineral concessions totaling 649 hectares, which old mining records indicate cover an epithermal quartz vein system. The concessions are owned by Minera Emilio and optioned by Sunburst de Mexico. The following table is a summary of the concessions on the Sahauyacan Property:

														Royalties and
Concession Name		Title #				Surface (Ha)				Term of Validity				Payments
Veronica Segunda			171083				8.0000				9/8/1982 – 8/8/2032				(1	)
Esperanza Segunda			171000				4.0000				5/8/1982 – 4/8/2032				(1	)
Maria Luisa			170673				9.6000				11/6/1982 – 10/6/2032				(1	)
Carmela			176856				4.0000				12/17/1985 – 12/16/2035				(1	)
Silvia			217673				212.7549				6/8/2002 – 5/8/2052				(1	)
La Chonca			218432				228.1808				5/11/2002 – 4/11/2052				(1	)
La Cumbre			216091				67.0314				9/4/2002 – 8/4/2052				(1	)
La Cumbre II			220349				5.2498				7/18/2003 – 7/17/2053				(1	)
La Cumbre II Fracc. A			220350				1.1925				7/18/2003 – 7/17/2053				(1	)
Santo Nino 3			220150				19.9500				6/17/2003 – 6/16/2053				(1	)
Fortunato 2			214274				7.1686				6/9/2001 – 5/9/2051				(1	)
Segunda Santa Theresa			219233				12.0000				2/20/2003 – 2/19/2053				(1	)
Santo Nino			191810				4.0000				12/9/1991 – 12/18/2041				(1	)
Segundo Santo Nino			191086				65.8730				4/29/1991 – 4/28/2041				(2	)
La Estrella			169365				9.0000				12/11/1981 – 11/11/2031				(3	)
Sultana Menor			169362				4.0000				12/11/1981 – 11/11/2031				(3	)

History

     The main vein in the area, the “Santo Nino Vein”, was the focus of a small scale underground gold mining operation in the late 1800’s and early 1900’s, with at least 3 main underground mine access drifts supplying feed to a centrally located mill, which is still present. The mine was closed at the time of the Mexican revolution. The Santo Nino vein system has not been evaluated using modern techniques or explored by drilling.

Geology

     Our initial exploration work on the property, as part of due diligence before acquiring the property, indicates that the geology exposed in the project area reveals a complex geologic history. We believe that the basement in the area is composed of dark gray-green massive, fractured and folded phyllitic metasedimentary and metavolcanic rocks in contact with Lower to Middle Cretaceous banded shale and fine grained arenite. Our exploration suggests that these phyllitic rocks are in contact with a Tertiary volcaniclastic sequence that occurs as intercalated fine to coarse grained tuffaceous sediments, volcanic breccias and flows which range in composition from andesite to rhyolite. Our exploration suggests that the entire sequence has been locally crosscut by at least 2 intrusive units of diorite to rhyolite composition possibly represent synvolcanic hypabyssal intrusions. The Tertiary volcanic sequence is the main host to the gold/silver quartz vein system present in the project area.

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

     We believe that all evidence suggests that the mineralization is controlled by a circular feature that may represent a caldera margin running from the Santa Teresa target up to north to the La Cumbre target. This evidence opens up the potential to further extend the mineralization found at Santa Teresa and La Cumbre targets further north though no assurance may given that any mineralization will be found.

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

Mineral Deposit

     A surface geological mapping and sampling crew evaluated the property from September 2006 through December 2006. Mapping on the property was completed at a scale of 1:5,000 with individual veins being mapped at a scale of 1:1,000. To date, a total of 309 samples have been taken from taken the property, including 101 rock chip and channel samples, 41 stream sediment samples and 158 soil samples. The underground workings are being evaluated for safe entry and will be mapped and sampled if deemed safe. The Sahauyacan Property is without known reserves. Our proposed exploration program is exploratory in nature.

     Santo Nino Vein:

     Our initial mapping indicates the Santo Nino vein consists of milky quartz and crackle breccia accompanied by iron oxides and veinletts of crustiform, banded and chalcedonic quartz which is suggestive of an epithermal origin. Our sampling of the rocks shows that mineralization presently recognized within the vein consists of chalcopyrite, malachite, azurite, pyrite and abundant iron oxides with manganese oxides. The predominant alteration adjacent to the vein is moderate to strong argillic alteration with local quartz and sericite which forms a halo to the vein which is locally up to 50 meters wide. Further from the vein this moderate to strong argillic zone is transitional to a zone of weak argillic alteration accompanied by supergene oxidation, and propylitic alteration. This weak argillic alteration zone is more than 200 meters wide. Our initial exploration has shown that the vein is locally offset along at least one left lateral fault (in the Mina Cobriza area).

     Our initial exploration shows that a second quartz vein parallel to and west of the Santo Nino vein has been mapped (“Santo Nino Segundo” vein). The northern termination of the Santo Nino vein appears to represent a fault offset (left lateral fault) possibly offsetting the mineralizing system 200 meters to the west. Here the wide weak argillic alteration zone (hangingwall to the vein system) is present and continues to the north-northwest for more than 500 meters to Sahuayacancito.

     El Cumbre:

     The El Cumbre area covers the local hill top located approximately 500 meters east of the Santo Nino vein. Teck-Cominco, a large Canadian mining company, drilled at least 3 holes in this area in the mid 1990s. Drill results have not been obtained from this work.

     Our initial work in the area shows that the stratigraphy in the El Cumbre area consists of Tertiary volcanics composed of porphyritic andesitic flows intercalated with fine to coarse volcaniclastic sediments overlain by rhyolite tuffs and flows. Tectonic breccias and stockwork zones are accompanied by veins and veinletts of chalcedonic quartz with iron oxides (hematite), manganese and very fine pyrite. Four brecciated structures have been identified to date in our preliminary exploration. Alteration consists of pervasive silicification with weak to moderate massive chalcedonic quartz in the matrix of the breccias, accompanied by a weak argillic alteration of the wall rock. Numerous old surface trenches are present in this area and will be the subject of future sampling and mapping.

Infrastructure

     The Sahauyacan Property is accessible year round by all weather road. There is no local electricity or water currently available. We will need to supply our own diesel generated electrical power.

Current Exploration

     Mexoro has completed a diamond drilling program of 13 holes comprising 2,027 meters. Three of the 13 holes were directed to test the Santo Niño vein, two drillholes were collared on the La Cumbre target and two more were drilled on the south of the property to test the Santa Teresa target. Of the 13 drillholes, only three have intersected economically attractive mineralization. The mineralized intercepts are as follows:

				Width of
				Intersection in
Drill Hole Number		Depth in Meters		Meters		Grade
Drillhole SDH-01 collared on the Santo Niño vein		from 65.00 to 72.50 meters from 96.50 to 104.5 meters		7.50 meters 8.0 meters		2.56 g/t Au 2.98 g/t Au
Drillhole SDH-05 collared on La Cumbre target		from 0 to 4.5 meters		4.5 meters		1.77 g/t Au
Drillhole SDH-12 drilled to test the Santa Teresa vein		from 74.50 to 82.00		7.5 meters		56.01 g/t Au and 283.22 g/t Ag

     A second phase drilling program is anticipated to be aimed to define the potential volume and grade of the mineralized system at Sahuayacan, primarily focusing on the Santa Teresa and La Cumbre targets which may represent a mineralization system developed along a caldera margin. Additional targets have been identified along the circular feature that seems to control the emplacement of alteration and mineralization zones on the Sahuayacan project.

     There are no known reserves on the Sahuayacan property.

Planned Exploration

     The next exploration stage will include mapping and sampling along the circular feature trying to define additional mineralization areas and drilling targets. The proposed exploration program will include:

	•		Mapping and sampling at 1:1,000 scale along the La Cumbre-Santa Teresa trend (mapping-sampling process Completed)
	•		Obtaining ASTER image analysis to identify additional alteration-mineralization areas along the semi-circular feature within the entire concession;
	•		Identifying drilling targets on the La Cumbre and Santa Teresa areas; and (Drilling targets selected, as shown in images below)
	•		Commencing a 4,000 to 6,000 meters exploration drilling program aimed to define the potential of the project.

Drilling Target: La Cumbre. The figure is showing completed mapping and selected drilling targets at La Cumbre (blue dots)

Drilling Target: Santa Teresa. The figure is showing completed mapping and selected drilling targets at La Cumbre (blue dots)

     The total exploration budget for Sahuayacan from November 2009 through December 2010 is $1,258,919. The breakdown of the budget is as follows:

Geochemistry		$	140,250
Geophysics		$	0
Safety		$	2,000
Land Costs		$	0
Contractors		$	1,007,800
Travel and Vehicles		$	34,620
Field Support		$	5,700
Communications		$	4,200
Subtotal		$	1,198,970
Contingency(5%)		$	59,949
Total		$	1,258,919

     There are no known reserves on the Sahuayacan properties.

Encino Gordo Project

Summary

     Our Encino Gordo Project is located in the Barranca section of Chihuahua State in Mexico, and according to data publicly published by the Mexican Government, it is at the interphase between the two main volcanic groups that form the bulk of the Sierra Madre Occidental. We own two concessions and have an option to acquire two other concessions from MRT, subject to a 2.5% NSR and making the scheduled project payments. We expect to begin mapping and sampling to indentify target areas and to commence drilling in 2010. In August 2009, we dropped one of our concessions in the Encino Gordo Project, Encino Gordo 2. We determined that the payments due to the concession holder were too expensive and it was not in our best interests to keep the concession. There is no plan, currently, to try and negotiate the payments for this Project. There are no known reserves on the Encino Gordo Project.

Location

     The Encino Gordo project is located in the Barranca section of Chihuahua State in Mexico, and according to data publicly published by the Mexican Government, is at the interphase between the two main volcanic groups that form the bulk of the Sierra Madre Occidental. The Encino Gordo Property is 3.2 miles west of the Guazapares Property. The location is 220 kilometers to the southwest of Chihuahua City. The property is accessible by an all weather dirt road along the southwest side of the property. There is no local electrical power or water available at this time, though major mining infrastructure is located within 3 miles of the concessions.

Claim Status

     Sunburst de Mexico owns two concessions (Title #225277 and #292013) and has the option to acquire 100% of the two other properties listed below, subject to a 2.5% net smelter royalty.

     The concessions not owned by Sunburst de Mexico are owned by MRT. The following table is a summary of the concessions on the Encino Gordo property:

		Title		Area
Lot Name		Number		(Ha)		Term of Validity		Royalties and Payments
Encino Gordo		225277		450		8/12/2005 to 8/11/2055		None (1)
Encino Gordo		292013		382		8/12/2005 to 8/11/2055		None (1)
El Camuchin		220149		100		6/17/2003 to 6/16/2053		Net Smelter Return of 2.5% (2)
La Paloma		220148		100		6/17/2003 to 6/16/2053		Net Smelter Return of 2.5% (2)

History

     The Encino Gordo Property, covering 1,042 hectares (approximately 2,575 acres), is situated near an old mining district with a lengthy production history, according to records in the public domain. Old mining records indicate that mining operations were commenced 3 kilometers east of this site in the 17th century. Most of the production from those mines came from high-grade vein deposits mined by crude underground methods. To the east of Encino Gordo, the main Guazapares breccia veins were discovered in about 1830. The major period of production was from 1870 to 1900 when there were four silver pan amalgamation mills in operation. Although those deposits contain both gold and silver, the early mills could not recover the gold as it is very fine and occurs along cleavage planes in the pyrite. The mills of the time could only process the oxidized portions of the veins, and the unoxidized, sulfide-bearing material was usually left in the mines as pillars. The principal mine owner of the properties east of Encino Gordo died in 1890, after which the mines of Guazapares slowly sank into disrepair and closed by 1900. In 1905, a US company consolidated most of the properties to the east of Encino Gordo and reopened some of the mine workings. That company ran into financial difficulties during 1907 and work halted. Ramon Valenzuela then acquired the properties to the east of Encino Gordo and operated a five stamp mill until 1912. Noranda Exploration, Inc. briefly optioned concessions in the area in the early 1990’s. Kennecott optioned the core concessions east of Encino Gordo in 1993-94 and drilled a few holes in one of the concessions to the east of Encino Gordo. The Encino Gordo property has never been in production. In August 2009, we dropped one of our concessions in the Encino Gordo Project, Encino Gordo 2.

Geological Setting and Deposit Types

     The geology at Encino Gordo project area is dominated by flows and tuff of andesitic to dacitic composition intruded by small plugs of porphyritic intrusions varying in composition from diorite to quartz-diorite. Small and localized areas exhibiting dacite porphyries are also common. The volcanic sequence which may be part of the Lower Volcanic Series (LVS) of the Sierra Madre Occidental Volcanic Complex (SMOVC) host most of the mineralization in the Encino Gordo area and in the whole Moris district host to Palmarejo deposit and the Guazapares gold hydrothermal system. The alteration and mineralization at the Encino Gordo project is mainly characterized by two different styles:

La Junta area — Most of the alteration and mineralization in this area is associated with andesitic rocks intruded by composite stock (diorite and quartz-diorite) and dacite porphyries. The alteration at La Junta is characterized by propylitic alteration (chlorite-calcite-pyrite) exhibiting small and localized areas with incipient K-silicate alteration, where K-feldspar is mainly replacing groundmass in the intrusion phases.

     Mineralization is occurring at La Junta in different styles, including: stockwork, fault-veins, sheeted veins, dissemination and breccias. However, main mineralization consists of an approximately 500 meter wide stockwork fault-vein zone developed in a dilatant jog “flower structure”. In this mineralized area, multiple cross-cutting vein types are present including:

•

Pyrite-only veins

•

Quartz-only veins

•

Quartz + pyrite veins

•

Quartz + chalcopyrite veins

•

Quartz + pyrite + chalcopyrite veins

•

Calcite veins

•

Quartz + galena veins

•

Chlorite + calcite veins

Figure is illustrating coincident Cu and Au geochemical anomalies in La Junta area which are spatially associated to a potassic alteration core resembling the classical geochemical-alteration signature of the porphyry systems.

     Supergene alteration is represented by an argillic alteration pervasive event developed by the oxidation and alteration of the primary sulfide zone observed at La Junta area. Limonites developed within this supergene event are dominated by goethite (± hematite — jarosite).

     The alteration assemblages, the style of mineralization, the content and type of sulfide mineralization suggest that La Junta area might be a mesothermal to near-mesothermal system, resembling a “porphyry-style” alteration-mineralization.

     Potential exists in this area to find a porphyry-style system and a similar gold mineralization, though, no assurance may be given that any mineralization whatsoever will be found. The proposed exploration program for the upcoming year will be focused on trying to asses the potential of the identified targets, including:

•

The porphyry-style mineralization in La Junta area

•

Anomaly N and La Elyka areas

Mineral Deposits

     Blackstone Resources Inc. hired Reliance Geological Services of Vancouver Canada in 1996 to evaluate the results of a geological and geochemical exploration program on the Encino Gordo zone. The subsequent work revealed results that were judged worthy of a second phase of exploration. Our surface sampling has indicated the presence of mineralized structures, including gold and silver anomalies on the property. Several gold-copper anomalous areas were also identified. The property is at the very early stages of exploration, though, and much more work is needed before any decisions can be made as to the viability of the property.

     Structure Empalme

     The Empalme vein outcrops northwest of the Elyca structure, inside the Encino Gordo Property and has been mapped for approximately 150 meters. Workings on the breccia-vein consist of 2 old shafts now filled with water. The host rocks consist of a sequence of volcaniclastic sediments overlain by tuffaceous dacites with moderate silicification and supergene argillic alteration.

     Cienega Vein

     Our exploration shows that the Cienega vein outcrops at one location along a stream bed within the Encino Gordo Property. It consists of brecciated quartz and contains 2-3% disseminated pyrite hosted by brown volcaniclastics.

     Arroyo Los Laureles Vein

     The vein outcrops in the southeast limit of the San Miguel claim in Arryo Los Laurels. The host rocks consist of intensely fractured volcaniclastic arenites, tuffs and dacites.

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

Infrastructure

     The Encino Gordo Property is accessible year round by all weather road. There is no local electricity or water currently available. We will need to supply our own diesel generated electrical power.

Current Exploration

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

     All information and field evidence gathered during the mapping and sampling process suggest the presence of “porphyry” style alteration and mineralization characterized by the presence of concentric alteration patterns (potassic alteration grading outward to quartz-sericite and propylitic alteration), coincident Cu, Au and Mo geochemical anomalies and a multiple-event of veining. No assurance can be given, though, that we will find such a deposit, if at all.

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

     There are no known reserves on the Encino Gordo property.

Planned Exploration Activities

     The total exploration budget for Encino Gordo from November 2009 through December 2010 is $118,545. The exploration expenditures are as follows:

Geochemistry		$	0
Geophysics		$	84,000
Safety		$	0
Land Costs		$	0
Contractors		$	0
Travel and Vehicles		$	17,100
Field Support		$	6,650
Communications		$	3,150
Subtotal		$	112,900
Contingency(5%)		$	5,645
Total		$	118,545

     There are no known reserves on the Encino Gordo properties.

Guazapares Project

     On May 17, 2009 we entered into a letter of agreement and on June 29, 2009 we signed the definitive agreement to sell our Guazapares concessions located in south western Chihuahua, Mexico to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount Gold and Silver Corp., or Paramount, for a total consideration of up to $5.3 million. A definitive agreement was signed on July 10, 2009 and closed on October 10, 2009. Payment of the funds from escrow, though, are subject to the satisfaction of various conditions. The material conditions of the agreement have been met and the payment for the sale of the properties is expected to occur when the agreements governing the concessions have been officially re-registered in Paramount’s name with the Mexican mining authorities. A 5.7% commission was paid on the closing of the sale. Our Guazapares Project comprised of 12 concessions close to Paramount’s San Miguel discovery. The purchase price is to be paid in two stages. The first payment of $3.7 million was deposited into escrow at closing, and will be released from escrow when the transfer of the 12 claims to Paramount is finalized. An additional payment of $1.6 million is due if, within 36 months following execution of the letter of agreement (July 10, 2009), either (i) Paramount Gold de Mexico SA de C.V. is sold by Paramount, either through a stock sale or a sale of substantially all of its assets, or (ii) Paramount’s San Miguel project is put into commercial production. Also, the final repayment of the outstanding debenture in the amount of $221,047.57 with Paramount has been made to Paramount from the funds that were delivered to the escrow account.

Recent Financing Activities

     On September 21, 2009, we entered into private placement subscription agreements, as thereafter amended, with certain U.S. accredited investors and certain non-U.S. investors for the private placement of 12,500,000 unregistered shares of the common stock with 100% warrant coverage at a purchase price of $0.20 per unit. The warrants have an exercise price of $0.30 per share, a two-year term and will not be exercisable until 12 months after their date of issuance. As of the filing of this registration statement, the Company has completed the sale of all of the unregistered shares, and the Company had received aggregate gross proceeds, prior to any expenses, from the Private Placement of $2,500,000.

Principal Products

     Our principal product is the exploration for and development of precious minerals. Because our properties are in the developed stage, there is no guarantee that any ore body will be found or extracted.

     Mario Ayub, one of the Company’s directors, is a past president of the National Miners Association of Mexico and of the Chihuahua Miners Association, and through his network, he has been able to obtain information on potential mining properties. A potential mining property is identified first by a visit to the property by a geologist. If the property has potential based upon the geologist’s findings, another visit is made to gather more information by taking surface samples and mapping the property. Also, geophysical work (in this case mineral exploration techniques using electromagnetic instruments to measure the conductivity of the rocks underground) may be performed before entering into the negotiation process for a particular property.

Legal Proceedings

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

Competition

     We compete with other mining and exploration companies in connection with the acquisition of mining claims and leases on gold and other precious metals prospects and in connection with the recruitment and retention of qualified employees. Many of these companies are much larger than we are, have greater financial resources and have been in the mining business much longer than we have. As such, these competitors may be in a better position through size, finances and experience to acquire suitable exploration properties. We may not be able to compete against these companies in acquiring new properties and/or qualified people to work on any of our properties.

     There is significant competition for the limited number of gold and silver acquisition opportunities available and, as a result, we may be unable to continue to acquire attractive gold and silver mining properties on terms we consider acceptable.

     Given the size of the world market for gold and silver relative to individual producers and consumers of gold and silver, we believe that no single company has sufficient market influence to significantly affect the price or supply of gold and silver in the world market.

Governmental Regulations

     Our business is subject to various levels of government controls and regulations, which are supplemented and revised from time to time. Any mineral exploration activities conducted by the Company require permits from governmental authorities. The various levels of government controls and regulations address, among other things, the environmental impact of mining and mineral processing operations and establish requirements for the decommissioning of mining properties after operations have ceased. With respect to the regulation of mining and processing, legislation and regulations in various jurisdictions establish performance standards, air and water quality emission standards and other design or operational requirements for various components of operations, including health and safety standards. Legislation and regulations also establish requirements for decommissioning, reclamation and rehabilitation of mining properties following the cessation of operations, and may require that some former mining properties be managed for long periods of time. In addition, in certain jurisdictions, we may be subject to foreign investment controls and regulations governing our ability to remit earnings abroad.

     The Company’s operations and properties are subject to a variety of governmental regulations including, among others, regulations promulgated by SEMARNAT, Mexico’s environmental protection agency; the Mexican Mining Law; and the regulations of the Comisión National del Aqua with respect to water rights. Mexican regulators have broad authority to shut down and/or levy fines against facilities that do not comply with regulations or standards. If we put any of our properties into production, operations may also be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, environmental legislation and mine safety.

     The need to comply with applicable laws, regulations and permits will increase the cost of operation and may delay exploration. All permits required for the conduct of mining operations, including the construction of mining facilities, may not be obtainable, which would have an adverse effect on any mining project we might undertake. Additionally, failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing exploration to cease or be curtailed. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

     Amendments to current governmental laws and regulations affecting mining companies, or the more stringent application thereof, could adversely affect the Company’s operations. The extent of any future changes to governmental laws and regulations cannot be predicted or quantified. Generally, new laws and regulations result in increased compliance costs, including costs for obtaining permits, delays or fines resulting from loss of permits or failure to comply with the new requirements.

     To keep our mineral concessions in good standing with the Government of Mexico, we must pay yearly property taxes. These taxes are based on a tariff per hectare and per the number of years (maturity) of each concession. The taxes are paid twice a year. We paid MXN $186,394 (approximately $13,049) in January 2009 and MXN $203,896 (approximately $15,379) in July 2009. We are in compliance with all of our tax payments to the government.

     We believe that we are in compliance with all material current government controls and regulations at each of our properties.

Compliance with Environmental Laws

     Our current exploration activities and any future mining operations (of which we currently have none planned) are subject to extensive laws and regulations governing the protection of the environment, waste disposal, worker safety, mine construction, and protection of endangered and protected species. We have made, and expect to make in the future, significant expenditures to comply with such laws and regulations. Future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have an adverse impact on our financial condition or results of operations. In the event that we make a mineral discovery and decide to proceed to production, the costs and delays associated with compliance with these laws and regulations could stop us from proceeding with a project or the operation or further improvement of a mine or increase the costs of improvement or production.

     In Mexico, we are required to submit, for government approval, a reclamation plan for each of our mining sites that establishes our obligation to reclaim property after minerals have been mined from the site. In some jurisdictions, bonds or other forms of financial assurances are required as security for these reclamation activities. We may incur significant costs in connection with these restoration activities. The unknown nature of possible future additional regulatory requirements and the potential for additional reclamation activities create uncertainties related to future reclamation costs.

Employees

     We currently have 13 persons working for Sunburst de Mexico in Mexico including 3 geologists, 1 field staff and 4 administrative personnel. Except for our general manager, Manuel Flores, and two geologists, all of these persons are provided to Sunburst de Mexico under third party contract, either directly or via a personnel service agency. On September 21, 2009, we hired George Young as our chief operating officer, Salil Dhaumya as our chief financial officer and Manuel Flores as our operations manager. On November 16, 2009, Mr. Young was appointed president upon the resignation of Francisco Quiroz. We do expect to hire 8 additional geologists in addition to drilling contractors to conduct exploration or development over the next 12 months. Other than these employees and our geologists, all of the employees we hire are contracted from third parties specializing in providing employees for Mexican companies. In using third party contractors, we minimize our exposure to Mexican employment law, and all liabilities are undertaken by the third party contractors providing the services. We pay a flat rate to the third parties for their services. In the event that our exploration projects are successful and warrant putting any of our properties into production, all such operations would be contracted out to third parties. Also, we rely on members of our management to handle all matters related to business development and business operations.

DESCRIPTION OF PROPERTY

     We currently maintain an office at C. General Retana #706, Col. San Felipe, Chihuahua, Chihuahua, Mexico, CP 31203. We previously leased this office under the terms of a two-year lease that expired by its terms in September 2008. The Company is still operating under the terms of this lease on a month-to-month basis, with a monthly rent of $900.

     As described above, we have property rights in the Cieneguita, Encino Gordo, and Sahuayacan Projects.

     All of the properties discussed below are located in the State of Chihuahua, Mexico. The following map illustrates the locations of Chihuahua and of the properties:

Location of Cieneguita, Encino Gordo and Sahuayacan Projects in Chihuahua, Mexico

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

     The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes and other financial information included elsewhere in this prospectus. The discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, expectations and intentions. Our actual results may differ significantly from management’s expectations. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Overview

     We are a development stage company and have generated only limited revenues from our Cieneguita project and have not yet generated or realized any revenue from our other two exploration projects. As of August 31, 2009, we had $8,146 in our bank account.

     On September 21, 2009, we entered into private placement subscription agreements, as thereafter amended, with certain U.S. accredited investors and certain non-U.S. investors for the private placement of 12,500,000 unregistered shares of the common stock with 100% warrant coverage at a purchase price of $0.20 per unit. The warrants have an exercise price of $0.30 per share, a two-year term and will not be exercisable until twelve months after their date of issuance. As of the filing of this registration statement, the Company has completed the sale of all of the unregistered shares, and the Company had received aggregate gross proceeds, prior to any expenses, from the Private Placement of $2,500,000.

     In August 2009, we dropped one of our properties in the Encino Gordo concessions, Encino Gordo 2. Management determined that the property payments due to the concession holder were too expensive and we did not make the option payment at this time. There is currently no plan to try and negotiate the payments for this property.

     On May 17, 2009, we entered into a letter of agreement and on June 29, 2009, we signed the definitive agreement to sell our Guazapares project located in south western Chihuahua, Mexico to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount Gold and Silver Corp. (“Paramount”) for a total consideration of up to $5.3 million. The first payment of $3.7 million will be released from escrow when the transfer to paramount is finalized. An additional payment of $1.6 million is due if, by July 10, 2012, either (i) Paramount sells its Mexican subsidiary or (ii) Guazapares is put into production.

     In February 2009, we entered into a development agreement with MRT, which we amended in December 2009. Pursuant to the terms of the development agreement, as amended, MRT has agreed to invest up to $8 million to initiate the first phase of production and to complete a feasibility study. The first phase of production is limited to the mining of the mineralised material that is available from the surface to a depth of 15 meters (“First Phase Production”). In exchange, we assigned MRT an interest to 74% of the net cash flows from First Phase Production and a 54% ownership interest in the Cieneguita Project.

     To fund our continued operations, we issued $1.5 million of convertible debentures in March 2009, of which an aggregate of $880,000 was issued to Mario Ayub, a director of Mexoro, and to his affiliated entity, MRT. Pursuant to the terms of the convertible debentures, the holders irrevocably converted the debentures into a 10% ownership interest in the Cieneguita Project and a 10% interest in the net cash flow from First Phase Production. In December 2009, Mario Ayub and MRT agreed to resell an aggregate 4% ownership interest in the Cieneguita Project back to us, along with 4% of the net cash flow from First Phase Production, in return for $550,000. In a private transaction not involving the Company, the other holders contributed their remaining 6% ownership interest in the Cieneguita Project to a newly formed entity, Marje Minerals SA.

     As a result of our amended development agreement and our agreements with the debenture holders, the ownership interest in the Cieneguita Project and the net cash flows from the First Phase Production are held by the Company, MRT and Marje Minerals as follows:

						Net Cash Flow Interest				Net Cash Flow Interest
						From First Phase				Following First Phase
Holder		Ownership Percentage				Production				Production
MRT			54	%			74	%			54	%
Marje Minerals			6	%			6	%			6	%
Mexoro			40	%			20	%			40	%

      Any additional costs for the First Phase Production and the feasibility study for the Cieneguita Project, after MRT invests $8 million, will be shared by the Company, MRT and Marje Minerals on a pro-rata basis based on their respective ownership percentages in the Cieneguita Project.

     The major terms of the development agreement with MRT and Marje Minerals are as follows:

•

MRT purchased $1 million of secured convertible debentures at 8% interest (payable in stock or cash). The proceeds from this investment were used for continued exploration and development of the Cieneguita Project and general working capital. On November 5, 2009, MRT exercised its conversion rights on the debenture and MRT was issued 3,333,333 common shares and a warrant to purchase 1,666,667 shares of common stock at an exercise price of $0.50 per share.

•

MRT agreed to provide the necessary working capital to begin and maintain mining operations, estimated to be $3 million, to put the first phase of the Cieneguita Project into production. In exchange for these funds, we assigned MRT an interest to 74% of the net cash flow from First Phase Production. The agreement limits the mining during First Phase Production to the mineralized material that is available from the surface to a depth of 15 meters.

•

MRT committed to spend up to $4 million to take the Cieneguita Project through the feasibility stage. In doing so, we assigned MRT a 54% interest in our rights to the Cieneguita Project. After the expenditure of the $4 million, all costs will be shared on a pro rata ownership basis (i.e. 54% to MRT, 40% to the Company and 6% to Marje Minerals). If any party cannot pay its portion of the costs after the $4 million has been spent, then their ownership position in the Cieneguita Project will be reduced by 1% for every $100,000 invested by the other owners. Our ownership interest in the Cienguita Project, however, cannot be reduced below 25%. In addition, we have the right to cover Marje Minerals’ pro rata portion of costs if they cannot pay their portion of the costs. In return, we will receive 1% of Marje Minerals’ ownership position in the Cieneguita Project for every $100,000 we invest on their behalf.

•

The MRT agreement was contingent on our repaying a debenture to Paramount Gold and Silver Corp. In March 2009, we repaid $1 million, or approximately two thirds of the debt, and Paramount released a security interest it had on the Cieneguita Project. In October 2009, we repaid the remaining amount of the debt, and Paramount released its security interests on the Sahuayacan, Guazapares and Encino Gordo properties.

     On May 5, 2008, we signed a letter of intent (the “Paramount LOI”) to enter into a strategic alliance with Paramount to combine mining and exploration expertise, along with efficient use of personnel, drill rigs and current mining concessions to improve efficiencies and potentially reduce costs for both companies. On August 6, 2008, the strategic alliance between Mexoro and Paramount was terminated, including Paramount’s right of first refusal on financings. On October 8, 2009, we paid the remaining outstanding balance of $221,047.37 to under the outstanding debentures. Upon receipt of this payment from the Company, Paramount released its security interests in the Company’s assets, including its security interests in the Company’s Sahuayacan, Guazapares and Encino Gordo properties.

     Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity. While we believe that we have raised sufficient funds in our recent offerings to allow us to continue in business until December 2010, we may not be able to continue in business beyond that date unless we obtain additional capital. If the sale of the Guazapares property is completed, the resulting $3,700,000 payment will also allow us to operate for the next 12 months. No assurance may be given, though, that this sale will close in a timely fashion or at all.

     As of August 31, 2009, the joint venture with MRT had generated net cash flows of approximately $1,568,336 of which $392,084 is attributable to us under the joint venture agreement. We are expecting additional ongoing cash flows from the commencement of operations at the Cieneguita property, starting in February 2010. The amount of net cash flows to be received on Mexoro’s 20% share from operations cannot be determined at this time. In fact, there is significant risk to us for this type of extracting of mineralized material because we have no known reserves on Cieneguita until an independent feasibility study is completed. We can not provide any assurance that the extraction and processing of mineralized material from the Cieneguita property will result in any cash flows for us.

     For the 12-month period from December 2009 through November 2010, we need to raise additional capital to maintain operations. We will need a minimum of $252,000 for property payments and an additional $1,853,000 for general and administrative costs. This does not include any capital needed to pay our accounts payables and to execute our exploration programs as detailed below. As of November 30, 2009, the following table shows our contractual property payments that are due until November 2010:

Name

Date

Payment Type

USD

Sahuayacan Property

December 2009 to November 2010

Property payments

$

65,000

Segundo Santo Nino (Sahuayacan)

May 2010

Property payments

$

120,000

La Estrella y la Sultana Menor

December 2009 and June 2010

Property payments

$

67,000

     Additionally, if our exploration during that time period is successful, we may need to raise additional capital to fund those exploration programs. At this time, we cannot assess with any accuracy our total capital needs to fund an expanded exploration program beyond our basic program. If the payments from the sale of the Guazapares properties to Paramount are not made, we do not have any additional sources of additional capital to fund our operations beyond December 2010. We also believe that, other than the initial bulk sample test done by MRT, we cannot determine if the joint venture with MRT will generate any revenues that would allow us to continue operations. If we are unable to raise additional capital through debt or equity beyond December 2010, it is most likely that we would need to cease operations and forfeit our properties as we would be unable to make the necessary property payments.

Plan of Operation

Summary

     Our business plan is to proceed with the exploration and development of our Mexican mineral properties to determine whether they contain commercially exploitable reserves of gold, silver or other metals. On May 17, 2009, we entered into a letter of agreement and on June 29, 2009, we signed the definitive agreement to sell our Guazapares project located in south western Chihuahua, Mexico to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount for a total consideration of up to $5.3 million USD. A definitive agreement was signed on July 10, 2009 and closed October 10, 2009. The payment of the funds from escrow is subject to the satisfaction of various conditions. The material conditions of the agreement have been met and the payment for the sale of the properties is expected to occur in January 2010 as the agreements governing the concessions have been officially re-registered in the name of Paramount Gold de Mexico, SA de C.V. with the Mexican mining authorities. A 5.7% commission was paid on the closing of the sale. Mexoro’s Guazapares project comprises 12 claims close to Paramount’s San Miguel discovery. The purchase price is to be paid in two stages. The first payment of $3.7 million was deposited into escrow at closing, and will be released from escrow to Mexoro when the transfer of the 12 claims to Paramount is finalized. An additional payment of $1.6 million is due to Mexoro if, within 36 months following execution of the letter of agreement (July 10, 2009), either (i) Paramount Gold de Mexico SA de C.V. is sold by Paramount, either through a stock sale or a sale of substantially all of its assets, or (ii) Paramount’s San Miguel project is put into commercial production.

     On February 12, 2009 we entered into a development agreement with MRT to provide us with immediate funding to initiate production at our Cieneguita property, to complete a feasibility study and to continue the exploration of its properties. The development agreement was amended in December 2009 and calls for project funding of up to $8,000,000 to be spent on First Phase Production and to complete a feasibility study. To date MRT has contributed $1,000,000 in working capital and has spent additional funds on initiating production plans for the Cieneguita project through the building of a floatation circuit mill. MRT has shipped approximately 5,000 ton bulk sample to its mill in Sinaloa Mexico for processing to verify the metallurgical process need to process the mineralized material from the Cieneguita property.

     In the event that our exploration and development program finds exploration targets that warrant additional exploration work, including exploration by drilling, we will not have enough cash available to fund an expanded exploration program. If we decide to expand our exploration and development program, we would need to raise additional capital to meet these needs. Other than the sale of the Guazapares properties to Paramount, for we have not yet received payment, and the proceeds received from the shares issued in the Private Placement, we currently do not have any sources of additional capital available to us and we may not have any in the future. The failure to raise additional capital would severely curtail our ability to conduct any additional exploration work that might be warranted because of the results of our current exploration program.

     Our original strategy was to put the Cieneguita property into production as a heap leach operation, and as such we purchased approximately $250,000 worth of new and used mining equipment to be used for heap leach production. We contemplated putting the Cieneguita property into production during 2008 but the positive exploration results from our drilling programs changed those plans. The mineralized material that has been defined by the drilling appears to suggest that the mineralized material is far larger than originally contemplated and of a different material that is not suitable for heap leaching. As such, we entered into the joint venture agreement with MRT to put the Cieneguita into production using a simple crushing and floatation circuit process and not a heap leach operation as originally planned.

     With the joint venture with MRT, we intend to put the Cieneguita project into First Phase Production in January 2010. We are using a simple crushing and floatation circuit process in stead of the heap leach process as originally contemplated. We still plan to use the equipment as part of the new mining process designed in the joint venture agreement. When all mineral extraction has been completed, then it is managements’ plan to try and sell the equipment that we have purchased. At this time, we have no estimates on what the equipment will be worth in the secondary market. If we are unable to sell it, we may lose all of our capital investment. No assurances can be given that we will be able to sell the equipment at a price to recover our original investment, or at all.

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

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

     On September 21, 2009, we hired George Young as our chief operating officer, Salil Dhaumya as our chief financial officer and Manuel Flores as our operations manager. On November 16, 2009, Mr. Young was appointed president upon the resignation of Francisco Quiroz. We expect to hire an additional 8 geologists in addition to the drilling contractors to conduct exploration or development over the next 12 months. Other than these employees and our geologists, all of the employees we hire are contracted from third parties specializing in providing employees for Mexican companies. In using third party contractors, we minimize our exposure to Mexican employment law, and all liabilities are undertaken by the third party contractors providing the services. We pay a flat rate to the third parties for their services.

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

Exploration Projects — Current Status

     To date the Sierra Madre gold exploration program has been focused on advancing current exploration projects to the next exploration stage. During most of 2008, exploration activities were concentrated in four projects: Sahuayacan, Encino Gordo, Guazapares and Cieneguita. However, exploration activities during the six months ended August 31, 2009 were focused exclusively on the Cieneguita project. As well, we sold our Guazapares concessions to Paramount Gold and Silver Corp. To date most of the data gathered during our field campaigns and drilling programs is completely compiled and is being evaluated. The next exploration stages for all three remaining projects have been already planned.

     Over the next twelve months, we intend to explore our three projects to determine whether there are economically attractive concentrations of gold and gold-silver mineralization. We intend to hire 8 additional employees but do not plan to make any purchase of equipment over the next twelve months. At this time, though, the exploration program is only planned for the next 12 months, which we will undertake when the necessary capital has been raised to complete these programs. We do not have any sources of capital indentified at this time and no assurance can be given that we will be able to complete the proposed exploration program.

Critical Accounting Estimates

     The preparation of the Company’s financial statements requires management to make various judgments with respect to estimates and assumptions. On an ongoing basis, management regularly reevaluates its estimates and assumptions; however actual amounts could differ from those based on such estimates and assumptions.

     The Company has made certain accounting estimates that have a material bearing on the financial statements. The most significant estimates are:

Income Tax Valuation Allowance

     The Company has a potential $7,859,422 deferred income tax asset, which has been fully allowed for in the consolidated financial statements, based on the difference in timing of certain deductions for income tax and accounting purposes. The ability of the Company to ultimately derive a benefit from the deferred tax asset depends on the existence of sufficient taxable income of the appropriate character within the carry forward period available under the tax law.

Stock based compensation

     All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. Stock options and warrants are valued at their fair value utilizing the Black-Scholes option-pricing model.

Convertible debentures

     Convertible debentures issued with attached warrants are recorded based upon the relative fair values of the debentures and the warrants. The fair value of the warrants is determined utilizing the Black-Scholes option-pricing model. The resulting debt discount is amortized to Interest Expense over the life of the debentures. Any resulting beneficial conversion features on these debentures are amortized to the earliest conversion date

Results of Operations

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

Year ended February 28, 2009 compared to the year ended February 29, 2008.

     References in the discussion below to 2009 are to our current fiscal year ended February 28, 2009, while references to 2008 are to our fiscal year ended February 29, 2008.

Revenues

     We did not earn revenues during 2009 or 2008 because we did not have commercial production of any of our properties. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties, if ever. We are presently in the development stage of our business. We can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties or, if such resources are discovered, that we will enter into commercial production of our mineral properties. Interest income is recorded under Other Income in the Statement of Operations in the financial statements.

Operating Costs

     We did not incur any operating costs during the years ended 2009 and 2008 due to the fact that we did not achieve production from exploration activities during either year.

Expenses

     Our operating expenses decreased to $7,049,069 for the year ended February 28, 2009 compared to $8,040,328 for the year ended February 29, 2008, representing a decrease of $991,259.

     In 2009, we incurred lower general and administrative expenses and write off of property costs, offset by mineral exploration expenses, which resulted in decrease of expenses.

     In the general and administrative expense category, the decrease in 2009 is attributable to $339,000 spent on investor relation activities compared with $816,000 in 2008 to raise additional funds for exploration activities and higher advertising and promotion costs of $16,000 in 2009 compared to $159,000 in 2008.

     Our exploration expenses increased to $4,132,048 in 2009 compared with $2,680,680 in 2008 as a result of the increased activity of the Company as it advanced its business plan.

     In 2009, we expensed $726,000 for stock-based compensation expense compared to $2,454,000 in 2008 primarily due to lower market price of the Company’s shares.

     For the year ended February 28, 2009, we incurred $239,000 in mineral property costs as payments for our Mexican properties. At February 28, 2009, we tested the carrying amounts of all our Mexican properties for recoverability. Based on our tests, we concluded that the sum of undiscounted cash flows expected to result from the use and eventual disposition of all such properties was nil as the properties have no known reserves. Accordingly, a mineral property impairment loss of $239,000 has been recognized for the year ended February 28, 2009. Impairment of mineral property costs in 2009 decreased to $239,000 compared to $580,000 for 2008. If we are able to raise additional funds to continue with our business plan, we anticipate that exploration expenditures will increase in fiscal 2010 as a result of exploration activities on our Mexican mineral properties.

     Our interest expense increased to $791,000 for 2009 compared to $58,000 for 2008. The higher interest expense in 2009 pertains to convertible debentures issued by the Company in May and June of 2008. The Company recorded a beneficial conversion feature of $313,000 as interest expense and $303,000 as relative fair value of the warrants in relation to the convertible debt. The Company did not incur interest expense related to convertible debt in 2008.

Net Loss

     Our net loss decreased to $8,036,208 for 2009 compared to $8,096,604 for 2008, representing a decrease of $60,396. This change in our loss was primarily attributable to higher investor relations expenses and exploration expenses in 2009. The non-cash component of stock-based compensation costs was $726,000 compared to $2,454,000 for 2008.

     We anticipate that we will continue to incur losses until such time that we can identify mineral deposits and achieve significant revenues from sale of gold recovered from our Mexican mineral properties, if ever. There is no assurance that we will commence the development stage of our operations at any our Mexican mineral properties or achieve revenues.

Three and six months ended August 31, 2009 compared to the three and six months ended August 31, 2008.

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

Revenues

     The Company earned its 25% proportionate revenue from the joint venture with MRT from the commercial pilot test during the six months ended August 31, 2009. Other than the commercial pilot test, which generated $392,000 in net cash flows, we did not have commercial production of any of our properties in 2009. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties, if ever. We are presently in the development stage of our business. We can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties or, if such resources are discovered, that we will enter into commercial production of our mineral properties.

Operating Costs

     We did not incur any operating costs during the three and six months ended August 31, 2009 or 2008 due to the fact that we did not achieve production from exploration activities during either year.

Expenses

     Our expenses decreased to $930,000 and $1,836,000 for the three and six months ended August 31, 2009, compared to $2,118,000 and $4,026,000 for the three and six months ended August 31, 2008, respectively. The decrease is primarily attributable to lower exploration costs which was due to lack of funding, and curtailment of exploration on Cieneguita because of the joint venture agreement with MRT, where MRT has agreed to spend up to $5,000,000 to take Cieneguita to a feasibility stage.

     General and administrative expenses increased slightly to $719,000 and $1,409,000 in the three and six months ended August 31, 2009 compared to $656,000 and $1,271,000 in the three and six months ended August 31, 2008, respectively. The increase during the current three and six month period is attributable to higher legal fees offset by lower travel costs. Included in the general and administrative expenses, is the non-cash stock-based compensation expense of $143,000 and $327,000 in 2009 compared to $151,000 and $340,000 in 2008 for the three and six months, respectively. The amount for the six month period in 2009 had $299,000 of stock-based compensation expense relating to options granted to officers, directors and consultants and $nil of stock-based compensation relating to warrants. The amount for the corresponding period in 2008 relates to stock options granted to management and key personnel and compensation relating to warrants for $332,000 and $8,000, respectively.

     Accounting and legal fees increased to $239,000 in the six months ended August 31, 2009 compared to $222,000 in the six months ended August 31, 2008. The increase was primarily attributable to higher legal costs relating to issuance, payment and restructuring of convertible debentures.

     Mineral exploration in the three and six months ended August 31, 2009 decreased to $153,000 and $324,000 compared to $1,462,000 and $2,755,000 for the three and six months ended August 31, 2008, respectively as the Company reduced its exploration activity as described above.

Net Loss

     Our net loss decreased to $817,000 and $1,983,000 for the three and six months ended August 31, 2009 compared to $2,235,000 and $4,238,000 for the three and six months ended August 31, 2008, respectively.

     Other than the lower operating loss as described above, this change in our loss was attributable to higher interest expense recognized in 2009 relating to beneficial conversion feature offset by gain on settlement of repayment of convertible debentures.

     We anticipate that we will continue to incur a loss until such time as we can commence the development stage of our operations and achieve significant revenues from sales of gold recovered from our Mexican mineral properties, if ever. There is no assurance that we will commence the development stage of our operations at any of our Mexican mineral properties or achieve revenues.

Liquidity and Capital Resources

     Since inception, we have undergone two unsuccessful business combinations, which have caused us to incur significant liabilities and have resulted in the accumulation of a substantial deficit during the exploration stage.

     As of August 31, 2009, we had total assets of $696,000, total liabilities of $6,000,000 and a deficit of $43,847,000 accumulated during the exploration/development stage.

Cash and Working Capital

     We had cash and cash equivalents of $8,000 as of August 31, 2009, compared to cash of $39,000 at February 28, 2009 and $1,000 at August 31, 2008. We had working capital deficiency of $4,701,000 as of August 31, 2009, compared to a working capital deficiency of $4,657,000 as of February 28, 2009 and $4,421,000 as of August 31, 2008.

     During the first six months of 2009, we reduced the activities for our exploration program considerably but have continued to incur corporate administrative expenses but were unable to raise sufficient funds to pay many of our suppliers. Our accounts payable and accrued liabilities decreased from $2,680,000 from the fiscal year ended February 28, 2009 to $2,176,000 in the first six months of 2009. Of the $2,176,000 accounts payable and accrued liabilities as of August 31, 2009, $752,000 relates to exploration expenses.

     We will require additional financing during the current fiscal year according to our planned exploration activities. We plan to spend approximately $252,000 for property payments and an additional $1,853,000 for general and administrative costs from December 2009 through November 2010.

     We will need to raise additional working capital to maintain basic operations. We plan to raise those funds through the sale of equity or debt. Other than our definitive agreements signed with MRT and Paramount, at this time we do not have any other sources to raise additional capital for the Company and no assurance may be given that we will be able to find sources to raise additional capital. Failure to raise any additional capital would most likely require us to cease operations and abandon all of our exploration properties.

     On September 21, 2009, we entered into private placement subscription agreements, as thereafter amended, with certain U.S. accredited investors and certain non-U.S. investors for the private placement of 12,500,000 unregistered shares of the common stock with 100% warrant coverage at a purchase price of $0.20 per unit. The warrants have an exercise price of $0.30 per share, a two-year term and will not be exercisable until twelve months after their date of issuance. To date, the Company had received aggregate gross proceeds, prior to any expenses, from the Private Placement of $1,881,000 based upon an aggregate share issuance of 9,405,000 units with 100% warrant coverage.

     On July 8, 2009, we entered into an Agreement for the Assignment of Mining Agreements with Paramount Gold and Silver Corp., a Delaware corporation (“Paramount”), and its subsidiary, Paramount Gold de Mexico S.A. de C.V., a Mexican corporation (“Paramount Gold de Mexico”). Pursuant to the terms of the agreement, we agreed to sell our Guazapares Project to Paramount Gold de Mexico. The closing of the sale is subject to the satisfaction of various conditions precedent prior to closing, and the purchase price will be paid in two stages. The first payment of $3.7 million was deposited into an escrow account in conjunction with the execution of the agreement, and will be released to us at the closing. An additional payment of $1.6 million will be due and payable to Mexoro if, within thirty six (36) months following the execution of the agreement, either: (i) Paramount Gold de Mexico is sold by Paramount, either through a stock sale or a sale of substantially all of its assets; or (ii) the Guazapares project is put into commercial production.

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

Year ended February 28, 2009 compared to the year ended February 29, 2008.

Cash Used in Operating Activities

     Cash used in operating activities decreased to $3,702,000 for the fiscal year ended February 28, 2009 compared to $3,837,000 for the fiscal year ended February 29, 2008. The cash was used for general and administrative costs and for the exploration programs on the properties.

Cash Used in Investing Activities

     Cash used in investing activities decreased to $13,000 for the fiscal year ended February 28, 2009 compared to $172,000 for the fiscal year ended February 29, 2008 for the purchase of equipment.

Financing Activities

     Cash provided by financing activities decreased to $3,780,000 for the fiscal year ended February 28, 2009 compared to $4,028,000 for the fiscal year ended February 29, 2008. Most of the cash provided by financing activities in 2009 was provided by issuance of convertible debentures and promissory notes. Cash provided by financing activities was used to fund our operating and investing activities.

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

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

     Subsequent to the year ended February 28, 2009, in March, 2009, the Company entered into an agreement with Paramount restructuring its payment terms on the three outstanding secured convertible debentures held by Paramount. Under the terms of the agreement, the Company paid Paramount $1,000,000 to cancel two debentures held by them, one issued on May 9, 2008 for $500,000 and another issued on July 11, 2009 for $500,000. The Company also amended a debenture issued to them on June 18, 2009 in the face amount of $370,000. The amount of that debenture was increased to $521,047.37 which, among other things, includes interest accrued on all three debentures to March 31, 2009. The Company was obligated to make a payment on March 31, 2009 on this debenture in the amount of $393,547.37 and the balance of $127,500 was to be re-paid on April 30, 2009. This remaining amount of $127,500 is interest free as long as the debenture remains in good standing. Subsequently, the Company has paid the remaining outstanding balance owed under the debenture.

     In February 2009, we entered into a development agreement with MRT, which we amended in December 2009. Pursuant to the terms of the development agreement, as amended, MRT has agreed to invest up to $8 million in First Phase Production and to complete a feasibility study. In exchange, we assigned MRT an interest to 74% of the net cash flows from First Phase Production and a 54% ownership interest in the Cieneguita Project.

     To fund our continued operations, we issued $1.5 million of convertible debentures in March 2009, of which an aggregate of $880,000 was issued to Mario Ayub, a director of Mexoro, and to his affiliated entity, MRT. Pursuant to the terms of the convertible debentures, the holders irrevocably converted the debentures into a 10% ownership interest in the Cieneguita Project and a 10% interest in the net cash flows from First Phase Production. In December 2009, Mario Ayub and MRT agreed to resell an aggregate 4% ownership interest in the Cieneguita Project back to us, along with 4% of the net cash flows from First Phase Production, in return for $550,000. In a private transaction not involving the Company, the other holders contributed their remaining 6% ownership interest in the Cieneguita Project to a newly formed entity, Marje Minerals SA.

     As a result of our amended development agreement and our agreements with the debenture holders, the ownership interest in the Cieneguita Project and the net cash flows from the First Phase Production are held by the Company, MRT and Marje Minerals as follows:

						Net Cash Flow Interest				Net Cash Flow Interest
						From First Phase				Following First Phase
Holder		Ownership Percentage				Production				Production
MRT			54	%			74	%			54	%
Marje Minerals			6	%			6	%			6	%
Mexoro			40	%			20	%			40	%

      Any additional costs for the First Phase Production and the feasibility study for the Cieneguita Project, after MRT invests $8 million, will be shared by the Company, MRT and Marje Minerals on a pro-rata basis based on their respective ownership percentages in the Cieneguita Project.

     The major terms of the development agreement with MRT and Marje Minerals are as follows:

•

MRT purchased $1 million of secured convertible debentures at 8% interest (payable in stock or cash).

•

MRT agreed to provide the necessary working capital to begin and maintain mining operations, estimated to be $3 million, to put the first phase of the Cieneguita Project into production.

•

MRT committed to spend up to $4 million to take the Cieneguita Project through the feasibility stage. In doing so, we assigned MRT a 54% interest in our rights to the Cieneguita Project. After the expenditure of the $4 million, all costs will be shared on a pro rata ownership basis (i.e. 54% to MRT, 40% to the Company and 6% to Marje Minerals). If any party to the development agreement cannot pay its portion of the costs after the $4 million has been spent, then their ownership position in the Cieneguita Project will be reduced by 1% for every $100,000 invested by the other owners. Our ownership interest in the Cienguita Project, however, cannot be reduced below 25%. In addition, we have the right to cover Marje Mineral’s pro rata portion of costs if they cannot pay their portion of the costs. In return, we will receive 1% of Marje Minerals’ ownership position in the Cieneguita Project for every $100,000 we invest on their behalf.

     Subsequent to the year ended February 28, 2009, in March 2009, the Company entered into a securities purchase agreement with OHAG Holdings, Ltd. (“OHAG”). Pursuant to the securities purchase agreement, OHAG paid the Company $250,000 in exchange for a secured convertible debenture of $250,000 and 250,000 shares of common stock. The secured convertible debenture had a term of one year and interest accrued at a rate of 15%. The debenture was secured by 2,250,000 restricted shares of the Company. In June 2009, MRT purchased the secured convertible debenture from OHAG. In September 2009, the Company defaulted on its payment obligations under the secured convertible debenture, and MRT acquired the 2,250,000 restricted shares of the Company in lieu of repayment of the secured convertible debenture. MRT subsequently sold these shares to third parties.

     Subsequent to the year ended February 28, 2009, in May 2009, the Company entered into a letter of agreement to sell its Guazapares project located in southwestern Chihuahua, Mexico to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount for a total consideration of up to $5.3 million USD. A definitive agreement was signed on July 10, 2009 but closing is subject to the satisfaction of various conditions. The material conditions of the agreement have been met and the payment for the sale of the properties is expected to occur when the agreements governing the concessions have been officially re-registered in the name of Paramount Gold de Mexico, SA de C.V. with the Mexican mining authorities. The registration was sent to the Mexican authorities on July 17, 2009 and it is expected to take between 60 and 90 days for the registration process to be completed. No assurance may be given though,

that the contracts will be registered on a timely basis or at all. A 5.7% commission was paid on the closing of the sale. Mexoro’s Guazapares project comprises 12 claims close to Paramount’s San Miguel discovery. The purchase price is to be paid in two stages. The first payment of $3.7 million will be deposited into escrow at closing, and will be released from escrow to Mexoro when the transfer of the 12 claims to Paramount is finalized. An additional payment of $1.6 million is due to Mexoro if, within 36 months following execution of the letter of agreement (July 10, 2009), either (i) Paramount Gold de Mexico SA de C.V. is sold by Paramount, either through a stock sale or a sale of substantially all of its assets, or (ii) Paramount’s San Miguel project is put into commercial production.

Three and six months ended August 31, 2009 compared to the three and six months ended August 31, 2008.

Cash Used in Operating Activities

     Cash used in operating activities decreased to $1,368,000 for the six months ended August 31, 2009 compared to $2,245,000 for the six months ended August 31, 2008. The cash used in operating activities was primarily for exploration costs and general and administrative expenses.

Cash Used in Investing Activities

     The Company received cash of $29,000 on the disposal of equipment and used cash of $23,000 for purchase of equipment for the six months ended August 31, 2009 compared to cash used of $13,000 for purchase of equipment for the six months ended August 31, 2008. There are no additional capital expenditures for the current fiscal year anticipated at this time.

Financing Activities

     Cash provided by financing activities decreased to $1,331,000 for the six months ended August 31, 2009 compared to $2,242,000 for the six months ended August 31, 2008. Most of the cash provided by financing activities was from issuing of convertible debentures and notes payables. Cash provided by financing activities was used to fund our operating and investing activities.

     We anticipate the sale of the Guazapares properties to close in our third quarter providing us with sufficient working capital for the next 12 months. But, we also anticipate continuing to rely on equity sales of our common stock or issuance of debt in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders.

     During the six months ended August 31, 2009, the Company issued a total of $1,895,000 convertible debentures to Paramount, MRT and other investors:

     The convertible debentures of $221,047 to Paramount with principal and accrued interest at 8% per year are convertible into 442,094 units at a price of $0.75 per unit at the discretion of Paramount. Each unit shall be comprised of one common share plus one-half common share purchase warrant. One full warrant is exercisable immediately at a price of $0.50 for four years. The Company paid off these convertible debentures in October 2009.

     The convertible debentures of $237,510 to MRT with principal and accrued interest at 8% per year are convertible into 455,850 units at a price of $0.60 per unit at the discretion of MRT. Each unit shall be comprised of two common share plus one common share purchase warrant. One full warrant is exercisable immediately at a price of $0.50 for three years.

     The convertible debentures of $1,500,000 to MRT and other investors with principal and accrued interest at 15% per year were convertible into 7,500,000 units at a price of $0.20 per unit at the discretion of the investors. MRT and other investors have irrevocably elected to convert the debentures into real interest in the Company’s Cieneguita project.

Going Concern

     Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern depends upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

     The Company has a history of operating losses and will need to raise additional capital to fund its planned operations. As of August 31, 2009, the Company had working capital deficiency of $4,701,000 (August 31, 2008 — working capital deficiency of $4,421,000) and an accumulated deficit during the exploration stage of $43,847,000 (August 31, 2008 — $38,066,000). These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

     There is no assurance that our operations will be profitable. The Company has conducted private placements of convertible debt and common stock, which have generated funds to satisfy all of the initial cash requirements of its planned Mexican extraction of its mineralized material and exploration ventures. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.

Off-Balance Sheet Arrangements

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

DIRECTORS AND EXECUTIVE OFFICERS

     The directors and executive officers currently serving the Company are as follows:

Name		Age				Tenure
Mario Ayub			56			Director since October 2009
John Clair			29			Director since September 2009
Salil Dhaumya			43			Chief Financial Officer since September 2009
Francisco “Barry” Quiroz			45			Director since February 2008
George Young			57			Director since September 2009
						President since November 2009
						Chief Operating Officer since September 2009

     The directors named above will serve until the next annual meeting of the Company’s 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, absent any employment agreement, of which none currently exists or is contemplated. There is no arrangement, plan or understanding between any of the directors or officers of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current directors to the Company’s board. There are also no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of the Company’s affairs. Officers are elected by the board of directors and serve until their successors are appointed by the board of directors. Biographical resumes of each officer and director are as follows:

Mario Ayub

     Mr. Ayub has served as a director of the Company since October 2009. He currently serves as President of MRT Investments Ltd. since March 2004 and has served as the President of Minera Rio Tinto S.A. de C.V., a Mexican company, since 1994. Minera Rio Tinto S.A. de C.V. has a joint venture agreement with us to develop and mine our Cieneguita project in Mexico. He is a former President of the Chihuahua Mining Association and of the National Miners Association of Mexico. He graduated in 1976 from the Universidad Iberoamericana in Mexico City with a degree in chemical engineering, and he has completed post-graduate studies in metallurgy at Comision de Fomento Minero and South Dakota University. Mr. Ayub has put seven mines into production over the past fifteen years. Mr. Ayub has previously served as a director of the Company from May 2004 to November 2008.

John Clair

     Mr. Clair has served as a director of the Company since September 2009. He has been the President of Decerto Group, a private investment firm, since February 2009. From September 2004 to February 2009, Mr. Clair was employed as an investment advisor by Goldman Sachs, & Co. a reporting issuer trading on the New York Stock Exchange. From July 2002 to September 2004 he was a senior consulting associate with Cambridge Associates LLC. Mr. Clair received his BA in Mathematics and Economics in May 2002 from Hamilton College in New York State.

Salil Dhaumya

     Mr. Dhaumya has served as the chief financial officer of the Company in September 2009. Mr. Dhaumya has currently served as the corporate controller for IBC Advanced Alloys Corp., a Canadian reporting issuer listed on the TSX Venture Exchange, since August 2008. Prior to that time, he served as corporate controller for New Legend Group Ltd., a TSX Venture Exchange-listed capital pool company, from June 2007 to February 2009. Mr. Dhaumya served as our Chief Financial Officer from October 2007 to November 2007. From August 2006 to June 2007, Mr. Dhaumya served as a management consultant at MCSI, providing corporate financial consulting services to Canadian and U.S. listed small reporting companies. From August 2005 to May 2006, Mr. Dhaumya also worked as a business analyst with Heli-One, a division of CHC Helicopters, (a reporting issuer trading on the New York Stock Exchange) a company providing helicopter support to the CHC Global Operations and third parties. He has also served as controller of Aquilini Group (also known as Golden Eagle Group), a business conglomerate from March 2002 to July 2005. Mr. Dhaumya graduated with honors in cost accounting at Punjab University in Chandigarh, India in 1986 and is a certified management accountant, a designation obtained in British Columbia, Canada in 2004. It is expected Mr. Dhaumya will spend approximately 70% of his time working for our Company as Chief Financial Officer.

Francisco “Barry” Quiroz

     Mr. Quiroz has served as a director of the Company since February 20, 2008. He previously served as president of the Company from November 2008 to November 2009 and as vice president of exploration from March 2007 to November 2008. Prior to joining Mexoro Minerals, Mr. Quiroz worked for BHP Billiton for 17 years. In his last position with BHP he was program leader for BHP-Billiton managing all aspects of exploration business in China and prior to that he was the senior project geologist for BHP-Billiton in Australia. He has worked as an exploration geologist, project geologist, project manager and program leader on a variety of projects and mining properties in Mexico, United States, Canada, Central and South America, Australia, China, Mongolia and Kazakhstan. For over 20 years, Mr. Quiroz has overseen the design, management and execution of numerous mineral exploration programs with expertise in planning, contract negotiations, staff training, construction supervision and data interpretation.

     Mr. Quiroz’s expertise includes the structuring and implementation of successful exploration strategies, project reviews, mineral acquisitions and management of local and expatriate exploration teams on a wide variety of cultures. Mr. Quiroz obtained a Masters in Science in the field of Economic Geology from the University of Arizona in Tucson, Arizona, USA and a Bachelors of Science in Geology from the Universidad Autonoma de Chihuahua in Chihuahua, Chihuahua, Mexico.

George Young

     Mr. Young has served as president of the Company since November 16, 2009 and chief operating officer and a director of the Company since September 2009. He is the chief executive officer and director of Fellows Energy Ltd., an early stage oil and gas company, since January 2004. Fellows Energy is a US reporting issuer trading on the over-the-counter bulletin board. Mr. Young previously served as Vice President and director of International Royalty Corporation from February 2005 to February 2008. International Royalty Corporation, a Canadian reporting issuer which trades on the Toronto Stock Exchange (“TSX”), is a company which acquires and creates natural resource royalties. Prior to that time, from January 2003 to January 2005, he served as President and director of MAG Silver Corp., a Canadian reporting issuer that trades on the TSX and the American Stock Exchange. MAG Silver is a silver exploration and emerging development company in Mexico. From October 2002 to July 2008, Mr. Young was a director of Palladon Ventures Ltd., a junior exploration and development company based in Salt Lake City, Utah, which trades on the TSX Venture Exchange in Canada. Mr. Young holds a Bachelor of Sciences degree from the University of Utah and a Juris Doctor from the University of Utah College of Law.

Director Independence

     We believe that John Clair is an “independent director,” as that term is defined by applicable listing standards of The Nasdaq Stock Market and SEC rules, including the rules relating to the independence standards of an audit committee and the non-employee director definition of Rule 16b-3 promulgated under the Exchange Act. There are no family relationships among any of our directors or executive officers.

Board Committees

     Our board of directors (“the Board”) currently performs the functions and duties generally performed by separately constituted audit, compensation and nominating and corporate governance committees. We intend to recruit additional directors to serve on our Board, and at such time, the Board will form separate Board committees. We intend that a majority of our directors will be independent directors, and that our Board and Board committees will meet the corporate governance requirements imposed by a national securities exchange, although we are not required to comply with such requirements until we seek listing on a securities exchange. Additionally, the Board will direct each committee to adopt a charter to govern its duties and actions.

     Audit Review. Our Board is responsible for assuring the integrity of our financial control, audit and reporting functions and reviews with our management and our independent auditors the effectiveness of our financial controls and accounting and reporting practices and procedures. In addition, our Board reviews the qualifications of our independent auditors, is responsible for their appointment, compensation, retention and oversight and reviews the scope, fees and results of activities related to audit and non-audit services.

     Executive Compensation. Our Board reviews and sets our general compensation policies and executive compensation, including officer salary levels, incentive compensation programs and share-based compensation. Our Board also has the exclusive authority to administer our stock option plan. George Young, our president, has abstained from any Board discussions with respect to his compensation.

     Nominating and Corporate Governance. Our Board is responsible for identifying and selecting potential candidates for our Board. Our Board reviews the credentials of proposed members of the Board, either in connection with filling vacancies or the election of directors at each annual meeting of stockholders. The Board will consider qualified nominees recommended by stockholders. The Board intends to periodically assess how well it is performing, and make recommendations regarding corporate governance matters and practices. Nominees for director are selected on the basis of their depth and breadth of experience, integrity, ability to make independent analytical inquiries, understanding our business environment and willingness to devote adequate time to their board duties.

     Stockholder Nominees. Our Board will consider written proposals from stockholders for nominees for director. Any such nominations should be submitted to the Board c/o the secretary of the Company and should include the following information: (i) with respect to each nominee, (a) the name, age, business address and residence address of the nominee, (b) the principal occupation or employment of the nominee, (c) the class and number of shares of the Company that are beneficially owned by the nominee, (d) a description of all arrangements or understandings between the stockholder submitting the nomination and the nominee pursuant to which the nomination is to be made by the stockholder, and (e)

any other information relating to the nominee that is required to be disclosed in solicitations of proxies for the election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (ii) with respect to the stockholder submitting the nomination, (a) the name and address of the stockholder, as they appear on our books, (b) the class and number of shares of the Company that are beneficially owned by the stockholder and (c) any material interest of the stockholder in the nomination. Such information should be submitted in the time frame described under our proxy statement.

     Process for Identifying and Evaluating Nominees. Our Board believes that we are well served by our current directors. In the ordinary course, absent special circumstances or a material change in the criteria for Board membership, the Board will renominate incumbent directors who continue to be qualified for Board service and are willing to continue as directors. If an incumbent director is not standing for re-election, or if a vacancy on the Board occurs between annual stockholder meetings, the Board will seek out potential candidates for Board appointment who meet the criteria for selection as nominees and have the specific qualities or skills being sought. Director candidates will be selected based on input from members of the Board, our senior management and, if the Board deems appropriate, a third-party search firm. The Board will evaluate each candidate’s qualifications and contact relevant references. Based on this input, the Board will evaluate which of the prospective candidates is qualified to serve as a director.

     Communications with Directors. Stockholders who wish to communicate with our Board may do so by writing to our corporate secretary at our principal executive offices located at #706 Col. San Felipe, Chihuahua, Chihuahua Mexico 31203.

Code of Ethics

     Our Board of Directors adopted a code of business conduct and ethics policy, the “Code of Ethics”. The Code of Ethics allows us to focus our Board and each Director and officer on areas of ethical risk, provide guidance to Directors to help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct and help foster a culture of honesty and accountability. A copy of our Code of Ethics may be obtained by writing to our corporate secretary of the Company at #706 Col. San Felipe, Chihuahua, Chihuahua Mexico 31203.

EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Goals of Compensation Program

     The primary goals of our Compensation Program with respect to the compensation of our executive officers are: (i) to attract and retain talented and dedicated executives; (ii) to tie annual and long-term cash and stock incentives to the achievement of specified company and individual performance criteria; and (iii) to align executives’ compensation incentives to achievements that we believe will lead to stockholder value creation. To achieve these goals, our Board maintains compensation plans that tie a substantial portion of executives’ overall compensation to the achievement of key operational, clinical and financial goals. Our Board also evaluates the performance of each individual executive officer against specific individual performance criteria. Our Board believes that the compensation for our executive officers is comparable with executives in other companies of similar size and stage of development operating in our industry, while taking into account our relative performance and our own strategic goals.

Elements of Compensation

     We currently have a relatively simple compensation structure that is comprised of: (i) base salary; (ii) annual cash and equity incentive awards; and (iii) stock options.

Base Salary

     Base salaries for our executive officers are established based on the scope of their responsibilities, taking into account competitive market compensation paid by other companies for similar positions. Generally, we target salaries for our executive officers near the median of the range of salaries for executives in similar positions with similar responsibilities at comparable companies. Base salaries are reviewed annually, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience as well as the company’s financial position.

Stock Options

     Our stock option plan authorizes us to grant options to purchase shares of common stock to our employees, directors and consultants. Our Board is the administrator of this stock plan. Stock option grants are made to employees after the commencement of employment and may also be made following a significant change in job responsibilities or to meet other special retention or performance objectives. Our Board reviews and recommends initial stock option awards for executive officers based upon a review of competitive compensation data. In appropriate circumstances, our Board considers the recommendations of our president when determining the amount of an initial option grant or the amount of an annual incentive option grant for executive officers. Stock options granted by us have an exercise price equal to the fair market value of our common stock on the day of grant, typically vest quarterly upon continued employment over approximately a two-year period, and generally expire ten years after the date of grant. Incentive stock options also include certain other terms necessary to assure compliance with the Internal Revenue Code of 1986, as amended.

Summary Compensation Table

     The following table sets forth executive compensation for our “named executive officers” for fiscal years ended February, 2009, 2008 and 2007.

Name And		Fiscal year												Stock
Principal		Ended				Salary				Bonus				Awards				Options				All Other				Total
Position (1)		February				($)				($)				($)				Awards ($)				Compensation ($)				($)
Barry Quiroz			2009				146,323				—				222,500				101,890				—				470,713
President, CFO			2008				120,000				—				—				140,875				—				260,875
Director			2007				—				—				—				—				—				—

Narrative Disclosure to Summary Compensation Table

Employment Agreements

     The Company has entered into an employment agreement with Barry Quiroz of calle Las Matrinas 6510, colonia Haciendas del Valle C.P. 31217, Chihuahua, Chihuahua, Mexico, dated March 1, 2007. Mr. Quiroz was hired as the Company’s president for an initial term of three years, until February 28, 2010, unless terminated earlier, with an annual salary of $132,000 and $24,000 of living out allowance paid by Sunburst Mining. Mr. Quiroz resigned as president on November 16, 2009.

     On September 21, 2009, the Company has entered into an employment agreement with Mr. Young. Mr. Young will serve as chief operating officer and will receive a monthly salary of $10,000. On September 21, 2009, the Company also granted Mr. Young options to purchase 1,000,000 shares of our common stock pursuant to our 2009 Nonqualified Stock Option Plan and form of Nonqualified Stock Option Agreement. The options vest in four equal installments, with the first installment vesting on the six month anniversary of the grant date and the remaining installments vesting every six months thereafter. The options have an exercise price of $0.36 per share. Mr. Young was appointed president on November 16, 2009.

     On September 21, 2009, the Company appointed Salil Dhaumya as chief financial officer and secretary. Mr. Dhaumya will serve as the Company’s principal financial and accounting officer. The Company entered into an employment agreement with Mr. Dhaumya pursuant to which Mr. Dhaumya will receive a monthly salary of $7,000.

     Except with respect to the employment agreements set forth above and an employment agreement with our operations manager, Manuel Flores, the Company has no written employment agreements with its officers. Compensation was determined after discussion about expected time commitments, remuneration paid by comparable organizations and the flexibility provided to the Company by not having extended terms and other terms typical of employment agreements. We have no plans or packages providing for compensation of officers after resignation or retirement.

Grants of Plan-Based Awards

     The following table sets forth information regarding grants of stock and option awards made to our named executive officers during the fiscal year ended February 28, 2009.

																		Grant Date Fair
														Exercise of				Value of Stock
						Number of Shares of				Number of Securities				Base Price of				and Options
Name(1)		Grant Date				Stock or Units				Underlying Options				Option Awards				Awards
Barry Quiroz			03/01/2007				—				150,000			$	1.04			$	140,875
			04/29/2008				—				200,000			$	0.52			$	60,881
			10/27/2008				100,000				—
			11/25/2008				500,000				—
			02/10/2009				—				250,000			$	0.18			$	41,009
			02/23/2009				400,000				—

Outstanding Equity Awards at Fiscal Year End

     The following table sets forth information regarding outstanding equity awards held by our named executive officers as of February 28, 2009.

Number of

Securities

Number of Securities

Underlying

Number of Securities

Underlying

Unexercised

Underlying

Unexercised

Option

Option

Options (#)

Unexercised Options

Unearned Options

Exercise Price

Expiration

Name(1)

exercisable

(#) Unexercisable

(#)

($)

Date

Barry Quiroz

100,000

50,000

(2)

Nil

1.04

4/16/2017

66,667

133,333

(3)

Nil

0.52

4/29/2018

41,667

208,333

(4)

Nil

0.18

2/10/2019

Options Granted During the Last Fiscal Year

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

     On February 10, 2009, the board of directors approved the granting of stock options according to the 2008 Option Plan. All of the options were granted and vest, pursuant to the terms of the 2008 Option Plan in six equal installments, with the first installment vesting at the date of grant, the second installment vesting August 10, 2009, the third installment vesting February 10, 2010, the fourth installment vesting August 10, 2010, the fifth installment vesting February 10, 2011 and the last installment vesting August 10, 2011.

     As of February 28, 2009, the Company granted 2,805,000 options under the 2008 Option Plan.

Aggregate Option Exercises in Last Fiscal Year

     None of the named executive officers exercised options during the year ended February 28, 2009.

Director Compensation

     We do not currently compensate our directors for their services as directors. Directors are reimbursed for their reasonable out-of-pocket expenses incurred while attending board or committee meetings. The following table shows compensation information for the individuals who served as our non-employee directors during the year ended February 28, 2009:

		Fees
		Earned												Non-equity				Nonqualified
		or Paid				Stock				Option				Incentive Plan				Deferred				All Other
		in Cash				Awards				Awards				Compensation				Compensation				Compensation				Total
Name(1)		($)				($)				($)				($)				Earnings ($)				($)				($)
Steven A. Sanders(2)			—				—				32,807	(2)			—				—				—				32,807
Manuel Flores(3)			—				—				32,807	(3)			—				—				—				32,807

EQUITY COMPENSATION PLAN

     The following summarizes our equity compensation plans as of February 28, 2009.

Weighted

Number of

average

Number of securities

securities to be

exercise

remaining available for

issued upon

price of

future issuances under

exercise of

outstanding

equity compensation

outstanding

options,

plans (excluding

options,

warrants and

securities reflected in

warrants and

rights

column (a))

rights (a)

(b)

(c)

Equity compensation plans approved by security holders

11,937,890

$

0.84

1,165,000

Equity compensation plans not approved by security holders

-0

-

$

0.00

-0

-

Total

11,937,890

$

0.84

1,165,000

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

     The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus. The information in this table provides the ownership information for each person known by us to be the beneficial owner of more than 5% of our common stock; each of our directors; each of our executive officers; and our executive officers and directors as a group.

     Beneficial ownership has been determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to the shares. Unless otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares indicated as beneficially owned by them. Common stock beneficially owned and percentage ownership is based on 54,340,493 shares outstanding on the date of this prospectus:

		Amount and Nature of Beneficial				Percent of
Name and Address		Owner(1)				Class
Mario Ayub Eugenio Ramirez Calderon #1404 Col San Felipe C.P. 31203 Chihuahua, Chih Mexico			7,434,333	(2)			13.13	%
John Clair 1 Penn Plaza, Suite 6157 New York, NY 10119			2,500,000	(3)			4.60	%
Salil Dhaumya 880 - 609 Granville Street, PO Box 10321 Pacific Centre Vancouver, BC V7Y 1G5 Canada			208,833	(4)				*
Barry Quiroz Calle Las Matrinas 6510 Colonia Haciendas del Valle CP31217 Chihuahua, Mexico			2,366,667	(5)			4.33	%
George Young Mountain View Center 12303 Airport Way Suite 200 Broomfield, CO 80021			95,000					*
All officers and directors as a group (5 in number)			12,371,335				21.63	%

RELATED PERSON TRANSACTIONS

     Beginning in November 2008, MRT purchased an aggregate of $1 million of secured convertible debentures at 8% interest (payable in stock or cash). The proceeds from this investment were used for continued exploration and development of the Cieneguita Project and general working capital. On November 5, 2009, MRT exercised their conversion rights on the debenture and MRT was issued 3,333,333 common shares and a warrant to purchase 1,666,667 shares of common stock at an exercise price of $0.50 per share.

     In February 2009, we entered into a development agreement with MRT, which we amended in December 2009. Pursuant to the terms of the development agreement, as amended, MRT has agreed to invest up to $8 million in First Phase Production and to complete a feasibility study. In exchange, we assigned MRT an interest to 74% of the net cash flows from First Phase Production and a 54% ownership interest in the Cieneguita Project.

     To fund our continued operations, we issued $1.5 million of convertible debentures in March 2009, of which an aggregate of $880,000 was issued to Mario Ayub, a director of Mexoro, and to his affiliated entity, MRT. Pursuant to the terms of the convertible debentures, the holders irrevocably converted the debentures into a 10% ownership interest in the Cieneguita Project and a 10% interest in the net cash flows from First Phase Production. In December 2009, Mario Ayub and MRT agreed to resell an aggregate 4% ownership interest in the Cieneguita Project back to us, along with 4% of the net cash flows from First Phase Production, in return for $550,000. In a private transaction not involving the Company, the other holders contributed their remaining 6% ownership interest in the Cieneguita Project to a newly formed entity, Marje Minerals SA.

     As a result of our amended development agreement and our agreements with the debenture holders, the ownership interest in the Cieneguita Project and the net cash flows from the First Phase Production are held by the Company, MRT and Marje Minerals as follows:

						Net Cash Flow Interest				Net Cash Flow Interest
						From First Phase				Following First Phase
Holder		Ownership Percentage				Production				Production
MRT			54	%			74	%			54	%
Marje Minerals			6	%			6	%			6	%
Mexoro			40	%			20	%			40	%

      Any additional costs for the First Phase Production and the feasibility study for the Cieneguita Project, after MRT invests $8 million, will be shared by the Company, MRT and Marje Minerals on a pro-rata basis based on their respective ownership percentages in the Cieneguita Project.

     The major terms of the development agreement with respect to MRT are as follows:

•

MRT purchased $1 million of secured convertible debentures at 8% interest (payable in stock or cash). The proceeds from this investment were used for continued exploration and development of the Cieneguita Project and general working capital. On November 5, 2009, MRT exercised its conversion rights on the debenture and MRT was issued 3,333,333 common shares and a warrant to purchase 1,666,667 shares of common stock at an exercise price of $0.50 per share.

	•		MRT agreed to provide the necessary working capital to begin and maintain mining operations, estimated to be $3 million, to put the Cieneguita Project into the first phase of production. In exchange for these funds, we assigned MRT an interest to 74% of the net cash flow from First Phase Production.
	•		MRT committed to spend up to $4 million to take the Cieneguita Project through the feasibility stage. In doing so, we assigned MRT a 54% interest in our rights to the Cieneguita Project. After the expenditure of the $4 million, all costs will be shared on a pro rata ownership basis (i.e. 54% to MRT). The ownership interests in the Cieneguita Project are subject to adjustment based on each party to the development agreement meeting its pro rata portion of required expenses as set forth in the development agreement. See “Description of Business–Cieneguita Project” for additional information.

     In March 2009, we entered into a securities purchase agreement with OHAG Holdings, Ltd. (“OHAG”). Pursuant to the securities purchase agreement, OHAG paid us $250,000 in exchange for a secured convertible debenture of $250,000 and 250,000 shares of common stock. The secured convertible debenture had a term of one year and interest accrued at a rate of 15%. The debenture was secured by 2,250,000 of our restricted shares. In June 2009, MRT purchased the secured convertible debenture from OHAG. In September 2009, we defaulted on our payment obligations under the secured convertible debenture, and MRT acquired the 2,250,000 of our restricted shares in lieu of repayment of the secured convertible debenture. MRT subsequently sold these shares to third parties.

     On September 21, 2009, we entered into a consulting agreement with MRT, an entity affiliated with Mario Ayub, a member of our board of directors, pursuant to which we have agreed to pay MRT $5,000 per month for consulting services. We have also granted a warrant to MRT to purchase 300,000 shares of our Company’s common stock, with an exercise price equal to $0.36 per share. The warrant shares vest in four equal installments, with the first installment vesting on the six month anniversary of the date of the consulting agreement, and the remaining installments vesting every six months thereafter, contingent upon MRT continuing to provide consulting services to the Company on such dates.

     In December 2009, we entered into a Cancellation of Debt and Release Agreement with Mario Ayub and MRT, pursuant to which we paid Mario Ayub and MRT an aggregate of $84,368 and we agreed to pay Mr. Ayub an additional $120,000 in twelve equal monthly installments beginning on the later of (i) January 15, 2010, or (ii) the closing of the sale of our Guazapares Project. In connection with the Cancellation of Debt and Release Agreement, we also entered into a Securities Purchase Agreement with Mr. Ayub pursuant to which we issued to Mr. Ayub 386,666 shares of our common stock and 193,333 warrants to purchase shares of our common stock. The warrants have an exercise price of $0.50 per share, a two-year term and will not be exercisable until twelve months after their date of issuance. In consideration for the payments and the issuance of securities, Mr. Ayub and MRT have agreed to discharge all of our outstanding debt owed to them and to release us from all any and all claims relating to the outstanding debt. As of the date of the Cancellation of Debt and Release Agreement, we owed Mr. Ayub and MRT an aggregate of $320,267.24

     On September 21, 2009, we entered into a consulting agreement with Decerto Group, an entity affiliated with John Clair, pursuant to which we have agreed to pay Decerto Group $5,000 per month for consulting services. The Company has also granted a warrant to Decerto Group to purchase 1,000,000 shares of the Company’s common stock, with an exercise price equal to $0.36 per share. The warrant shares vest in two equal installments, with the first installment vesting on the six month anniversary of the date of the consulting agreement, and the second installment vesting on the one year anniversary of the date of the consulting agreement, contingent upon the Decerto Group continuing to provide consulting services to the Company on such dates.

     On September 21, 2009, we entered into private placement subscription agreements, as thereafter amended, with certain U.S. accredited investors and certain non-U.S. investors for the private placement of 12,500,000 unregistered shares of the common stock with 100% warrant coverage at a purchase price of $0.20 per unit. The warrants have an exercise price of $0.30 per share, a two-year term and will not be exercisable until twelve months after their date of issuance. Nevaheel Consortium LLC, a limited liability company affiliated with John Clair, purchased 2,500,000 unregistered shares of common stock with 100% warrant coverage in the Private Placement, and George Young, our president and director, purchased 95,000 unregistered shares of common stock with 100% warrant coverage in the Private Placement.

Indemnification of Officers and Directors

     Our articles of incorporation, as amended, provide that, to the fullest extent permitted by Colorado law, our directors or officers shall not be personally liable to us or our shareholders for damages for breach of such director’s or officer’s fiduciary duty. The effect of this provision of our articles of incorporation, as amended, is to eliminate our rights and our shareholders’ rights (through shareholders’ derivative suits on behalf of our company) to recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions in our articles of incorporation, as amended, are necessary to attract and retain qualified persons as directors and officers.

     Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

Exclusion of Liability

     Pursuant to the Colorado Corporation Code, the Company’s articles of incorporation exclude personal liability for its directors for monetary damages based upon any violation of their fiduciary duties as directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, acts in violation of Section 7-5-114 of the Colorado Corporation Code, or any transaction from which a director receives an improper personal benefit. This exclusion of liability does not limit any right which a director may have to be indemnified and does not affect any director’s liability under federal or applicable state securities laws.

Conflicts of Interest

     Salil Dhaumya, our chief financial officer, will only devote a portion of his time to the affairs of the Company. In addition, other officers of the Company may have business interests outside that of the Company. There will be occasions when the time requirements of the Company’s business conflict with the demands of the officers’ other business and investment activities. Such conflicts may require that the Company attempt to employ additional personnel. There is no assurance that the services of such persons will be available or that they can be obtained upon terms favorable to the Company.

WHERE YOU CAN FIND MORE INFORMATION

     We have filed a registration statement on Form S-1 under the Securities Act of 1933, as amended, relating to the shares of common stock being offered by this prospectus, and reference is made to such registration statement. This prospectus constitutes the prospectus of Mexoro Minerals Ltd., filed as part of the registration statement, and it does not contain all information in the registration statement, as certain portions have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission.

     We are subject to the informational requirements of the Exchange Act which requires us to file reports, proxy statements and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information may be inspected at public reference facilities of the SEC at Judiciary Plaza, 450 Fifth Street N.W., Washington D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at 100 F Street, NE, Room 1580, Washington, D.C. 20549 at prescribed rates. The public could obtain information on the operation of the public reference room by calling the Securities and Exchange Commission at 1-800-SEC-0330. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC’s Internet website at http://www.sec.gov.

FINANCIAL STATEMENTS

MEXORO MINERALS LTD.
(A Development Stage Company)

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Stockholders’ Deficiency		F-4
Consolidated Statements of Operations and Comprehensive Income (Loss)		F-8
Consolidated Statements of Cash Flows		F-9
Notes to Consolidated Financial Statements		F-11

MEYLER & COMPANY, LLC
ONE ARIN PARK
1715 HIGHWAY 35
MIDDLETOWN, NJ 07748

Report of Independent Registered Public Accounting Firm

To the Board of Directors and
Stockholders of Mexoro Minerals Ltd.

We have audited the accompanying consolidated balance sheets of Mexoro Minerals Ltd. (a Development Stage Company) as of February 28, 2009 and February 29, 2008, and the related consolidated statements of stockholders’ deficiency, operations and comprehensive income (loss), and cash flows for the two year period ended February 28, 2009 and for period from March 1, 2004 (Development Stage) to February 28, 2009. 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. The related consolidated statements of stockholders’ deficiency, operations and comprehensive income (loss), and cash flows from April 27, 1997 (Development Stage) to February 29, 2004 and March 1, 2004 (Development Stage) to February 28, 2007 were audited by other auditors whose report dated May 31, 2007 expressed an unqualified opinion, with an explanatory paragraph discussing the Company’s ability to continue as a going-concern. Our opinion on the consolidated stockholders’ deficiency, consolidated statements of operations and comprehensive income (loss), and consolidated cash flows from April 27, 1997 (Development Stage) to February 29, 2004 and March 1, 2004 (Development Stage) to February 28, 2007, is based solely on the reports of other auditors.

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. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mexoro Minerals Ltd. as of February 28, 2009 and February 29, 2008, and the results of its operations and its cash flows for the two-year period ended February 28, 2009 and the period from March 1, 2004 (Development Stage) to February 28, 2009, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has a history of operating losses, a working capital deficiency of $4,657,260 at February 28, 2009 and a cumulative loss during the development stage of $41,864,219. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Meyler & Company, LLC
June 11, 2009

MEXORO MINERALS LTD.
(A Development Stage Company)

Consolidated Balance Sheets
(Expressed in U.S. Dollars)

		August 31, 2009				February 28, 2009				February 29, 2008
		(Unaudited)
Assets
Current
Cash and cash equivalents		$	8,146			$	38,704			$	12,947
Accounts receivable			393,150				248,589				278,847
Prepaid expenses			30,326				34,048				104,936
			431,622				321,341				396,730
Equipment (note 4)			264,843				275,900				460,941
Total assets		$	696,465			$	597,241			$	857,671
Liabilities
Current
Accounts payable and accrued liabilities		$	2,175,588			$	2,679,512			$	655,677
Current portion of loans payable (note 9)			60,248				63,232				71,256
Promissory notes (note 7)			1,150,377				968,543				1,480,702
Current portion of convertible debentures (note 8)			1,746,211				1,267,314				—
			5,132,424				4,978,601				2,207,635
Loans payable (note 9)			740				7,608				27,481
Convertible debentures (note 8)			866,994				673,887				—
Total liabilities			6,000,158				5,660,096				2,235,116
Stockholders’ deficiency
Capital stock
Preferred stock
Authorized: 20,000,000 shares without par value (note 10)
Issued: nil			—				—				—
Common stock
Authorized: 200,000,000 shares without par value
Issued: 38,420,493 (note 11)			27,050,401				25,556,901				22,978,654
Additional paid-in capital			13,122,872				12,676,908				11,155,687
Stock subscriptions			170,000				121,258				330,000
Accumulated deficit from prior operations			(2,003,427	)			(2,003,427	)			(2,003,427	)
Accumulated deficit during the development stage			(43,847,088	)			(41,864,219	)			(33,828,011	)
Other comprehensive income (loss)			203,549				449,724				(10,348	)
Total stockholders’ deficiency			(5,303,693	)			(5,062,855	)			(1,377,445	)
Total liabilities and stockholders’ deficiency		$	696,465			$	597,241			$	857,671