UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

T

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the Fiscal Year Ended December 31, 2009

OR

£

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. – 000-29595

TARA GOLD RESOURCES CORP.

 (Name of Small Business Issuer in its charter)

Nevada		90-0316566
(State of incorporation)		(IRS Employer Identification No.)
2162 Acorn Court Wheaton, IL		60189
(Address of Principal Executive Office)		(Zip Code)

Registrant's telephone number, including Area Code:   (630) 462-2079

Securities registered pursuant to Section 12(b) of the Act:    None

Securities registered pursuant to Section 12(g) of the Act: (Title of Class) Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 Yes £   No T  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 Yes £   No T  

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  £    No T

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  £   No £

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K  T

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):

Yes  £    No T

The aggregate market value of the voting stock held by non-affiliates of the Company on June 30, 2009 was approximately $13,955,000.

As of December 8, 2010, the Company had 102,795,119 outstanding shares of common stock.

Documents incorporated by reference:

None

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

         This report includes "forward-looking statements". All statements other than statements of historical facts included in this report, regarding the Company’s financial position, business strategy, plans and objectives, are forward-looking statements.  Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which such forward-looking statements are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct.

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ITEM 1.  BUSINESS

Tara Gold (the “Company”), was incorporated in 1999 in Nevada as Westnet Communications Group, Inc.  On April 1, 2001 the Company acquired MerchantPark Communications, Inc. for shares of its common stock.  After this acquisition the Company’s operations involved the development of software which could be used by small businesses for web-site development and hosting.

In March 2002 the Company’s discontinued its software development operations and was inactive until early 2004.  In November 2003 the Company changed its name to American Stellar Energy, Inc., and in early 2004 began acquiring oil and gas properties.  In 2005 the Company sold its oil and gas properties after it determined that these properties were not economical.

In February 2006, the Company changed its name to Tara Gold Resources.

In May 2005 the Company, through its subsidiary Corporacion Amermin S.A. de C.V. (“Amermin”), began acquiring mining properties in Mexico.  In May 2006, the Company formed Tara Minerals Corp. (“Tara Minerals”), which owns 99.9% of American Metal Mining (“AMM”).  As of December 8, 2010 Tara Minerals also owns 90% of the common stock of Adit Resources Corp. (“Adit”), which in turns owns 99.9% of American Copper Mining, S.A. de C.V. (“ACM”), which was established in December 2006.  Adit was organized in June 2009 and ACM was acquired by Adit in June 2009. Amermin, Adit and ACM focus on gold mining concessions.  AMM focuses on industrial minerals, e.g. copper, zinc.  Amermin, AMM and ACM are Mexican corporations. All of the Company’s operations in Mexico are conducted through its Mexican subsidiaries.  At December 8, 2010, the Company owned 75% of the outstanding common stock of Tara Minerals.

Unless otherwise indicated, all references to Tara Gold include the operations of its subsidiaries, and all references to Adit include the operations of its subsidiary.

Tara Gold’s plan is to acquire low-cost properties that have the potential to yield high returns.  After acquiring a property and selecting a possible exploration area through its own efforts or with others, Tara Gold will typically compile reports, past production records and geologic surveys concerning the area.  Tara Gold will then undertake a field exploration program to determine whether the area merits work.  Initial field exploration on a property normally consists of geologic mapping and geochemical and/or geophysical surveys, together with selected sampling to identify host environments that may contain specific mineral occurrences.  If an area shows promise, geologic drilling programs may be undertaken to further define the existence of any economic mineralization.  If such mineralization is delineated, further work may be undertaken to estimate ore reserves, evaluate the feasibility for the development of the mining project, obtain permits for commercial development, and, if the project appears to be economically viable, proceed to place the deposit into commercial production.

The capital required for exploration and development of mining properties is substantial.  Tara Gold plans to finance its future operations through joint venture arrangements with third parties (generally providing that the third party will obtain a specified percentage of Tara Gold’s interest in a certain property in exchange for the expenditure of a specified amount), the sale by Tara Gold of interests in properties, and by the sale of its common stock.    

The exploration and development of properties that are joint ventured with third parties are managed by one of the joint venture participants which is designated as the operator.  The operator of a mining property generally provides all labor, equipment, supplies and management on a cost plus fee basis and generally must perform specific tasks over a specified time period.  Separate fees may be charged to the joint ventures by the operator and, once certain conditions are met, the joint ventures are typically required to pay the costs in proportion to their interests in the property.    

In connection with the acquisition of a property, Tara Gold may conduct limited reviews of title and related matters and obtains representations regarding ownership.  Although Tara Gold plans to conduct reasonable investigations (in accordance with standard mining practice) of the validity of ownership, it may be unable to acquire good and marketable title to its properties.

Tara Gold had interests in the mining properties listed below. Prior to December 31, 2009, Tara Gold sold its interests in the San Miguel, Santa Cruz and Lluvia de Oro prospects and dropped the La Millonaria and Cucurpe prospects.

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There is no assurance that any of Tara Gold’s remaining properties will be capable of producing precious metals in commercial quantities.

In Mexico land size is denominated in hectares and weight is denominated in tonnes.  One hectare is equal to approximately 2.47 acres and one tonne is equal to 2,205 pounds.

La Currita Prospect

Tara Gold acquired the La Currita property in May 2005 from Minera Tres de Mayo, S.A.  In consideration for the assignment of its interest in this prospect, Tara Gold paid Minera Tres de Mayo $1,200,000, plus $180,000 of value-added tax.

In December 2008, Tara Gold signed an option agreement to Coeur d’ Alene Mines Corporation which gave Coeur d’ Alene Mines Corporation the right to acquire a 100% interest in the concession from Tara Gold and all data in Tara Gold’s possession and control. In 2009 the option was terminated.

The La Currita property covers 65 hectares and is located in Chihuahua approximately 400 km southwest of the city of Chihuahua, northern Mexico.  The property is situated on the western edge of the Sierra Madre Occidental in the Temoris mining district.  The La Currita property includes four mines and a floatation mill.  

The La Currita mines were in production between 1983 and 1998.  Mining operations resumed in early January 2007 and had terminated by October 2008.

Currently, Tara Gold is looking for a joint venture partner which would be willing to fund the development of this prospect.  In the alternative, Tara Gold, depending on its ability to raise additional capital, will continue the development of this prospect with its own funds.

San Miguel Prospect

Tara Gold acquired the San Miguel property in May 2005 from Minera Navajoa, S.A. for $700,000, plus an extension/option payment of $22,000.    

Pursuant to the terms of an August 2005 agreement, Paramount Gold Mining Corp. acquired a 70% interest in the San Miguel prospect by:

·

Paying Tara Gold $250,000;

·

Paying $150,000 directly to Minera Navajoa;

·

Issuing 718,519 shares of its common stock to Tara Gold; and

·

Spending $2.5 million on a trenching, drilling and sampling program on the property.

Paramount was the operator of the property and Tara Gold and Paramount were required to jointly approve any exploration or development program concerning the property.

The San Miguel property is comprised of 276 hectares and is located in Chihuahua, Mexico in the Temoris mining district, which is part of the Sierra Madre Occidental.  

In 2008, Tara Gold disputed certain amounts billed by Paramount. In October 2008, the dispute was eliminated when Paramount purchased Tara Gold’s interest in this prospect for 7,000,000 shares of its common stock.  The shares of Paramount were received in the second quarter of 2009.

Santa Cruz

The Santa Cruz prospect was sold to Paramount, along with Tara Gold’s interest in the San Miguel prospect.   Paramount will issue 350,000 shares of its common stock to Tara Gold when defects in title to this prospect have been resolved. Due to claimed defects in title, Tara Gold agreed that Paramount would only be required to issue 300,000 shares to complete the purchase. The Paramount shares were received in the second quarter of 2010.

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Las Minitas Prospect

Tara Gold acquired the Las Minitas property in March 2006 from Isidro Hernandez Pompa.  In consideration for the assignment of his interest in this prospect Tara Gold, pursuant to a January 2008 amended agreement, agreed to pay Mr. Pompa $2,150,000, plus $322,500 in value-added tax.

In 2007 Tara Gold signed an agreement with Pershimco Resources Ltd. providing Pershimco the option to acquire a 75% interest in the Las Minitas prospect.  In March 2008 Tara Gold and Pershimco agreed to terminate their joint venture with respect to the Las Minitas prospect.  The termination agreement between Tara Gold and Pershimco did not require Tara Gold to refund $570,000 previously paid by Pershimco to Tara Gold.  The agreement with Pershimco contained a clause that any prospects purchased by Pershimco adjacent to Las Minitas would revert to Tara Gold.  This resulted in Tara Gold obtaining the Auriferos V Fraccion 1 and 2 concessions, which are considered to be a part of the Las Minitas prospect.

The Las Minitas prospect is 1,226.9746 hectares in size and is located in Sonora, Mexico, approximately 40 kilometers northwest of the town of Alamos.  The property lies at the western edge of the Sierra Madre Occidental gold-silver belt.

As of December 8, 2010 Tara Gold was negotiating an amendment to its agreement with all vendors relating to the Las Minitas Prospect.

Mariana and Mezquite Prospect

In March 2008, Pershimco Resources transferred the mineral claims and obligations linked to Mariana and Mezquite prospect to Tara Gold. The obligations linked to Mariana and Mezquite are the remaining debt payments of $190,000, which includes value added taxes of $24,783 owed to a third party.

The Mariana and Mezquite prospect is 276 hectares in size and is located in Sonora, Mexico, near the town of Alamos and Quiriego.

As of December 8, 2010 Tara Gold is in negotiations to amend to its agreements with all vendors relating to Mariana and Mesquite Prospect.

Lluvia de Oro Prospect

Tara Gold acquired the Lluvia de Oro property in March 2006 from Atotonilco Construcciones,  S. A. in consideration of $4, 000,000, plus value-added tax of $600,000.

On April 4, 2006 Tara Gold signed an agreement, as amended on September 12, 2006, with Northwest Mining, formerly known as Columbia Metals Corporation, providing Northwest the right to acquire a 100% interest in the Lluvia de Oro prospect by:

·

paying $550,000 to Tara Gold;

·

paying all remaining property payments;

·

issuing 1,000,000 shares of its common stock to Tara Gold;

·

reserving a 20% net cash flow interest in favor of Tara Gold.

The net cash flow interest entitled Tara Gold to 20% of the revenue from the operation of the property, less all expenses associated with maintaining and operating the property.  

By December 2008 Northwest had made all required payments and title to this prospect was conveyed to Northwest in September 2009.

In December 2009, Tara Gold sold its 20% interest in Lluvia de Oro to Northwest for $200,000 in cash and 2,500,000 of Northwest Mining common stock. Northwest will issue an additional 2,500,000 shares of its common stock to Tara Gold when, during any three-month period, it sells 3,750 ounces of gold produced from this prospect.

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La Millionaria Prospect

Pursuant to a June 2005 agreement, which was amended in October 2006, Tara Gold acquired four concessions, which comprise the “La Millionaria” property, from an unrelated third party.  

In November 2007 Tara Gold entered into an agreement with La Camera Mining, Inc. which allowed La Camera to earn a 70% interest in the La Millionaria prospect.  In July 2008 the agreement with La Camera Mining was terminated.

The La Millionaria prospect was acquired from Minas de Topago, S.A. de C.V.  Minas de Topago was also the owner of the Centenario prospect, which is part of the Don Roman groupings now owned by Tara Minerals.  In June 2009 the La Millionaria prospect was returned to Minas de Topago and $197,956 of the deposit for La Millonaria prospect were credited towards the Centenario note and $462,900 were credited towards the balance due on the Pilar note.

Curcurpe Prospect

In April 2007 Tara Gold entered into an agreement with Carlos Arnold Acuna Aranda for the purchase of five concessions, known as “Curcurpe”.  The purchase price for the concessions was $2,000,000, plus a value-added tax of $300,000 and was payable over a four-year period.

In November 2007 Tara Gold entered into an agreement with La Camera Mining, Inc. which allowed La Camera to earn a 70% interest in the Curcurpe prospect.  In June 2008, the agreement with La Camera Mining was terminated.

In July 2008 the Curcurpe prospect was returned to Mr. Acuna.

Dos Amigos/Unificación Rey de Oro Prospects

In October 2006 Tara Gold purchased 97% of a Mexican corporation named Compañía Minera La Escuadra, S.A. de C.V.  At the time of this acquisition, the primary assets of Compania Minera la Escuadra were the Dos Amigos and Unification Rey de Oro mining prospects.  In September 2008, Tara Gold signed the advanced termination and mutual settlement agreement pertaining to the returned of Compañía Minera La Escuadra, S.A. de C.V. to its original owners.

The Dos Amigos and Unification Rey de Oro prospects were later acquired by Tara Gold’s subsidiary, Adit, as part of the Picacho Group of concessions.

La Estrella Prospect

In January 2006 Tara Gold entered into an agreement to purchase the La Estrella mining property for $400,000.  Tara Gold has paid $24,000 toward the purchase price but the seller of the property has not complied with his obligations under the purchase agreement.  Tara Gold is reviewing the situation with its legal advisors in Mexico.

La Virginia Prospect

In February 2007 Tara Gold entered into an agreement to purchase the La Virginia mining property for $600,000.  Tara Gold has paid $5,500 toward the purchase price but the seller of the property has not complied with his obligations under the purchase agreement.  Tara Gold is reviewing the situation with its legal advisors in Mexico.

Tara Minerals Corp.

As of December 8, 2010, Tara Gold owned 75% of the outstanding common stock of Tara Minerals Corp.  Tara Minerals Corp. has a 100% ownership in the Don Roman group of concessions which are described below.

Don Roman Groupings

The Don Roman Groupings, comprised of 7,032 hectares, were acquired in October 2006 and November 2008 from unrelated third parties for approximately $2,846,229, plus value added taxes of approximately $460,311. The Don Roman Groupings consist of the Pilar, Don Roman, Las Nuvias, and the Centanario mining prospects

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The remaining payments for the Don Roman Groupings are due according to the following schedule:

2010

$     362,063

2011

546,673

2012

       692,330

$  1,601,066

The Don Roman Groupings are located approximately 25 kilometers from the town of Choix, Sinaloa State, Mexico.  The properties are accessed by driving a 4x4 vehicle on Sinaloa State maintained roads along the north side of the Rio Fuerte River to the village of Altamira, located in the center of the La Reforma Mining District.  From Altamira, the road trends due north to the village of Mocoribo.  The properties can then be reached by hiking two kilometers from the village.

Preliminary and continuing evaluation of the Don Roman Groupings has identified numerous mineralized systems at various locations on the property, some of which include a series of parallel NE trending lead, zinc, silver structures that can be traced for more than 300 meters; an abandoned lead, zinc, silver mine; and historic vein-type gold mineralization.  A number of these mineralized structures lie within a complex suite of volcanic-granitic and sedimentary (carbonate) rocks.  Preliminary evaluation of the property has indicated the potential for five separate mineral systems each having varying mineral characteristics.  Initial sampling has indicated the potential for two lead, zinc, silver systems; two gold/copper systems; and one iron ore, gold, copper system. Permits needed for active mining have been obtained.

In the third quarter of 2010, Tara Minerals continued Don Roman operations but struggled to find the right professional team to optimize processes to segregate and control mined material. Due to this, recovery rates and concentrate shipments have been inconsistent. Metallurgical testing is currently being performed on mined material from El Sapo and other recently discovered structures at Don Roman to improve recovery rates at the mill. Management has spent the last couple of months reviewing proposals from turn-key contract operators to run Don Roman at expanded capacity and improved recovery rates. Management is currently in discussions with a preferred experienced team. Tara Minerals management is committed to resolve all operational issues in an expeditious manner. Tara Minerals believes that both cash and securities on hand, and joint venture relationships will satisfy its working capital needs for 2010.

The Company’s future plans will be dependent upon the amount of capital available to it and the amount of cash provided by its operations.  

Adit Resources Corp.

As of December 8, 2010, Tara Gold owned 75% of the outstanding common stock of Tara Minerals Corp.  As of December 8, 2010 Tara Minerals in turn owns 90% of the outstanding common stock of Adit Resources Corp.  Adit Resources owns a 100% interest in the mining prospect described below.  Although Adit believes that this property has deposits of gold and silver, the property is in the exploratory state, does not have any known reserves, and may never produce any of these metals in commercial quantities.

Picacho Prospect

Between October 2006 and January 2007 Tara Gold acquired six mining claims known as the “Picacho prospect” from Emilio Acuña Peralta.  Under the terms of the agreement with Mr. Acuña, Tara Gold had the right to acquire a 100% interest in the property by making payments to Mr. Acuña totaling $7,000,000 over a five-year period.  Due to economic circumstances relating to the current recession, Tara Gold failed to make a payment due in November 2008.   In July 2009 Tara Minerals agreed to acquire the Picacho claims, which then included the Dos Amigos and Unification Rey de Oro prospects for a total of eight concessions, from Mr. Acuña for $4,800,000, plus value-added tax of $720,000.  Tara Minerals paid $575,000 of the purchase price in June 2009.  The $575,000 paid to Mr. Acuña in June 2009 was borrowed from Tara Gold by Tara Minerals.  In December 2009 Adit paid an installment of $278,500 (which included applicable value added taxes) toward the purchase.

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In July 2009 Tara Minerals transferred the Picacho prospect to Adit.  In connection with the transfer of the prospect, Adit issued Tara Minerals a promissory note in the principal amount of $650,000 to compensate Tara Minerals for its down payment toward the purchase price of the property and to reimburse Tara Minerals for other amounts advanced on behalf of Adit.  The note is unsecured, bears interest at 3.25% per year, and is due and payable on June 30, 2011.  Adit has since repaid $200,000 towards this note.

On March 31, 2010 Adit and Mr. Acuna amended their agreement.  Under the revised arrangements Adit paid Mr. Acuna $500,000 in cash (plus $80,000 in value added taxes); and in consideration for the transfer of all technical data relating to the prospect, issued Mr. Acuna 320,000 shares of Adit’s common stock, which was valued at $2.50 per share, and 437,500 shares of Tara Minerals’ common stock, which was valued at $4.00 per share.  

Adit paid for the Tara Minerals shares by means of a note in the principal amount of $1,750,000.  The note bears interest at 6% per year and is be due and payable on March 31, 2012. At any time after July 1, 2010 Tara Minerals may convert the outstanding principal, plus accrued interest, into shares of Adit’s common stock.  Tara Minerals will receive one share of Adit’s common stock for each $1.00 of principal and interest converted.  

The Picacho Prospect, which includes mineral interests staked by Tara Gold, has a surface area of approximately 7,060 hectares, and is located in the Northern Sierra Madre Gold Belt, 120 kilometers south of the U.S. border, in Sonora, Mexico.  The Picacho Prospect is located approximately 24 kilometers from the town of Bacoachi, Sonora State, Mexico where there is a national paved highway, the national power grid, and a 1200 meter airstrip. The town of Bacoachi has a population of approximately 1500, with most amenities needed to support Adit’s planned exploration and development program.

The predominant rocks in the area are Late Cretaceous to mid-Tertiary andesitic flows, tuffs, and breccias overlain by Tertiary flows and tuffs and crosscut by rhyodacite intrusives.  The Picacho Mining District was reportedly discovered in 1898 with unrecorded gold and silver production between 1900 and 1935, primarily from the Picacho Mine. In the opinion of Adit, the district needs thorough exploration using present day, industry standard, exploration methods, including geochemistry, geophysics, and geology. Adit feels that this area may potentially host precious metals that were never discovered or exploited due in part to market conditions, lack of technology, and lack of funding.  

There are approximately 2,000 meters of underground workings at the old Picacho mine and perhaps a few hundred meters of workings elsewhere on the property. Most of the Picacho mine workings that are on the vein have been sampled at 3 to 5 meter intervals.  

A review of past work and documentation of vein textures and mineralogy, including over 5300 meters of diamond drilling, suggest that the level of exposure in Picacho’s hydrothermal system is quite high, thus a precious metal zone could persist for several hundred, perhaps as much as 600 meters, below the surface.

While there are no well-defined reserves at Picacho, using the sampling of the underground workings and the drilling intercepts along the main portion of the Picacho vein, it has been possible to roughly define four mineralized zones. Three of the zones are 70 to 90 meters wide along strike, but the third zone appears to be at least 120 meters wide along strike and open to the north. The zone appears to widen with depth, with increasing grades.

Between June 2006 and May 2007, Tara Gold mined a small amount of ore containing gold and silica.  The mineralized ore was crushed at the mill and then sold to an unrelated third party.

Assuming Adit has the necessary funding or has an agreement with a joint venture partner with adequate funding; the following shows the timing and estimated cost of the present exploration plan for the Picacho Prospect property, with emphasis on the Picacho Vein:

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United States Mining Laws and Regulations

In the United States, unpatented mining claims on unappropriated federal land may be acquired pursuant to procedures established by the Mining Law of 1872 and other federal and state laws.  These acts generally provide that a citizen of the United States (including corporations) may acquire a possessory right to develop and mine valuable mineral deposits discovered upon unappropriated federal lands, provided that such lands have not been withdrawn from mineral location, e.g., national parks, military reservations and lands designated as part of the National Wilderness Preservation System.  The validity of all unpatented mining claims is dependent upon inherent uncertainties and conditions.  These uncertainties relate to such non-record facts as the sufficiency of the discovery of minerals, proper posting and marking of boundaries, and possible conflicts with other claims not determinable from descriptions of record.  Prior to discovery of a locatable mineral thereon, a mining claim may be open to location by others unless the owner is in possession of the claim.  

The domestic exploration programs conducted by Tara Gold will be subject to federal, state and local environmental regulations.  The United States Forest Service and the Bureau of Land Management extensively regulate mining operations conducted on public lands.  Most operations involving the exploration for minerals are subject to existing laws and regulations relating to exploration procedures, safety precautions, employee health and safety, air quality standards, pollution of stream and fresh water sources, odor, noise, dust, and other environmental protection controls adopted by federal, state, and local governmental authorities as well as the rights of adjoining property owners.  Tara Gold may be required to prepare and present to federal, state, or local authorities data pertaining to the effect or impact that any proposed exploration or production of minerals may have upon the environment.  All requirements imposed by any such authorities may be costly and time-consuming, and may delay commencement or continuation of exploration or production operations.

Future legislation and regulations are expected to continue to emphasize the protection of the environment, and, as a consequence, the activities of Tara Gold may be more closely regulated to further the cause of environmental protection.  Such legislation and regulations, as well as future interpretation of existing laws, may require substantial increases in capital and operating costs to Tara Gold and may result in delays, interruptions, or a termination of operations, the extent of which cannot be predicted.

Mining operations in the United States are subject to inspection and regulation by the Mine Safety and Health Administration of the Department of Labor (MSHA) under provisions of the Federal Mine Safety and Health Act of 1977.

Tara Gold’s operations will also be subject to regulations under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA or Superfund), which regulates and establishes liability for the release of hazardous substances, and the Endangered Species Act (ESA), which identifies endangered species of plants and animals and regulates activities to protect these species and their habitats. Tara Gold may incur expenditures for land reclamation pursuant to federal and state land restoration laws and regulations.  Under certain circumstances, Tara Gold may be required to close an operation until a particular problem is remedied or to undertake other remedial actions.

Mexican Mining Laws and Regulations

In Mexico, Article 27 of the Mexican Constitution grants the ownership of essentially all minerals to the Mexican nation.  The right to exploit those minerals is given to private parties through concessions issued by the Mexican government.  The current Mining Law of Mexico was enacted in 1992.  Concessions are granted on mining lots, the sides of which measure 100 meters, or a multiple of 100, except when adjoining lots (granted when there were no size requirements) require a smaller size.  

An exploration concession is granted to the first applicant that meets the requirements of the Mining Law, the most important of which is that the claimed area is deemed to be “free land”.  Under the Mining Law, areas that are already covered by mining concessions or applications for mining concessions are not free, as well as reserved areas such as the coast and the seabed.

Exploration mining concession applications are filed at government offices.  Exploration concessions are valid for fifty years and give their holders the right to carry out exploration work and, if warranted, any mine on the concession put into production.

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Mining concessions do not grant the holder right to enter or use the surface land of the mining lots.  It is therefore necessary to obtain the permission of the surface owner for that purpose.  Typically, a verbal authorization with no consideration is granted for prospecting and sample gathering.  A simple letter agreement or contract is normally used for drilling, trenching, or basic road building.  For more advanced exploration activities, a small monetary consideration is normally required.  In some cases the concessionaire is also required to make minor improvements which benefit the local community such as fixing a road or fence or building an earthen dam.  Building and operating a mine requires a more formal agreement.  If an agreement cannot be reached with the surface owner, the Mining Law gives the concessionaire the right to request a temporary occupation of the land or an expropriation (or an easement for the construction of roads, power lines, water pipes, etc.).  Compensation is set through an appraisal made by the federal government.

A concessionaire’s most important obligation is the performance of assessment work on the mining lots.  A minimum amount of assessment work measured in monetary terms must be performed each year, depending on the size of the mining lot and, for an exploration mining concession, the number of years elapsed since its issue, pursuant to minimum investment tables established by the Mexican government.  Assessment work may be done either through expenditures or the sale of minerals.  A report must be filed in May of every year regarding the work for the previous calendar year.  Lack of performance of the minimum work will result in the cancellation of the concession; payment to the government in lieu of required assessment of work is not allowed.

Concessionaires must comply with federal environmental regulations which generally require that mining activities be subject to an environmental impact statement authorization.  Normally an environmental impact statement authorization can be obtained in six to twelve months from the date of its filing.  However, mining operations which do not exceed levels established by the Mexican government are not required to file an environmental impact statement.

The Mining Law forbids concessionaires from removing mine timbering and supports and requires compliance with all safety rules promulgated by the Mexican government.

Mexican and foreign individuals, as well as Mexican corporations, are allowed to hold mining concessions.  Although foreign corporations may not hold mining concessions, foreign corporations may, however, own Mexican corporations.

Potential Acquisition of Tara Gold by Tara Minerals

In September 2010, Tara Gold entered into a tentative agreement with Tara Minerals which provided that Tara Minerals will acquire all of the outstanding shares of Tara Gold by exchanging one Tara Mineral share for two Tara Gold shares. In an effort to avoid any conflicts due to common directors, the transaction will require the approval of non-affiliate shareholders owning a majority of the outstanding shares of Tara Minerals and Tara Gold.

General  

As of December 8, 2010, Tara Gold had three part-time employees, including its two officers.

Tara Gold’s offices are located at 2162 Acorn Court, Wheaton, IL 60189 and consist of approximately 150 square feet of space, which is supplied without charge by Francis Richard Biscan, Jr., Tara Gold’s President.  Tara Gold’s offices are expected to be adequate to meet its foreseeable future needs.    

Tara Gold’s website is www.taragoldresources.com

ITEM 1A.

RISK FACTORS

There is no assurance that any of Tara Gold’s remaining properties will be capable of producing precious metals in commercial quantities.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 2.  

DESCRIPTION OF PROPERTY

See Item 1.  

ITEM 3.  

LEGAL PROCEEDINGS.

In May 2005 Tara Gold borrowed $25,000 from Daniel Wilson.  At Mr. Wilson’s option, the loan, plus accrued interest, could be converted into 907,139 shares of Tara Gold’s common stock at any time prior to May 2006.  Subsequent to May 2006, Mr. Wilson attempted to convert his notes but was advised by Tara Gold that his conversion rights had expired.  Mr. Wilson also claims that he is owed 833,333 shares of Tara Gold’s common stock for providing consulting services with respect to Tara Gold’s mining properties.  In January 2007 Tara Gold filed a lawsuit against Mr. Wilson in the U.S. District Court for the Northern District of Illinois seeking a ruling that Tara Gold did not owe any shares to Mr. Wilson.  The lawsuit was settled in February 2008 by Tara Gold issuing 850,000 shares of its common stock to Mr. Wilson.

On September 13, 2010, Tara Gold announced that it had entered into a tentative agreement with Tara Minerals which provided Tara Minerals would acquire all of the outstanding shares of Tara Gold by exchanging one share of Tara Mineral’s common stock for two Tara Gold shares.  

On September 20, 2010 Chris Columbo filed a lawsuit in the District Court for Carson City Nevada, against Tara Gold, Tara Gold’s officers and directors and Tara Minerals. The essence of the lawsuit was to obtain the fairest price for Tara Gold, whether from Tara Minerals or a third party.  On October 25, 2010 Mr. Columbo voluntarily dismissed his lawsuit against Tara Gold and other defendants.

On October 22, 2010 Patricia J. Root filed a lawsuit in the Circuit Court for Dupage County, Illinois, against, Tara Gold, Tara Gold’s directors and Tara Minerals.  The essence of the lawsuit is to prevent Tara Mineral’s proposed acquisition of Tara Gold.

Tara Gold believes the lawsuit filed by Ms. Root is premature since, as noted in the September 13, 2010 press release, the transaction is tentative and is subject to the approval of the shareholders of Tara Gold who are not officers or directors of Tara Gold.  No binding agreement between Tara Gold and Tara Minerals has been signed.  

On May 6, 2010, the Securities and Exchange Commission temporarily suspended trading in Tara Gold’s securities due to the failure of Tara Gold to file its 10-Q and 10-K reports pursuant to Section 13 of the Securities and Exchange Act of 1934.

On the same day the Commission issued an Order Instituting Proceedings whereby the Commission sought to revoke Tara Gold’s registration of its common stock pursuant to Section 12(j) of the Exchange Act.

On September 7, 2010 an administrative law judge issued an Initial Decision revoking Tara Gold’s registration of its common stock. The Initial Decision will not become final until the Commission enters an order of finality. The Commission will enter an order of finality unless a party files a Petition for Review or a motion to correct a manifest error of fact, or unless the Commission determines on its own to review the Initial Decision.

On September 24, 2010 Tara Gold filed a Petition to Review the decision of the administrative law judge. On September 30, 2010 the Commission granted Tara Gold’s Petition for Review.

On November 1, 2010 Tara Gold filed a brief in support of its petition with the Commission. The SEC’s Enforcement Division has until December 1, 2010 to file a brief in opposition. Tara Gold then has until December 15, 2010 to file a reply to the Division’s opposition.

After all briefs and replies have been filed, the Commission will decide if Tara Gold’s registration pursuant to Section 12(j) of the Exchange Act should be revoked.

Other than the foregoing, Tara Gold is not involved in any legal proceedings and Tara Gold does not know of any legal proceedings which are threatened or contemplated.

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ITEM 4.  

(REMOVED AND RESERVED)

ITEM 5.

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.

As of December 8, 2010 there were approximately 1,500 holders of Tara Gold’s common stock, which number includes shares held by banks, brokerage houses and securities depositories.  Prior to May 2010 the common stock of Tara Gold traded in the over-the-counter market, which is sometimes referred to as the “pink sheets”, under the symbol: TRGD. In May 2010 the Securities and Exchange Commission stopped the trading in Tara Gold’s common stock due to the fact that Tara Gold was delinquent in filing its 10-K and 10-Q reports. As a result of the SEC’s stop trading order Tara Gold’s common stock was removed from the Pink Sheets and now trades only on an unsolicited basis (See also Item 3 of this report). Shown below are the high and low quotations for Tara Gold’s common stock for the periods indicated as reported by the FINRA.  The market quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not necessarily represent actual transactions.

Quarter Ending	High	Low
3/31/08	$ 0.36	$ 0.32
6/30/08	$ 0.27	$ 0.25
9/30/08	$ 0.12	$ 0.10
12/31/08	$ 0.07	$ 0.05
3/31/09	$ 0.10	$ 0.10
6/30/09	$ 0.16	$ 0.16
9/30/09	$ 0.32	$ 0.30
12/31/09	$ 0.39	$ 0.36

As of December 8, 2010 Tara Gold had 102,795,119 outstanding shares of common stock. As of that same date Tara Gold did not have any outstanding options, warrants or securities which were convertible into shares of Tara Gold’s common stock.

Holders of common stock are entitled to receive dividends as may be declared by Tara Gold’s Board of Directors. Tara Gold’s Directors are not restricted from paying any dividends but are not obligated to declare a dividend.  No dividends have ever been declared to private investors and it is not anticipated that dividends will ever be paid.

Trades of Tara Gold’s common stock are subject to Rule 15g-9 of the Securities and Exchange Commission, which rule imposes certain requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors.  For transactions covered by the rule, brokers/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser's written agreement to the transaction prior to sale.  The Securities and Exchange Commission also has rules that regulate broker/dealer practices in connection with transactions in "penny stocks".  Penny stocks generally are equity securities with a price of less than $5.00 (other than 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 that security 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 the rules, to deliver a standardized risk disclosure document prepared by the Commission 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 monthly account statements showing the market value of each penny stock held in the customer's account.  The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.  These disclosure requirements may reduce the level of trading activity in Tara Gold’s common stock.

During the years ended December 31, 2009 and 2008 neither Tara Gold, nor any of Tara Gold’s officers or directors, purchased any shares of Tara Gold’s common stock in the open market.

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ITEM 6.

SELECTED FINANCIAL DATA

Not applicable.

ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION

During 2008 and 2009 Tara Gold’s general and administrative expenses increased due to continued mining operations greater costs of flushing out our infrastructure of the Company, including increased consultants and professional fees.

During the year ended December 31, 2008 Tara Gold’s operations used approximately $4,304,,000 in cash.  During this same period Tara Gold paid approximately the following for investing and financing activities as reported on its statement of cash flows:

·

$44,000 toward mining equipment and other equipment,

·

$2,808,000 in loans to third parties,

·

$656,000 for construction in progress, and

·

$223,000 toward the purchase of mining concessions.

These payments were offset by the following:

·

$1,756,000 in payments from Joint Venture partners,

·

$1,093,000 in proceeds from the sale of marketable securities,

·

$774,000 from the sale of common stock for cash of a subsidiary

·

$384,000 for the sale of assets, and

·

$1,908,000 for the sale of mining concessions.

 

During the year ended December 31, 2009, Tara Gold’s operations used approximately $2,178,000 in cash.  During this same period Tara Gold paid:

·

$109,000 for mining equipment, furniture and fixtures,

·

$586,000 in loans to unrelated third parties,

·

$643,000 toward the purchase price of mining concessions,

·

$1,498,000 for construction in progress, and

These payments were offset by the following:

·

$4,547,000 in proceeds from the sale of marketable securities, and

·

$2,668,000 from the sale of common stock for cash of a subsidiary.

Tara Gold anticipates that its capital requirements for the twelve months ending September 31, 2011 will be:

Property payments and taxes – Pilar de Mocoribo property		$        535,659
Property payments and taxes – Pirita property		170,455
Exploration and Development – Don Roman Groupings		1,000,000
Exploration and Development -  Picacho Prospect		500,000
Exploration and Development – Centenario		300,000
Property payments and taxes – Centenario		526,088
Property payments and taxes – Mariana and Mezquite		62,905
Property payments and taxes – Las Minitas		133,614
Exploration and Development – Godinez Joint Venture		200,000
General and administrative expenses		500,000
Total		$      3,928,721

The capital requirements shown above include capital required by Tara Minerals Corp. and subsidiaries.

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Tara Gold does not anticipate that it will need to hire any additional employees prior to May 31, 2011.

Tara Gold does not have any commitments or arrangements from any person to provide Tara Gold with any additional capital.  If additional financing is not available when needed, Tara Gold may not continue to operate in its present mode, may need to cease operations or may not be able to maintain its required SEC filings.  

In 2008, Tara Gold’s cash flow was substantial due to its ability to joint venture its mining concessions. However, several of Tara Gold’s joint venture partners defaulted on their agreements to provide funding. In 2009, Tara Gold did not enter in any joint ventures and the outstanding joint venture partner dissolved on the agreement.

See Note 1 to the financial statements included as part of this report for a description of Tara Gold’s significant accounting policies and recent accounting pronouncements.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 8.  

FINANCIAL STATEMENTS

See the financial statements attached to this report.  

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

None.

ITEM 9A. and 9A.(t)  CONTROLS AND PROCEDURES

Francis R. Biscan, Jr., Tara Gold’s President and Chief Executive Officer, and David A. Bizzaro, Tara Gold’s Principal Financial Officer, evaluated the effectiveness of Tara Gold’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report, and in their opinion Tara Gold’s disclosure controls and procedures were ineffective.  

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Tara Gold’s management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of Tara Gold’s principal executive and principal financial officers and implemented by its Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Tara Gold’s financial statements in accordance with U.S. generally accepted accounting principles.

Tara Gold’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of Tara Gold’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with U.S. generally accepted accounting principles, and that Tara Gold’s receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

In connection with the preparation of Tara Gold’s financial statements, management undertook an assessment of the effectiveness of Tara Gold’s internal control over financial reporting, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. Management’s assessment included an evaluation of the design of Tara Gold’s internal control over financial reporting and testing of the operational effectiveness of those controls.

 

Based on this evaluation, management has concluded that Tara Gold’s internal control over financial reporting was not effective as of December 31, 2009 due to its inability to prepare financial statements on a timely basis.

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There were no changes in Tara Gold’s internal controls over financial reporting that occurred during the fiscal year ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, Tara Gold’s internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION

Not applicable.

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Francis R. Biscan Jr. has been an officer and director of Tara Gold since August 2003.  Between 1997 and August 2003 Mr. Biscan was an independent financial consultant, providing advice to public and private companies in the areas of capital formation and mergers and acquisitions.  Mr. Biscan has also been an officer and director of Tara Minerals Corp., a subsidiary of Tara Gold, since May 2006.

David Bizzaro was appointed as Tara Gold’s Principal Financial and Accounting Officer on May 12, 2010.  Mr. Bizzaro has been the managing partner of The IFC Group, a firm which provides outsourced international controllership services to middle market companies, since January 2010.  Prior to founding The IFC Group, Mr. Bizzaro served as the Acting Chief Financial Officer for Rigid Building Systems Ltd. of Houston Texas during 2009.  From 2007 – 2009 he was Vice President of International Operations at High Street Partners, a global consulting and professional services firm.  Before that, Mr. Bizzaro served as the Sr. Vice President of International Finance at ICT Group, Inc., a publicly traded call center and BPO service provider.  Previous postings include Corporate Finance Director at Avaya Inc. from 2004 – 2006; Finance Director for Asia Pacifica at Ciena Corporation from 2001 – 2003 and Operations Finance Director for XO Communications from 2000 – 2001.  Mr. Bizzaro began his career with NCR Corporation where he held various financial leadership roles in the U.S., Spain and the Netherlands from 1988  – 2000.

Clifford A. Brown has been an officer and director of Tara Gold since November 2004.  Mr. Brown resigned as Tara Gold’s Principal Financial and Accounting Officer in May 2010.  Since 1989 Mr. Brown has been the President of Clifford A. Brown and Co., a firm which provides accounting and consulting services and sells accounting software.  Since 1993 Mr. Brown has served as the treasurer and Board member of Restoration Ministries, Inc., a non-profit corporation with 33 different ministries in Chicago.  Mr. Brown has also been an officer and director of Tara Minerals Corp., a subsidiary of Tara Gold, since May 2006.

Each director holds office until the next annual meeting of shareholders and until their successor has been elected and qualified.  Tara Gold’s officers are elected by its Board of Directors and hold office until their resignation or removal by the Board of Directors. Tara Gold believes its directors are qualified to act as such due to their long standing relationship with Tara Gold.

None of Tara Gold’s directors are independent as that term is defined in section 803 of the listing standards of the NYSE Amex.

Tara Gold does not have a compensation committee or an audit committee.  David A. Bizzaro is Tara Gold’s financial expert.  However, since Mr. Bizzaro is an officer of Tara Gold he is not independent as that term is defined in section 803 of the listing standards of the NYSE Amex.

Tara Gold has adopted a Code of Ethics applicable to its principal executive, financial, and accounting officers and persons performing similar functions.  Tara Gold’s Code of Ethics was filed as an exhibit to its annual report on Form 10-KSB for the year ended December 31, 2004.

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ITEM 11.  EXECUTIVE COMPENSATION

The following table shows, in summary form, the compensation earned or received by (i) Tara Gold’s Chief Executive Officer and (ii) by each other executive officer of Tara Gold who earned or received in excess of $100,000 during the three years ended December 31, 2009.  Tara Gold, through its subsidiary Tara Minerals, has adopted stock option and stock bonus plans.

(1)

The dollar value of base salary (cash and non-cash) earned.

(2)

The dollar value of bonus (cash and non-cash) earned.

(3)

During the periods covered by the table, the value of Tara Gold’s shares issued as compensation for services calculated in accordance with the Stock Compensation topic of the FASB ASC.

(4)

The amount recognized for financial statement reporting purposes, and calculated in accordance with the Stock Compensation topic of the FASB ASC, for options awarded during the year.

(5)

All other compensation received that Tara Gold could not properly report in any other column of the table.  

Mr. Brown was Tara Gold’s Principal Financial and Accounting Officer between November 2004 and May 2010.

In January 2008 Tara Gold entered into an employment agreement with Mr. Biscan which was renewed for 2009 and 2010, and expires on January 1, 2011.  The employment agreement provided that Tara Gold would pay Mr. Biscan a salary of $276,000 during the term of the agreement and requires Tara Gold to pay for Mr. Biscan’s medical, dental, optical, life and disability insurance.  In the event there is a material reduction in Mr. Biscan’s authority, duties or activities, in the event Mr. Biscan’s offices are moved to a location which is not conducive to operating in North America, or in the event there is a change in the control of Tara Gold, then Mr. Biscan may resign from his position at Tara Gold and receive the remainder of his $276,000 salary.  For purposes of the employment agreement, a change in control includes the acquisition of more than 50% of the outstanding shares of Tara Gold’s common stock by a third party or a change in a majority of Tara Gold’s directors.

Mr. Biscan’s employment agreement will also terminate upon the death or physical or mental disability of Mr. Biscan, in which case Mr. Biscan, or his legal representative, as the case may be, will be paid the salary provided by the employment agreement for a period of one year following Mr. Biscan’s death or disability.

In January 2008 Tara Gold entered into an employment agreement with Clifford A. Brown, which was extended to  January 1, 2011.  The employment agreement provides that Tara Gold will pay Mr. Brown a salary of $96,000 during the term of the agreement and requires Tara Gold to pay for Mr. Brown’s medical insurance.  

Tara Gold, through its subsidiary Tara Minerals, plans to sign an employment agreement to David A. Bizzaro subsequent to the filing of this document.

Stock Option and Bonus Plans

Tara Gold, through its subsidiary Tara Minerals, has adopted stock option and stock bonus plans.  A summary description of these plans follows.  In some cases these Plans are collectively referred to as the “Plans”.  All reference to options plans below reflect the Tara Minerals Stock Option Plans referred to as “Tara Gold’s”.

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Incentive Stock Option Plan.  The Incentive Stock Option Plan authorizes the issuance of shares of Tara Minerals’ common stock to persons that exercise options granted pursuant to the Plan.  Only Tara Minerals employees may be granted options pursuant to the Incentive Stock Option Plan.  The option exercise price is determined by Tara Gold’s directors but cannot be less than the market price of Tara Minerals’ common stock on the date the option is granted.

Non-Qualified Stock Option Plan.  Tara Minerals’ Non-Qualified Stock Option Plan authorizes the issuance of shares of Tara Minerals’ common stock to persons that exercise options granted pursuant to the Plan.  Tara Minerals’ employees, directors, officers, consultants and advisors are eligible to be granted options pursuant to the Plan, provided however that bona fide services must be rendered by such consultants or advisors and such services must not be in connection with the offer or sale of securities in a capital-raising transaction.  

Stock Bonus Plan.  Tara Minerals’ Stock Bonus Plan allows for the issuance of shares of common stock to its employees, directors, officers, consultants and advisors.  However bona fide services must be rendered by the consultants or advisors and such services must not be in connection with the offer or sale of securities in a capital-raising transaction.

Summary.  The following lists, as of December 8, 2010, the options granted and the bonus shares issued pursuant to the Plans.  Each option represents the right to purchase one share of Tara Minerals’ common stock.

Tara Minerals’ stock option and bonus plans have not been approved by its shareholders.

Long-Term Incentive Plans.  Tara Gold does not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans and has no intention of implementing any of these plans for the foreseeable future.

Employee Pension, Profit Sharing or other Retirement Plans.  Tara Gold does not have a defined benefit, pension plan, profit sharing or other retirement plan, although it may adopt one or more of such plans in the future.

Compensation of Directors.  Tara Gold’s directors do not receive any compensation pursuant to any standard arrangement for their services as directors.

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ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the ownership of Tara Gold’s common stock, as of December 8, 2010 by each shareholder known by Tara Gold to be the beneficial owner of more than 5% of its outstanding shares, each director and executive officer and all directors and executive officers as a group.  Except as otherwise indicated, each shareholder has sole voting and investment power with respect to the shares they beneficially own.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During the year ended December 31, 2005 Tara Gold issued:

·

2,199,999 shares of its common stock to Mr. Biscan in payment of accrued salary of $96,000

·

882,986 shares of its common stock to Mr. Brown in payment of accrued salary of $30,000 and a bonus of $8,500.

Between August 2005 and March 2006 Tara Gold borrowed $324,500 from Mr. Biscan.  The loans were represented by promissory notes which, at the option of Mr. Biscan, could be converted at any time into shares Tara Gold’s common stock.  In March 2008 Mr. Biscan converted loans in the principal amount of $259,500 into 7,983,333 shares of Tara Gold’s common stock.  Tara Gold paid the remaining note of $65,000 with cash.

 In January 2007, Amermin, made the arrangements to purchase the Pilar, Don Roman and Las Nuvias properties listed as part of the Don Roman Groupings. These properties were assigned to AMM in January 2007. AMM makes payments to Amermin and Amermin makes payments related to the original purchase agreements.  At June 30, 2010, Amermin has paid the original note holder in full but AMM has not paid Amermin. At September 30, 2010, due to related parties (This is an intercompany transaction that was eliminated during the consolidation of the Company’s financials) consisted of:

- Pilar mining concession:  $535,659 (inclusive of valued added tax)

- Don Roman concession:  $211,826

- Other related party loans with Amermin: $686,447

- Less due from related parties $75,057

During the year ended December 31, 2008 Tara Gold issued 100,000 shares of its common stock to Mr. Brown in payment of accrued salary of $34,000.

In June 2009, Tara Minerals borrowed $1,695,000 from Tara Gold.  The loans bore interest at the prime rate plus 3.25%.  On December 31, 2009 Tara Gold converted the amounts loaned to Tara Minerals, plus accrued interest of $55,088, into 8,750,440 shares of Tara Minerals’ common stock.

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In June, 2009 Tara Minerals acquired the Picacho claims for $4,800,000, plus value-added tax of $720,000.  Tara Minerals paid $575,000 of the purchase price in June, 2009.  The $575,000 paid in June 2009 was borrowed from Tara Gold.  In July 2009 Tara Minerals transferred the Picacho prospect to Adit.  In connection with the transfer of the prospect, Adit issued Tara Minerals a promissory note in the principal amount of $650,000 to compensate Tara Minerals for its down payment toward the purchase price of the property and to reimburse Tara Minerals for other amounts advanced on behalf of Adit.  The note is unsecured, bears interest at 3.25% per year, and is due and payable on June 30, 2011.  Adit has since repaid $200,000 towards this note.  This is an intercompany transaction that was eliminated during the consolidation of the Company’s financials.

On March 31, 2010 Adit and the vendor of the property amended their agreement.  Under the revised agreement, Adit paid the vendor $500,000 in cash (plus applicable taxes); and issued the vendor 320,000 shares of Adit’s common stock and 437,500 shares of Tara Minerals’ common stock.  Adit paid for the Tara Minerals shares by means of a note in the principal amount of $1,750,000.  The note bears interest at 6% per year and is due and payable on March 31, 2012. At any time after July 1, 2010 Tara Minerals may convert the outstanding principal, plus accrued interest, into shares of Adit’s common stock.  Tara Minerals will receive one share of Adit’s common stock for each $1.00 of principal and interest converted. This is an intercompany transaction that was eliminated during the consolidation of the Company’s financials.

During the year ended September 30, 2010 an officer of the Company loaned Tara Minerals $50,000. The note bears interest at 10% per year, and is due and payable on December 15, 2010. Tara Minerals may elect to extend the maturity of the note to June 15, 2011. The interest will increase to 12% beginning December 15, 2010. As further consideration for extending credit to Tara Minerals, the officer received a warrant that entitles him to purchase 50,000 shares of Tara Minerals’ restricted common stock at a price of $1.20 per share. The warrant may be exercised at any time on or prior to June 15, 2013.

As of December 8, 2010 the Company had loaned Tara Minerals $1,826,900 and it is due on demand. This is an intercompany transaction that was eliminated during the consolidation of the Company’s financials.

On July 28, 2010 Adit borrowed $100,000 from an officer of Adit. The note bears interest at 3.25% per year, and is due and payable on December 31, 2010.

As of December 8, 2010, Tara Gold owned 75% of the outstanding shares of Tara Minerals Corp.

As of December 8, 2010, Tara Minerals owned 90% of the outstanding common stock of Adit Resources.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Mendoza Berger audited Tara Gold’s financial statements for the years ended December 31, 2009 and 2008.  The following table shows the aggregate fees billed to Tara Gold during the years ended December 31, 2009 and 2008 by Mendoza Berger.

	2009	2008
Audit Fees	$ 127,653	$ 118,565
Audit-Related Fees	$ 0	$ 0
Financial Information Systems	$ 0	$ 0
Design and Implementation Fees	$ 0	$ 0
Tax Fees	$ 0	$ 0
All Other Fees	$ 0	$ 0

Audit fees represent amounts billed for professional services rendered for the audit of Tara Gold’s annual financial statements and the review of Tara Gold’s interim financial statements.  Before Mendoza Berger was engaged by Tara Gold to render these services, the engagement was approved by Tara Gold’s Directors.

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ITEM 15.  EXHIBITS

Exhibit No.	Description of Exhibit
3.1.1	Articles of Incorporation	(Incorporated by reference to the same exhibit filed with the Company’s registration statement on Form 10-SB)
3.1.2	Amendment to Articles of Incorporation for Name Change To MerchantPark Communications	(Incorporated by reference to exhibit 3(i) filed with the Company’s report on Form 8-K on April 6, 2001).
3.1.3	Amendment to Articles of Incorporation for name change to American Stellar Energy, Inc.	Incorporated by reference to exhibit 3.1 filed with the Company’s report on Form 10-KSB for the year ended December 31, 2004).
3.1.4	Amendment to Articles of Incorporation for name change to Tara Gold Resources Corp	(2)
3.2	Bylaws	(Incorporated by reference to exhibit3.2 filed with the Company’s registration statement on Form 10-SB
10.1	Employment Agreement – Francis R. Biscan Jr.	(2)
10.2	Employment Agreement – Clifford Brown	(2)
10.3	[RESERVED]
10.4	Amended Agreement pertaining to La Currita property	(2)
10.5	Agreement pertaining to San Miguel property	(2)
10.6	Letter of Intent pertaining to Las Minitas property	(2)
10.7	Agreement pertaining to Lluvia de Oro property	(2)
10.8	Agreement pertaining to Picacho property	(2)
10.9	Agreement pertaining to acquisition of La Millionaria property	(2)
10.10	Letter of intent pertaining to La Millionaria property	(2)
10.11	Modification of agreement pertaining to San Miguel property	(3)
10.12	Agreement to terminate JV pertaining to Las Minitas property	(3)
10.13	Agreement to terminate joint venture pertaining to La Millonaria	(3)
10.14	Modified purchase agreement pertaining to Picacho Property	(4)
10.15	Stock purchase agreement pertaining to La Escuadra	(4)
10.16	Purchase agreement pertaining to Pilar property	(4)
10.17	Joint venture and option agreement pertaining to Lluvia de Oro	(4)
10.18	Second modified purchase agreement pertaining to Picacho property	(4)
10.19	Purchase agreement pertaining to Picacho property	(4)
10.20	Joint venture agreement pertaining to San Miguel and Santa Cruz properties	(4)
10.21	Modified purchase agreement pertaining to Pilar property	(4)
10.22	Agreement pertaining to Las Brisas property
10.23	Notice of pending default on joint venture pertaining to  Picacho property	(4)
10.24	Joint venture termination letter pertaining to Picacho	(4)
10.25	Binding letter of intent pertaining to Curcurpe, Picacho and La Millonaria properties	(4)
10.26	Agreement pertaining to Marina property	(4)

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10.27	Modification agreement pertaining to JV agreement with Lateegra and La Camera	(4)
10.28	Binding Commitment to purchase pertaining to Curcurpe with La Camera	(4)
10.29	Binding Commitment to purchase pertaining to Picacho with La Camera	(4)
10.30	Binding Commitment to purchase pertaining to La Millonaria with La Camera	(4)
10.31	JV agreement between Tara Gold and La Camera	(4)
10.32	Promissory note pertaining Curcurpe – La Camera	(4)
10.33	Promissory note pertaining Picacho – La Camera	(4)
10.34	Promissory note pertaining La Millonaria – La Camera	(4)
10.35	Modification of agreement pertaining to Las Minitas property	(4)
10.36	Termination of joint venture agreement pertaining to Curcurpe, Picacho and La Millonaria properties	(4)
10.37	Agreement pertaining Los Auriferos property	(4)
10.38	Surrender of rights and termination of joint venture pertaining to Curcurpe, Picacho and La Millonaria properties	(4)
10.39	Default letter on joint venture agreement pertaining to La Currita property	(4)
10.40	Option and JV Agreement pertaining to property La Currita	(4)
10.41	Modified termination agreement pertaining to the Pilar property	(4)
10.42	Judicial agreement pertaining to Picacho litigation and Dos Amigos property	(4)
10.43	Second Judicial termination agreement pertaining to the Picacho litigation and Unificacion de Oro property	(4)
10.44	Gratuitous cession of rights pertaining to the Picacho litigation	(4)
10.45	Donation of mining equipment pertaining to the Picacho litigation	(4)
10.46	Purchase of Equipment from a related party	(5)
10.47	Purchase agreement of Picacho Fractions mining concession	(5)
10.48	Advanced termination and mutual settlement agreement pertaining to La Escuadra	(5)
14	Code of Ethics	(1)
21	Subsidiaries	(4)
31	Rule 13a-14(a) Certifications	(5)
32	Section 1350 Certifications	(5)

(1)

Incorporated by reference to the same exhibit filed with the Company’s report on Form 10-KSB for the year ended December 31, 2004

(2)

Incorporated by reference to the same exhibit filed with the Company’s report on Form 10-KSB for the year ended December 31, 2005

(3)

Incorporated by reference to the same exhibit filed with the Company’s report on Form 10-KSB for the year ended December 31, 2006

(4)

Incorporated by reference to the same exhibit filed with the Company’s report on Form 10-KSB for the year ended December 31, 2007

(5)

Filed with this report.

21

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TARA GOLD RESOURCES CORP.

TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(Formerly American Stellar Energy, Inc.)

(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

FOR

THE FISCAL YEARS ENDED DECEMBER 31, 2009 AND 2008

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
FINANCIAL STATEMENTS:
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations and Comprehensive Loss	F-4
Consolidated Statements of Stockholders’ Equity	F-6
Consolidated Statements of Cash Flows	F-13
Notes to the Consolidated Financial Statements	F-16

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders'

of Tara Gold Resources Corp., Inc. (formerly American Stellar Energy, Inc.) and Subsidiaries

We have audited the accompanying consolidated balance sheets of Tara Gold Resources Corp., Inc. (formerly American Stellar Energy, Inc.) (an exploration stage company) (a Nevada corporation) and subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of operations and comprehensive loss, stockholders' equity (deficit), and cash flows for each of the years then ended and the period from inception (December 5, 2000) through December 31, 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 financial statements of Tara Gold Resources Corp., Inc. and subsidiaries from inception (December 5, 2000) through December 31, 2004, were audited by other auditors whose report there on dated December 9, 2005, expressed an unqualified opinion on those statements (the December 9, 2005 report was modified related to the uncertainty of the Company’s ability as a going concern), have been furnished to us.

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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides 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 Tara Gold Resources Corp, Inc. (formerly American Stellar Energy, Inc.) and subsidiaries as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the years then ended and for the period from inception (December 5, 2000) through December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

/s/ Mendoza Berger & Company, LLP

Mendoza Berger & Company, LLP

Irvine, CA

December 8, 2010

F-2

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. Dollars)

	December 31, 2009	December 31, 2008
Assets
Current assets:
Cash	$ 1,451	$ 264
Other receivables, net of $374 and $243 of allowance as of December 31, 2009
and December 31, 2008, respectively	3,262	11,018
Due from related parties	354	-
Marketable securities	450	464
Other current assets	47	167
Total current assets	5,564	11,913
Property, equipment, and mine development, net of accumulated depreciation of
$111 and $71 as of December 31, 2009 and December 31, 2008, respectively	13,141	13,092
Construction in progress	2,163	665
Deposits	-	928
Deferred tax asset	1,748	1,425
Goodwill	12	-
Total Assets	$ 22,628	$ 28,023
Liabilities and Stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$ 1,143	$ 1,378
Notes payable, current	1,106	3,099
Payments from joint venture partner for options to purchase mining properties	-	250
Deferred tax liability, current	-	1,802
Due to related parties	-	18
Total current liabilities	2,249	6,547
Long-term accrued liabilities	989	940
Notes payable, long term	6,168	5,894
Total liabilities	9,406	13,381
Commitments and contingencies	-	-
Stockholders’ equity:
Common stock; $0.001 par value 150,000,000 shares authorized – 102,795,119 and 101,995,119 issued and outstanding at December 31, 2009 and December 31, 2008, respectively	103	102
Additional paid-in capital	12,175	11,135
Accumulated deficit during exploration stage	(3,293)	1,147
Other comprehensive loss	(436)	(1,268)
Total Tara Gold stockholders’ equity	8,549	11,116
Non-controlling interest	4,673	3,526
Total equity	13,222	14,642
Total liabilities and equity	$ 22,628	$ 28,023

 

See accompanying notes to these consolidated financial statements.

F-3

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(In thousands of U.S. Dollars)

 

 

See accompanying notes to these consolidated financial statements.

F-4

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(In thousands of U.S. Dollars)

(Continued)

See accompanying notes to these consolidated financial statements.

 

F-5

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2009

(In thousands of U.S. Dollars, except share amounts)

F-6

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2009

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

F-7

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2009

(In thousands of U.S. Dollars, except share amounts)

 

 (Continued)

F-8

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2009

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

F-9

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2009

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

 

F-10

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2009

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

F-11

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2009

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

See accompanying notes to these consolidated financial statements

F-12

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands of U.S. Dollars)

	For the Year  Ended		From inception
	December 31,		(December 5, 2000)
	2009	2008	to Dec. 31, 2009
Cash flows from operating activities:
Net (loss) income	$ (4,440)	$ 5,795	$ (3,293)
Adjustments to reconcile net (loss) income to net cash   used in operating activities:
Depreciation and amortization	40	40	418
Allowance for doubtful accounts	131	(51)	370
Allowance for mining deposits deemed uncollectible	-	-	29
Common stock issued for services and other expenses	1,040	67	2,599
Stock based compensation and stock bonuses	-	-	1,290
Gain on deconsolidation of joint venture	-	(8,856)	(8,666)
Non-cash expense due to deconsolidation of joint venture	-	-	216
Gain on sale of joint venture interest	-	-	(2,862)
Gain on dissolution of joint venture	(250)	(3,978)	(8,688)
Loss on extinguishment of debt, net	1,097	550	746
(Gain) loss on disposal of oil & gas properties	-	-	8
Deferred tax (asset) liability	(2,125)	808	(1,748)
Non-controlling interest in net (loss)	(447)	(38)	(1,135)
Amortization of beneficial conversion	-	23	361
Loss on the disposal of assets	-	(1)	218
Realized loss on marketable securities	2,266	2,129	4,604
Common stock of subsidiary issued for services	-	-	750
Lawsuit settlement payable in stock	-	-	315
Cancellation of common stock for settlement (Tara          Minerals)	-	(750)	(750)
Loss on discontinued operations	-	993	993
Net assets acquired from La Escuadra	-	17	(330)
Gain on acquisition of mining concession	-	(100)	(100)
Gain on sale of net cash flow interest	(197)	-	(197)
Changes in operating assets and liabilities:
Other receivable IVA	(423)	428	(745)
Other receivable	(46)	(139)	(192)
Prepaid expenses	-	-	2
Other current assets	12	40	(59)
Accounts payable and accrued expenses	(97)	(922)	1,553
Deferred joint venture income	-	(12)	(33)
Net cash used in operating activities	(3,439)	(3,957)	(14,326)

F-13

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands of U.S. Dollars)

 (Continued)

	For the Year  Ended		From inception
	December 31,		(December 5, 2000)
	2009	2008	to Dec. 31, 2009
Cash flows from investing activities:
Proceeds from sales of oil & gas properties	-	-	6
Purchase of mining equipment and furniture and fixtures	(109)	(44)	(397)
Purchase of land and office building	-	-	(415)
Proceeds from the sale of marketable securities	4,547	1,093	6,278
Proceeds from the sale of assets	-	384	384
Purchase of mining concession	(643)	1,908	214
Deposits	-	(223)	(738)
Payment for construction in progress	(1,498)	(656)	(2,163)
Proceeds from note receivable payments	-	-	(7)
Proceeds from disposal of assets	-	-	347
Loans to unrelated third parties	-	-	(380)
Cash included in business acquisition	2	-	2
Business acquisition goodwill	(4)	-	(4)
Cash in discontinued operations	-	-	(3)
Net cash provided by in investing activities	2,296	2,462	3,125
Cash flows from financing activities:
Proceeds from short term convertible debt	-	-	(22)
Payments toward short term convertible debt	-	-	72
Payments toward notes payable	(586)	(2,808)	(10,016)
Change in due to/from related parties, net	(370)	68	397
Non-controlling interest in net assets of consolidated  subsidiaries	2,668	774	6,589
Payments from joint venture partners	-	1,756	9,920
Stock offering costs	-	-	(13)
Cash acquired in reverse acquisition	-	-	4
Common Stock issued for cash	-	-	5,753
Net cash provided (used) by financing activities	1,712	(210)	12,684
Effect of exchange rate changes on cash	618	(637)	(32)
Cash and cash equivalents:
Net increase for the period	1,187	(2,342)	1,1451
Beginning of the period	264	2,606	-
End of period	$ 1,451	$ 264	$ 1,451

F-14

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands of U.S. Dollars, except per share amount)

 (Continued)