UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the Quarterly Period Ended September 30, 2009.

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

AURELIO RESOURCE CORPORATION

(Exact name of registrant as specified in its charter)

Nevada

000-50931

33-1086828

(State or other jurisdiction of

incorporation or organization)

(Commission File No.)

(I.R.S. Employer

Identification No.)

Suite 202, 12345 W Alameda Parkway,

Lakewood, Colorado

80228

(Address of principal executive offices)

(Zip Code)

(303) 795 - 3030

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required 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 the filing requirements for at least the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 such files). Yes ¨ No ¨

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 definitions of “large accelerated filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November 19, 2009 the registrant had 97,239,127 common shares outstanding.

AURELIO RESOURCE CORPORATION.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009

TABLE OF CONTENTS

Part I – Financial Information


		PAGE NO.
Item 1.	Unaudited Consolidated Financial Statements

a.	Unaudited Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008	3

b.	Unaudited Consolidated Statements of Operations for the nine months ended September 30, 2009 and 2008 and from February 19, 2004 (Inception)	4

c.	Unaudited Consolidated Statement of Stockholders’ Equity (Deficit) from February 19, 2004 (Inception) through September 30, 2009	5

d.	Unaudited Consolidated Statements of Cash Flows for the three months ended September 30, 2009 and 2008 and from February 19, 2004 (Inception)	7

e.	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

Part II – Other Information

Item 1.	Legal Proceedings	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3.	Defaults Upon Senior Securities	29

Item 4.	Submission of Matters to a Vote of Security Holders	29

Item 5.	Other Information	29

Item 6.	Exhibits and Reports on Form 8-K	29

Signatures		30

- 2 -

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	Sept 30, 2009			Dec 31, 2008
	(unaudited)
Current Assets
Cash	$	145,734		$	103,793
Accounts receivable		12,345			—
Receivable from Telifonda		254,963			216,689
Prepaid expenses and other		94,458			50,376

Total current assets		507,500			370,858

Mining claims		3,688,316			4,240,470
Investment		362,050			—
Equipment, net		50,766			89,389

		4,101,132			4,329,859

Total Assets		4,608,632			4,700,717


LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	67,968		$	170,872
Accounts payable - related parties		—			218,481
Short term note payable		—			2,000,000
Current portion of long-term debt		—			798,166

Total current liabilities		67,968			3,187,519
Long-term debt		—			1,664,000
Real estate deposit		462,050			—

Total Liabilities		530,018			4,851,519

Stockholders’ Equity
Common stock, $0.001 par value; 400,000,000 shares authorized; 97,239,127 issued and outstanding		97,240			40,417
Preferred stock, $0.01 par value; 87,500,000 shares authorized; zero issued and outstanding		—			—
Warrants		98,333			321,813
Additional paid in capital		11,867,132			7,244,506
Deficit accumulated during the exploration stage		(7,969,289	)		(7,740,859	)
Cumulative effect of currency translation		(14,801	)		(16,679	)

Total Stockholders’ Equity		4,078,614			(150,802	)

Total Liabilities and Stockholders’ Equity	$	4,608,632		$	4,700,717

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

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AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended Sept 30, 2009			Three Months Ended Sept 30, 2008			Nine Months Ended Sept 30, 2009			Nine Months Ended Sept 30, 2008			Feb. 19, 2004 (Inception) Through Sept 30, 2009
Revenue	$	—		$	—		$	—		$	—		$	—

Expenses:
Depreciation		2,321			4,159			7,911			11,881			40,129
General and administrative		52,048			76,946			196,186			279,297			2,471,301
Mineral property expenditures		131,467			104,395			193,586			352,609			2,326,748
Professional fees		89,767			187,875			318,878			525,868			1,902,569

		275,603			373,375			716,561			1,169,655			6,740,747

Loss from operations		(275,603	)		(373,375	)		(716,561	)		(1,169,655	)		(6,740,747	)
Other income (expense)
Other income		15,682			833			44,198			833			103,846
Interest income		5,569			1,864			19,652			10,389			48,116
Other expense		(1,650	)		—			(1,746	)		—			(1,746	)
Loss on debentures		—			—			—			—			(407,714	)
Loss on sale of assets		(130,000	)		—			(1,606,789	)		—			(1,606,789	)
Interest expense		—			(431,949	)		(196,122	)		(1,289,210	)		(1,593,193	)

Income (loss) before provision for income tax		(397,140	)		(802,627	)		(2,457,368	)		(2,447,643	)		(10,198,227	)

Provision for income tax		—			—			—			—			—
Net income (loss)		(397,140	)		(802,627	)		(2,457,368	)		(2,447,643	)		(10,198,227	)
Other comprehensive income (loss) - net of tax
Foreign currency translation gains (losses)		(2,771	)		(2,659	)		1,878			(2,911	)		(14,801	)

Comprehensive income (loss)		(399,911	)		(805,286	)		(2,455,490	)		(2,450,554	)		(10,213,028	)

Net income (loss) per share
(Basic and fully diluted)		(0.004	)		(0.02	)		(0.037	)		(0.06	)

Weighted average number of common shares outstanding		97,228,805			40,236,882			65,697,185			39,405,729

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

- 4 -

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)


	Common Stock							Additional Paid-in Capital		Deficit Accumulated During Exploration Stage			Cumulative Effect of Currency Translation			Total Stockholders’ Equity (Deficit)
	Shares		Amount			Warrants		Additional Paid-in Capital		Deficit Accumulated During Exploration Stage			Cumulative Effect of Currency Translation			Total Stockholders’ Equity (Deficit)
Balance, February 19, 2004 (date of inception)	—		$	—		$	—	$	—	$	—		$	—		$	—
Common stock issued for cash at $0.002 per share, March 2004	13,000,000			13,000			—		7,000		—			—			20,000
Common stock issued for cash at $0.004 per share, April 2004	18,200,000			18,200			—		51,800		—			—			70,000
Common stock issued for cash at $0.03 per share, May 2004	201,500			202			—		5,998		—			—			6,200
Net loss	—			—			—		—		(14,607	)		—			(14,607	)

Balance, May 31, 2004	31,401,500			31,402			—		64,798		(14,607	)		—			81,593
Net loss	—			—			—		—		(60,698	)		—			(60,698	)

Balance, May 31, 2005	31,401,500			31,402			—		64,798		(75,305	)		—			20,895
Net loss	—			—			—		—		(36,750	)		—			(36,750	)

Balance, May 31, 2006	31,401,500			31,402			—		64,798		(112,055	)		—			(15,855	)
Common stock returned for cancellation	(12,965,000	)		(12,965	)		—		12,965		—			—			—
Common stock issued for acquisition of Subsidiaries	10,000,000			10,000			—		440,000		—			—			450,000
Common stock issued for cash at $0.40 per share, September 2006	4,000,000			4,000			—		1,596,000		—			—			1,600,000
Common stock options issued	—			—			—		168,000		—			—			168,000
Net loss	—			—			—		—		(957,221	)		(1,580	)		(958,801	)

Balance, December 31, 2006	32,436,500			32,437			—		2,281,763		(1,069,276	)		(1,580	)		1,243,344

(Continued On Following Page)

- 5 -

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Continued From Previous Page)


	Common Stock					Additional Paid-in Capital		Deficit Accumulated During Exploration Stage		Cumulative Effect of Currency Translation		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Warrant		Additional Paid-in Capital		Deficit Accumulated During Exploration Stage		Cumulative Effect of Currency Translation		Total Stockholders’ Equity (Deficit)
Balance, December 31, 2006, from prior page	32,436,500		32,437	—		2,281,763		(1,069,276	)	(1,580	)	1,243,344
Issuance of stock options	—		—	—		405,500		—		—		405,500
Issued for cash	1,476,555		1,477	—		1,327,423		—		—		1,328,900
Issued for services	584,100		584	—		462,671		—		—		463,255
Exercise of stock options	150,000		150	—		118,350		—		—		118,500
Net loss	—		—	—		—		(3,379,987	)	(1,675	)	(3,381,662	)

Balance, December 31, 2007	34,647,155		34,648	—		4,595,707		(4,449,263	)	(3,255	)	177,837
Issued for cash	3,333,334		3,333	321,813		674,854		—		—		1,000,000
Issuance of stock options	—		—	—		28,101		—		—		28,101
Issued for services at $0.36 per share	1,899,300		1,899			682,089						683,988
Issued for services at $0.28 per share	267,855		268	—		74,732		—		—		75,000
Forfeiture of stock options	—		—	—		(348,500	)	—		—		(348,500	)
Discount on issuance of debentures	—		—	—		1,275,018		—		—		1,275,018
Beneficial conversion feature of debentures	—		—	—		224,982		—		—		224,982
Issued in exchange for office rent	58,053		58	—		8,195		—		—		8,253
Issued in exchange for leasehold improvements	210,993		211	—		29,328		—		—		29,539
Net loss	—		—	—		—		(3,291,596	)	(13,424	)	(3,305,020	)

Balance, December 31, 2008	40,416,690		40,417	321,813		7,244,506		(7,740,859	)	(16,679	)	(150,802	)
Issued for services at $0.03 per share	4,222,223		4,222	—		122,445		—		—		126,667
Sale of subsidiary	—		—	—		—		2,228,938		—		2,228,938
Net loss	—		—	—		—		(1,751,541	)	(27	)	(1,751,568	)

Balance, March 31, 2009 (unaudited)	44,638,913		44,639	321,813		7,366,951		(7,263,462	)	(16,706	)	453,235

Issued for services at $0.0842 per share	380,418		380	—		31,660		—		—		32,040
Issued for services at $0.057 per share	789,474		790	—		42,211		—		—		45,000
Issued for services at $0.029 per share	1,551,723		1,552	—		43,448		—		—		45,000
Issued for services at $0.10 per share	522,000		522	—		51,678		—		—		52,200
Issued for exploration properties at $0.08 per share	47,500,000		47,500	—		3,752,500		—		—		3,800,000
Issued for cash	1,666,667		1,667	—		165,000		—		—		166,667
Revaluation of warrants	—		—	(223,480	)	398,580		—		—		175,100
Net loss	—		—	—		—		(308,687	)	4,676		(304,011	)
Balance, June 30, 2009 (unaudited)	97,049,195	$	97,050	98,333		11,854,027		(7,572,149	)	(12,030	)	4,465,231
Issued in exchange for rent	189,932		190	—		13,105		—		—		13,295
Net loss	—		—	—		—		(397,140	)	(2,771	)	(399,911	)

Balance, September 30, 2009 (unaudited)	97,239,127		97,240	98,333		11,867,132		(7,969,289	)	(14,801	)	4,078,615

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

- 6 -

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended Sept 30, 2009		Three Months Ended Sept 30, 2008		Nine Months Ended Sept 30, 2009		Nine Months Ended Sept 30, 2008		Feb. 19, 2004 (Inception) Through Sept 30, 2009
Cash Flows From Operating Activities:
Net loss	(397,140	)	(802,627	)	(2,457,368	)	(2,447,643	)	(10,198,227	)
Adjustments to reconcile comprehensive loss to net cash provided by (used for) operating activities:
Depreciation	2,321		4,159		7,911		11,881		40,129
Stock-based compensation	—		37,792		206,280		476,381		1,214,030
Interest, amortization of discount on debentures	—		323,547		—		867,304		867,304
Loss on extinguishment of debentures	—		—		—		—		407,714
Beneficial conversion feature of debentures	—		—		—		224,982		224,982
Stock in exchange for rent	13,294		—		15,471		—		23,724
Stock in exchange for mining claim	—		—		3,800,000		—		3,800,000
Value adjustment of warrants	—		—		175,100		—		175,100
Loss on sale of asset	130,000		—		130,000		—		130,000

Changes in current assets and liabilities:
Accounts receivable	(12,345	)	—		(12,345	)	—		(12,345	)
Receivable from Telifonda	2,386		—		(38,274	)	—		(254,963	)
Prepaid expenses, advances and security deposits	(41,709	)	7,030		(44,082	)	(48,422	)	(94,458	)
Reclamation bond - MAN claims	—		—		—		33,711		—
Accounts payable and accrued expenses	(2,136	)	52,479		(102,904	)	(254,670	)	71,804
Accounts payable - related parties	—		(23,477	)	(123,828	)	(561,103	)	562,492

Net Cash provided by / (used for) operating activities	(305,329	)	(401,097	)	(1,555,961	)	(1,697,579	)	(3,042,714	)


Cash Flows From Investing Activities
Sale / purchase of mining claims - net (Note 6)	100,451		(48,251	)	(1,940,012	)	(369,894	)	(5,578,796	)
Purchase of fixed assets - net	116		(29,706	)	28,509		(36,759	)	(36,958	)
Sale of subsidiary	—		—		2,228,938		—		2,228,938

Net cash provided by / (used for) investing activities	100,567		(77,957	)	317,435		(406,653	)	(3,386,816	)

(Continued On Following Page)

- 7 -

AURELIO RESOURCE CORPORATION

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Continued From Previous Page)


	Three Months Ended Sept 30, 2009			Three Months Ended Sept 30, 2008			Nine Months Ended Sept 30, 2009			Nine Months Ended Sept 30, 2008			Feb. 19, 2004 (Inception) Through Sept 30, 2009
Cash Flows From Financing Activities:
Proceeds from sale of convertible debentures	$	—		$	—		$	—		$	1,500,000		$	1,500,000
Bridge loan from shareholder		—			—			(2,000,000	)		—			—
Issue notes for property acquisition		—			—			—			—			2,714,000
Debt principal repayment		—			(2,480	)		—			(261,056	)		(532,271	)
Proceeds from short-term borrowings		—			—			—			—			250,000
Repayment of convertible debentures		—			—			—			—			(1,500,000	)
Proceeds from exercise of stock options		—			—			—			—			118,500
Issuance of common stock for cash		—			—			166,667			1,000,000			4,039,836


Net cash provided by / (used for) financing activities		—			(2,480	)		(1,833,333	)		2,238,944			6,590,065


Effect of exchange rate changes on cash		(2,771	)		(3,163	)		1,878			(2,911	)		(14,801	)


Net increase / (decrease) in cash		(207,533	)		(484,697	)		41,941			131,801			145,734


Cash at the beginning of the period		353,267			884,908			103,793			268,410			—

Cash at the end of the period	$	145,734		$	400,211		$	145,734		$	400,211		$	145,734


Schedule Of Non-Cash Investing & Financing Activities
Acquisition of Minera Milenium, S.A. de C.V.	$	—		$	—		$	—		$	—		$	(46	)
Acquisition of Aurelio Resources, Inc.		—			—			—			—			450,000
Mineral properties		—			48,251			2,040,463			1,383,894			8,042,037
Less note payable		—			—			—			(1,014,000	)		(2,454,000	)
Fixed asset purchases		—			29,706			—			36,759			122,016
Less long-term debt		—			—			—			—			(25,453	)
Supplemental Disclosure
Cash paid for interest	$	—		$	64,839		$	21,022		$	50,546		$	(87,072	)
Cash paid for income taxes		—			—			—			—			—

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

- 8 -

AURELIO RESOURCE CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Aurelio Resource Corporation (the “Company” or “Aurelio”) have been prepared by management in accordance with generally accepted accounting principles for interim financial information and with the regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation of their financial position as of September 30, 2009 and the results of their operations and cash flows for the three and nine months ended September 30, 2009 and 2008 have been included.

While management believes the disclosures presented are adequate to prevent misleading information, it is suggested that the accompanying unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange Commission. The interim results of operations for the three and nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for any other interim period of 2009 or for the year ending December 31, 2009.

Going Concern

These financial statements have been prepared with the ongoing assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions as noted below currently exist which raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

The operations of the Company have primarily been funded by the sale of common stock and issuance of debt. Continued operations of the Company are dependent on the Company’s ability to complete additional equity and/or debt financings or generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity and/or debt financings. Such financings may not be available or may not be available on reasonable terms.

From inception, February 19, 2004 through September 30, 2009, the Company generated a loss from operations during the exploration stage of $10,198,227.

Net Loss Per Share

Basic loss per share is computed by dividing the net income by the weighted average number of common shares outstanding for the period. Diluted shares outstanding are calculated factoring in stock options, and warrants outstanding, and their equivalents are included in diluted computations through the “treasury stock method” unless they are anti-dilutive. Convertible securities are included in diluted computations through the “if converted” method unless they are anti-dilutive.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is required to the extent any deferred tax assets may not be realizable. While the Company has net operating loss (“NOLs”) carry-forwards related to certain tax jurisdictions, the Company has limited or no NOLs in others.

As of September 30, 2009, the deferred tax asset related to the net operating loss carry forward was fully reserved by a valuation allowance due to the uncertainty of the Company generating future taxable income.

- 9 -

Recently Issued Accounting Standards

In December 2007, the FASB issued FASB Statement No. 141R, Business Combinations (SFAS No. 141R) and FASB Statement No. 160, Non-controlling Interests in Consolidated Financial Statements an amendment to ARB No. 51 (SFAS No. 160). SFAS No. 141R and No. 160 require most identifiable assets, liabilities, non-controlling interests, and goodwill acquired in a business combination to be recorded at “full fair value” and require non-controlling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with non-controlling interest holders. Both Statements are effective for periods beginning on or after December 15, 2008, and earlier adoption is prohibited. SFAS No. 141R will be applied to business combinations occurring after the effective date. SFAS No. 160 will be applied prospectively to all non-controlling interests, including any that arose before the effective date. The adoption of SFAS No. 141R and SFAS No. 160 did not have a material impact on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”), which amends and expands the disclosure requirements of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative instruments. This statement applies to all entities and all derivative instruments. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of SFAS No. 161 did not have a material impact on our consolidated financial statements.

In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other applicable accounting literature. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. The adoption of FSP FAS 142-3 did not have a material impact on our consolidated financial statements.

In May 2008, the FASB issued Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (“FSP 14-1”), which clarifies the accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. FSP 14-1 requires issuers to account separately for the liability and equity components of certain convertible debt instruments in a manner that reflects the issuer’s nonconvertible debt (unsecured debt) borrowing rate when interest cost is recognized. FSP 14-1 is effective for fiscal years beginning after December 15, 2008. The adoption of FSP 14-1 did not have a material impact on our consolidated financial statements.

2. MANAGEMENT OF FINANCIAL RISK

The Company is subject to a concentration of credit risk with all of its cash at September 30, 2009 on deposit with JPMorgan Chase Bank, NA. Management considers that in view of the financial standing and nature of the operations of JPMorgan Chase Bank, NA the risk of loss is small.

3. FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash and cash equivalents, notes payable, debentures payable and accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. In each case, the fair value of these financial instruments approximate their carrying values, unless otherwise noted

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4. PROPERTY AND EQUIPMENT


		Cost		Accumulated Depreciation		Net Book Value
As of September 30, 2009
Lakewood	- office furniture	$	11,943	$	4,834	$	7,109
	- office equipment⁽¹⁾		22,244		11,856		10,388
	- leasehold improvements		29,539		923		28,616
Mexico	- vehicles and equipment		8,693		5,201		3,492
	- furniture and equipment		2,495		1,334		1,161
Elfrida, AZ	- vehicles and equipment⁽²⁾		—		—		—

Total:		$	74,914	$	24,148	$	50,766

As of December 31, 2008
Lakewood	- office furniture	$	11,943	$	3,555	$	8,388
	- office equipment		47,769		17,361		30,408
	- leasehold improvements		29,539		369		29,170
Mexico	- vehicles and equipment		8,553		3,587		4,966
	- furniture and equipment		2,455		918		1,537
Elfrida, AZ	- vehicles and equipment		20,200		5,280		14,920

Total:		$	120,459	$	31,070	$	89,389

(1)	The reduction in Lakewood - office equipment cost, accumulated depreciation and net book value for the period ending September 30, 2009 reflect the sale of Bolsa Resources, Inc. on February 18, 2009 and the resulting transfer of ownership of certain assets.

(2)	The reduction in Elfrida, AZ - vehicles and equipment cost, accumulated depreciation and net book value for the period ending September 30, 2009 reflect the sale of Bolsa Resources, Inc. on February 18, 2009 and the resulting transfer of ownership of certain assets.

In addition to the above equipment, the Company had capitalized costs relating to mining claims and other property in the amount of $3,688,316 and $4,240,470 at September 30, 2009 and December 31, 2008, respectively. Refer also to Note 6 regarding current property payment obligations. The September 30, 2009 capitalized costs relating to mining claims and other property were reduced as a result of the sale of Bolsa Resources, Inc. on February 18, 2009.

Depreciation expense was $2,321 and $7,911 for the three and nine months ended September 30, 2009, was $4,159 and $11,881 for the comparable periods in 2008, and was $40,129 from Inception through September 30, 2009.

5. LONG-TERM DEBT

Long-term debt consists of the following:


		September 30, 2009		December 31, 2008
Bank debt⁽¹⁾		$	—	$	8,166
Note payable	– Courtland Claims⁽²⁾		—		950,000
Note payable	– Rae Properties⁽³⁾		—		754,000
Note payable	– View Sites⁽⁴⁾		—		750,000

	Subtotal		—		2,462,166
Less: current portion			—		(798,166	)

Long-term portion		$	—	$	1,664,000

(1)	The bank debt was repaid in full on March 9, 2009.

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(2)	This loan was assumed by Telifonda (Cayman) Ltd. on February 18, 2009 following completion of its acquisition of Bolsa Resources, Inc.

(3)	This loan was assumed by Telifonda (Cayman) Ltd. on February 18, 2009 following completion of its acquisition of Bolsa Resources, Inc.

(4)	This loan was assumed by Telifonda (Cayman) Ltd. on February 18, 2009 following completion of its acquisition of Bolsa Resources, Inc.

6. CONTRACTUAL OBLIGATIONS, CONTINGENT LIABILITIES AND COMMITMENTS


	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
Contractual Obligations as of Sept 30, 2009
Unpatented BLM mining claims - annual renewal fees⁽¹⁾	$	264,600	$	52,920	$	105,840	$	105,840	$	—
Gavilanes option payments ⁽²⁾		365,000		60,000		305,000		—		—
Crescent Valley North (CVN) Lease ⁽³⁾		—		—		—		—		—
Horse Creek (HC) Lease ⁽⁴⁾		200,000		30,000		75,000		95,000		—
Indian Creek (IC) Lease ⁽⁵⁾		—		—		—		—		—
Iron Butte Lease ⁽⁶⁾		400,000		60,000		150,000		190,000		—
North Sleeper Lease ⁽⁷⁾		—		—		—		—		—
Robinson Creek (RC) Lease ⁽⁸⁾		—		—		—		—		—

Safford Canyon Lease ⁽⁹⁾		—		—		—		—		—
Sands Spring Lease ⁽¹⁰⁾		220,000		30,000		90,000		100,000		—
Veta Grande Lease ⁽¹¹⁾		200,000		25,000		75,000		100,000		—
Lease of Lakewood, Colorado office ⁽¹²⁾		78,332		44,510		33,822		—		—
Lease of Culican, Mexico office space ⁽¹³⁾		1,638		1,512		126		—		—

(1)

Effective June 15, 2009 the Company completed the acquisition of a total of 1,820 unpatented mining claims located in Nevada from C³ Resources, Inc. (“C³”), including 934 claims comprising the Cortez-Carlin Corridor project, which were staked by C³ in 2008 and are not subject to any underlying lease or royalty agreements. For each of the unpatented mining claims, there is an annual renewal fee of $140 per claim payable to the Bureau of Land Management, an agency of the U.S. Department of the Interior. These claim fees are payable annually, on or before August 31^st (although certain of the Nevada projects require payments prior to August 31^st pursuant to the terms of the underlying leases as detailed in Notes (3) thru (11) below. The values in this entry have been adjusted to reflect: (i) the 52 claims at North Sleeper that are subject to a joint venture agreement (see note 7 below) and for which a third party has made the required claim payments; and, (ii) the 395 claims comprising the Crescent Valley North, Indian Creek, Robinson Creek and Safford Canton projects (see notes 3, 5, 8 and 9 below) for which a third party has made the required claim payments.

In light of the increased claim maintenance costs and the expense of mounting an effective grass-roots exploration program, the Company elected not to renew any of the 934 Cortez-Carlin Corridor claims. The values in this entry have been further adjusted to reflect the decision not to renew the 934 unpatented mining claims.

(2)

In addition to the total of the option payments for the purchase price of the three mining claims (covering approximately 1,000 hectares) making up the Gavilanes property, the property is subject to a 3% net smelter return royalty in favor of Mr. Modesto Rivas Beltran of Culiacan, Sinaloa, Mexico.

As described in Note 12: Sale Of Assets To And Financing Agreement With A Shareholder, the Company has entered into (and shareholders have approved) the sale of a further 3% NSR royalty interest in the Gavilanes property to Telifonda (Cayman) Ltd. This transaction is anticipated to close on or before December 31, 2009 and only upon receipt of full payment for the royalty interest will Aurelio convey an executed royalty agreement to the purchaser.

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(3)

The 172 unpatented lode mining claims comprising the Crescent Valley North (CVN) project that are situated in Sections 4 and 5, Township 30 North, Range 51 East, and Sections 28, 29, 31, 32 and 33, Township 31 North, Range 51 East, in Eureka County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated August 25, 2008 between David Mathewson, as owner (as assigned from KM Exploration, Ltd. by assignment of mining leases dated February 4, 2009), and C³ Resources, Inc., as tenant (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 19, 2008).

All of C³’s rights and interests in the Lease were assigned to the Company on June 15, 2009.

The Crescent Valley North Lease contains the following material terms and conditions:

(i)

a term of twenty-five years and so long thereafter as minerals are mined, produced, explored or sold from the CVN Claims;

(ii)

the lessee is required to make annual rental payments on each anniversary of the Lease starting at $30,000 upon signing (paid) and increasing to $60,000 on the sixth anniversary and annually thereafter, provided however that every five years the payments shall be increased in proportion to any increase in the CPI(U) over the prior five-year period;

(iii)

the CVN claims are subject to a 4% NSR production royalty payable to David Mathewson, provided that the lessee has the sole and exclusive option to buy down the royalty from 4% to 2% by paying Mathewson a lump sum payment per royalty point of between $2 and $8 million depending upon the average price of gold for the thirty days preceding the exercise of the option as more particularly set out in the Lease; and,

(iv)

prior to June 30^th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the CVN claims are located to maintain the claims in good standing.

Effective September 14, 2009, the Company entered into an option agreement with JKR Gold Resources, Inc. pursuant to which JKR can acquire all of Aurelio’s rights and interests in the Crescent Valley North property (in addition to the Indian Creek, Robinson Creek and Safford Canyon projects) in exchange for cash payments totaling $216,657 ($116,657 of which has been received to date), issuing 600,000 common shares of JKR, a privately-held company (received), and completing $1.5 million in exploration and development work prior to August 31, 2012; the Company would retain a 1% NSR on each of the four projects. The agreement also requires JKR to make all underlying lease payments, in addition to paying all Federal and county claim maintenance fees and expenses.

$16,657 of cash received was recorded as a reduction to expenses we incurred for the Crescent Valley North, Indian Creek, Robinson Creek and Safford Canyon properties while this agreement was being finalized. $100,000 of cash and the 600,000 common shares have been recorded as a real estate deposit liability until the remaining obligations have been met by JKR. The 600,000 common shares received have been recorded as an investment on the consolidated balance sheet as of September 30, 2009. As of the date of the agreement, these shares represented approximately 5% of the outstanding JKR common shares, and are accounted for under the cost method.

(4)

The 189 unpatented lode mining claims comprising the Horse Creek project that are situated in Sections 13, 22, 23, 24, 25, 26, 27, 35 and 36, Township 27 North, Range 49 East; Sections 19, 30 and 31, Township 27 North, Range 50 East; Section 1, Township 26 North, Range 49 East; and, Sections 6 and 7, Township 26 North, Range 50 East in Eureka County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated August 25, 2008 between David C. Knight (as assigned from KM Exploration, Ltd. by assignment of mining leases dated February 4, 2009), as owner, and C³ Resources, Inc., as tenant (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 5, 2008).

All of C ³’s rights and interests in the Horse Creek Lease were assigned to the Company on June 15, 2009.

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The Horse Creek Lease contains the following material terms and conditions:

(i)

a term of 25 years and so long thereafter as minerals are mined, produced, explored or sold from the claims;

(ii)

the lessee is required to make annual rental payments on each anniversary of the Lease starting at $20,000 upon signing (paid) and increasing by $5,000 per year to $50,000 on the 6th anniversary and annually thereafter, provided, however, that every five years the payments shall be increased in proportion to any increase in the CPI(U) over the prior five-year period;

(iii)

the Horse Creek claims are subject to a 4% NSR production royalty payable to KM Exploration, provided that the lessee has the sole and exclusive option to buy down the royalty from 4% to 2% by paying KM Exploration a lump sum payment per royalty point of between $2 and $8 million, depending upon the average price of gold for the 30 days preceding the exercise of the option as more particularly set out in the Lease; and,

(iv)

prior to August 31st, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the Horse Creek claims are located to maintain the claims in good standing.

Effective August 25, 2009, the Company and David C. Knight amended the 2008 Mineral Lease Agreement to provide for a four-month extension in the due date for the first advanced annual royalty payment (to January 25, 2010), in exchange for a $3,000 increase in the first anniversary payment (from $25,000 to $28,000); all other terms of the 2008 Mineral Lease Agreement remained unchanged.

(5)

The 88 unpatented lode mining claims comprising the Indian Creek (IC) project that are situated in Sections 5 and 6, Township 27 North, Range 54 East, and Sections 28, 29, 30, 31 and 32, Township 28 North, Range 54 East, in Elko County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated August 25, 2008 between David Mathewson (as assigned from KM Exploration, Ltd. by assignment of mining leases dated February 4, 2009), as owner, and C³ Resources, Inc. as lessee (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 19, 2008).

All of C³’s rights and interests in the Lease were assigned to the Company on June 15, 2009.

The Indian Creek Lease contains the following material terms and conditions:

(i)

the lessee is required to make annual rental payments on each anniversary of the Lease starting at $20,000 upon signing (paid) and increasing $5,000 per year to $50,000 on the sixth anniversary and annually thereafter, provided however that every five years the payments shall be increased in proportion to any increase in the CPI over the prior five-year period;

(iii)

the Indian Creek claims are subject to a 4% NSR production royalty payable to KM Exploration, provided that the lessee has the sole and exclusive option to buy down the royalty from 4% to 2% by paying KM a lump sum payment per royalty point of between $2 and $8 million depending upon the average price of gold for the thirty days preceding the exercise of the option as more particularly set out in the Lease; and,

(iv)

prior to June 30^th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the Indian Creek claims are located to maintain the claims in good standing.

Effective September 14, 2009, the Company entered into an option agreement with JKR Gold Resources, Inc. pursuant to which JKR can acquire all of Aurelio’s rights and interests in the Indian Creek property (in addition to the Crescent Valley North, Robinson Creek and Safford Canyon projects) in exchange for cash payments totaling $216,657 ($116,657 of which has been received to date), issuing 600,000 common shares of JKR, a privately-held company (received), and completing $1.5 million in exploration and development work prior to August 31, 2012; the Company would retain a 1% NSR on each of the four projects. The agreement also requires JKR to make all underlying lease payments, in addition to paying all Federal and county claim maintenance fees and expenses.

- 14 -

See final paragraph in Note (3) on page 13 for further information concerning the JKR transaction.

(6)

The 86 unpatented lode mining claims comprising the Iron Butte project that are situated in Sections 13 and 24, Township 26 North, Range 43 East, and Sections 18 and 19, Township 26 North, Range 44 East, in Lander County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated August 25, 2008 between David C. Knight (as assigned from KM Exploration, Ltd. by assignment of mining leases dated February 4, 2009), as owner, and C³ Resources, Inc., as tenant (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 5, 2008).

All of C³’s rights and interests in the Iron Butte Lease were assigned to the Company on June 15, 2009.

The Iron Butte Lease contains the following material terms and conditions:

(i)

a term of 25 years and so long thereafter as minerals are mined, produced, explored or sold from the claims;

(ii)

the lessee is required to make annual rental payments on each anniversary of the Lease starting at $40,000 upon signing (paid) and increasing by $10,000 per year to $100,000 on the 6th anniversary and annually thereafter, provided however that every five years the payments shall be increased in proportion to any increase in the CPI(U) over the prior five-year period;

(iii)

the Iron Butte claims are subject to a 4% NSR production royalty payable to KM Exploration, provided that the lessee has the sole and exclusive option to buy down the royalty from 4% to 2% by paying KM Exploration a lump sum payment per royalty point of between $2 and $8 million, depending upon the average price of gold for the 30 days preceding the exercise of the option as more particularly set out in the Lease; and,

(iv)

prior to August 31st, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the Iron Butte claims are located to maintain the claims in good standing.

(7)

The 52 unpatented lode mining claims comprising the North Sleeper project that are situated in Sections 2, 3, 4, 9, 10, 11 and 33, Township 40 North, Range 35 East in Humboldt County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated December 7, 2006 between CARACOL, as owner, and C³ Resources, Inc., as tenant.

All of C³’s rights and interests in the North Sleeper Lease were assigned to the Company on June 15, 2009.

The Company, in turn, entered into a joint venture agreement with Montezuma Mines, Inc. (“Montezuma Mines”) on June 15, 2009; pursuant to the terms of the joint venture agreement, Montezuma Mines assumed responsibility for the payments detailed in notes (ii) and (iv) below.

The North Sleeper Lease contains the following material terms and conditions:

(i)

a term of ten years, renewable for additional ten-year periods

(ii)

the lessee is required to make annual rental payments on each anniversary of the Lease starting at $10,000 upon signing (paid) and increasing to $12,500 on the second anniversary (paid); $15,000 on the third anniversary; $25,000 on the fourth anniversary and $50,000 annually thereafter, provided however that after five years the payments shall be increased in proportion to any increase in the CPI(U) subsequent to December 31, 2006;

(iii)

the North Sleeper claims are subject to a 3% NSR production royalty payable to CARACOL, provided that the lessee has the sole and exclusive option to buy down the royalty from 3% to 1% by paying CARACOL a lump sum payment per royalty point of between $1.5 and $7 million, depending upon the average price of gold for the month preceding the exercise of the option as more particularly set out in the Lease; and,

(iv)

prior to June 30th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the North Sleeper claims are located to maintain the claims in good standing.

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(8)

The 91 unpatented lode mining claims comprising the Robinson Creek (RC) project that are situated in Sections 24 and 25, Township 29 North, Range 54 East in Elko County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated August 25, 2008 between David Mathewson (as assigned from KM Exploration, Ltd. by assignment of mining leases dated February 4, 2009), as owner, and C³ Resources, Inc. as lessee (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 19, 2008).

All of C³’s rights and interests in the Lease were assigned to the Company on June 15, 2009.

The Robinson Creek Lease contains the following material terms and conditions:

(i)

(iii)

the Robinson Creek claims are subject to a 4% NSR production royalty payable to KM Exploration, provided that the lessee has the sole and exclusive option to buy down the royalty from 4% to 2% by paying KM a lump sum payment per royalty point of between $2 and $8 million depending upon the average price of gold for the thirty days preceding the exercise of the option as more particularly set out in the Lease; and,

(iv)

prior to June 30^th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the Robinson Creek claims are located to maintain the claims in good standing.

Effective September 14, 2009, the Company entered into an option agreement with JKR Gold Resources, Inc. pursuant to which JKR can acquire all of Aurelio’s rights and interests in the Robinson Creek property (in addition to the Crescent Valley North, Indian Creek and Safford Canyon projects) in exchange for cash payments totaling $216,657 ($116,657 of which has been received to date), issuing 600,000 common shares of JKR, a privately-held company (received), and completing $1.5 million in exploration and development work prior to August 31, 2012; the Company would retain a 1% NSR on each of the four projects. The agreement also requires JKR to make all underlying lease payments, in addition to paying all Federal and county claim maintenance fees and expenses.

See final paragraph in Note (3) on page 13 for further information concerning the JKR transaction.

(9)

The 44 unpatented lode mining claims comprising the Safford Canyon project that are situated in Sections 8, 19, 20, 29 and 30, Township 31 North, Range 51 East, in Eureka County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated November 30, 2006 between WFW Resources, LLC as owner, and C³ Resources, Inc., as tenant (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 19, 2008).

All of C³’s rights and interests in the Safford Canyon Lease were assigned to the Company on June 15, 2009.

The Safford Canyon Lease contains the following material terms and conditions:

(i)

a term of ten years, extendable in five-year increments up to 40 years and so long thereafter as minerals are mined, produced, explored or sold from the WFW Claims;

(ii)

the lessee is required to make annual rental payments on each anniversary of the Lease starting at $6,000 upon signing (paid), $12,500 in years 2 thru 6, $17,500 in years 7 thru 11 provided that the payments shall be adjusted in the 11^th and subsequent years to reflect increases in inflation and general costs of living.

(iii)

the WFW claims are subject to a 3% NSR production royalty payable to WFWE Resources, provided that the lessee has the sole and exclusive option to buy down the royalty from 3% to 1% by paying WFW Resources a lump sum payment per royalty point of between $1.5 and $7 million depending upon the average price of gold for the thirty days preceding the exercise of the option as more particularly set out in the Lease;

- 16 -

(iv)

prior to June 30^th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the Safford Canyon claims are located to maintain the claims in good standing; and,

(v)

at any time during the term of the lease, the lessor may purchase all 44 WFW claims for $20,000 per claim, thus eliminating the annual rental payments (the claims would remain subject to the NSR production royalty).

Effective September 14, 2009, the Company entered into an option agreement with JKR Gold Resources, Inc. pursuant to which JKR can acquire all of Aurelio’s rights and interests in the Safford Canyon property (in addition to the Crescent Valley North, Indian Creek and Robinson Creek projects) in exchange for cash payments totaling $216,657 ($116,657 of which has been received to date), issuing 600,000 common shares of JKR, a privately-held company (received), and completing $1.5 million in exploration and development work prior to August 31, 2012; the Company would retain a 1% NSR on each of the four projects. The agreement also requires JKR to make all underlying lease payments, in addition to paying all Federal and county claim maintenance fees and expenses.

See final paragraph in Note (3) on page 13 for further information concerning the JKR transaction.

(10)

The 78 unpatented lode mining claims comprising the Sand Springs project that are situated in Sections 3, 4, 9 and 10, Township 11 North, Range 21 East in Churchill County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated March 14, 2007 (as amended) between Randall Stoeberl (d/b/a RS Gold), as owner, and C³ Resources, Inc., as tenant.

All of C³’s rights and interests in the Sands Springs Lease were assigned to the Company on June 15, 2009.

The Sand Springs Lease contains the following material terms and conditions:

(i)

a term of 25 years and so long thereafter as minerals are mined, produced, explored or sold from the claims;

(ii)

the lessee is required to make annual rental payments on each anniversary of the Lease starting at $20,000 upon signing (paid), $10,000 on the second anniversary (paid), $30,000 on the 3^rd anniversary, $40,0000 on the 4^th anniversary and $50,000 annually thereafter.

(iii)

the Sand Springs claims are subject to a 3% NSR production royalty payable to RS Gold provided that the lessee has the sole and exclusive option to buy down the royalty from 3% to 1% by paying RS Gold a lump sum payment per royalty point of $1 million as more particularly set out in the Lease; and,

(iv)

prior to August 31st, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the Sand Springs claims are located to maintain the claims in good standing.

In August 2009, the Company reduced its land position at Sand Springs to a core group of 10 unpatented mining claims; accordingly, the figures in this entry have been reduced to reflect the reduced land position.

(11)

The 86 unpatented lode mining claims comprising the Veta Grande project that are situated in Sections 3, 4, 9 and 10, Township 11 North, Range 21 East in Douglas County, Nevada and are subject to the terms and conditions of an underlying lease agreement dated March 14, 2007 between CARACOL, as owner, and C³ Resources, Inc., as tenant.

All of C³’s rights and interests in the Lease were assigned to the Company on June 15, 2009.

The Veta Grande Lease contains the following material terms and conditions:

(i)

a term of ten years, extendable for additional ten year periods;

- 17 -

(ii)

the lessee is required to make annual rental payments on each anniversary of the Lease starting at $20,000 upon signing (paid) and increasing to $25,000 on the 2^nd (paid) through 4^th anniversaries, and $50,000 annually thereafter;

(iii)

the Veta Grande claims are subject to a 3% NSR production royalty payable to CARACOL, provided that the lessee has the sole and exclusive option to buy down the royalty from 3% to 1% by paying CARACOL a lump sum payment per royalty point of between $1.5 and $7 million, depending upon the average price of gold for the month preceding the exercise of the option as more particularly set out in the Lease; and,

(iv)

prior to June 30th, the lessee is required to pay all claim maintenance fees and file all required filings with the United States Bureau of Land Management and the county in which the Veta Grande claims are located to maintain the claims in good standing.

(12)

Beginning in July 2008 the Company leased office space in Lakewood, Colorado. During the second 12 months of the lease, the Company is required to pay $3,693 per month, including utilities, with an option to pay a total of $13,295 ($1,108 per month) of the second year’s rent in stock. In July 2009, the Company issued a total of $13,295 worth of restricted common shares in partial payment of the 2009-2010 rent obligations. During the third year of the lease, the Company’s monthly rent (including utilities) will be $3,758 and the Company will have the option to pay the equivalent of $1,503 of the rent per month in restricted common shares during the third year of the lease.

(13)	Lease of office space in Culiacan, Sinaloa, Mexico for P1,700 (approximately $126 per month based on prevailing exchange rates at September 30, 2009) with a commitment through October 2010.

In addition, should we produce precious or base metals on the Gavilanes property, we would have to pay a net smelter return royalty as described in Note (2).

Our total rent expense (including those Bolsa-related rent expenses from January 1 through February 18, 2009) for the three and nine months ended September 30, 2009 was $11,457 and $33,983 respectively.

7. STOCKHOLDERS’ EQUITY

Shares Issued During The Period Ending September 30, 2009

On July 6, 2009 we issued a total of 189,932 restricted common shares at a deemed price of $0.07/share to the Company’s third-party landlord in partial consideration for the office rent at the Company’s Lakewood, Colorado corporate offices for the period July 1, 2009 - June 30, 2010 pursuant to exemptions from registration as set out in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

The shares were valued at the fair value of the services received by the Company.

Series A and Series B Warrants

In conjunction with a $1,500,000 convertible debenture financing entered into with private investors on February 26, 2008 (the debentures were repaid in full at their face value on October 1, 2008), we issued Series A and Series B common share purchase warrants. Specifically, we issued (i) 3,750,000 Series A common share purchase warrants which have an initial exercise date of August 26, 2008 and will be exercisable for five (5) years with an exercise price of $0.35 per share of common stock and (ii) 4,999,997 Series B common share purchase warrants which were exercisable immediately upon issuance for eighteen (18) months with an exercise price of $0.35 per share of common stock.

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Subsequent to Closing, we paid a finder’s fee of $90,000 in cash and 3% of the value of the transaction, or $45,000, payable in each of Series A and Series B warrants.

Pursuant to the terms and conditions of the February 2008 Convertible Debenture Financing, the exercise price of the Series A and Series B warrants was re-set to $0.10 per share on May 29, 2009.

The Series B warrants expired unexercised on August 26, 2009.

Telifonda Warrants

In conjunction with a $1 million equity financing entered into with Telifonda Ltd. on February 15, 2008 we issued 1,666,667 common share purchase warrants which were exercisable immediately upon issuance for five years with an exercise price of $0.50 per share of common stock.

Effective May 29, 2009 the Company and Telifonda mutually-agreed to adjust the exercise price of these warrants to $0.10 per share of common stock, with an accelerated expiration date of May 29, 2010.

8. STOCK-BASED COMPENSATION

The Company adopted SFAS No. 123R, “Share Based Payment” (“SFAS 123R”), on January 1, 2006. SFAS 123R requires all share-based payments, including grants of stock options, to be recognized in the income statement as an operating expense, based on their fair values.

Prior to adoption of SFAS 123R, Aurelio accounted for stock-based employee compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB”). The Company has applied the modified prospective method in adopting SFAS 123R, and as a result, periods prior to the adoption of SFAS 123R have not been restated.

The following summarizes the activity of the Company’s stock options for the nine months ended September 30, 2009:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Number of shares under option:
Outstanding at July 1, 2009	350,000	$	0.70
Granted	—		—
Exercised	—		—
Expired	50,000		0.79

Outstanding at Sept 30, 2009	300,000	$	0.66	0.6	$	—

Exercisable at Sept 30, 2009	300,000	$	0.66	0.6	$	—

All outstanding options were fully vested as of September 30, 2009.

There was no intrinsic value of any option as all were out of the money as of September 30, 2009.

The Black-Scholes option pricing model is used by the Company to determine the weighted average fair value of options and the value of the re-priced warrants. The fair value of options at date of grant and the assumptions utilized to determine such values are indicated as follows:


	Nine Months Ended September 30,
	2009	2008
Expected life	0.1 to 1.3 yrs	3 yr
Risk-free interest rates	0.14 to 1.94%	4.60%
Expected stock price volatility	164%	74%
Expected dividend yield	—	—

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9. INCOME TAXES

The Company has net operating loss carry-forwards of approximately $7.7 million available for deduction against future years’ taxable income. This was fully reserved by a valuation allowance as of the quarter ended September 30, 2009, since the realization of the net operating loss carry-forwards is doubtful. It is reasonably possible that our estimate of the valuation allowance will change. The operating loss carry-forwards will expire between 2019 and 2023.

10. RELATED PARTY TRANSACTIONS

During the year ended December 31, 2008 and throughout the first, second and third quarters of 2009 Aurelio maintained consulting contracts with our president, company officers, directors and their wholly-owned companies, through which they provided services to our company. For the three and nine months ended September 30, 2009, Aurelio paid or accrued consulting fees of $59,994 and $180,032 in lieu of salaries to company officers and directors. Fees charged for consulting services were in the normal course of business and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. Refer to Note 7.

In addition, in June 2009 we issued a total of 522,000 restricted common shares to Company officers, directors and consultants in partial consideration for consulting services. 432,000 of those shares were a pre-payment (for the period July 1, 2009 thru December 31, 2010) of the equity portion of the individuals’ consulting contracts. The value of the shares issued for the three and nine months ending September 30, 2009 was $7,200 and $16,200 respectively.

Some of the Company’s directors have interests in the various transactions with Telifonda (Cayman) Ltd. as described in Note 7 - Stockholders’ Equity (May 2009 Private Placement Financing) and also Note 12 - Sale of Assets To And Financing Arrangement With A Shareholder that are different from, or are in addition to, their interests as stockholders in the Company.

These interests include the following:

Based on information filed in a Form 13D by Telifonda Holdings Co. Limited (“Holdings”) and DFG Master Hedge Fund Ltd. (“DFG”), Antony Warnaars is responsible for the overall management and control of DFG. Holdings and Telifonda are both wholly-owned subsidiaries of DFG. Mr. Antony Warnaars is the son of Dr. Frederik Warnaars, Chairman of the Board of Directors of Aurelio.

¨	Maarten D. Tjaden is employed by Diversica Financial Group B.V., an affiliate of DFG and Holdings.

Telifonda, together with its affiliate DFG Master Hedge Fund Ltd. and certain advisory board members and related parties of Telifonda beneficially own or control an estimated 4.6% of the issued and outstanding common stock of the Company. The Company’s Board of Directors was aware of these additional interests and considered them when they approved the Stock Purchase Agreement, as amended, as well as the May 2009 Private Placement Financing and Amendment to the February 18, 2009 Respite Agreement and Note.

David C. Knight, a Director of the Company, holds a 100% interest in the underlying leases, core mining claims and NSR production royalties for the Horse Creek and Iron Butte projects (see Item 6 - Contractual Obligations, Contingent Liabilities and Commitments, notes 4 and 6 on pages 13 - 15). Mr. Knight, through the David C. and Deborah J. Knight Living Trust, is a Member of WFW Resources, LLC, which holds a 100% interest in the underlying leases, core mining claims and NSR production royalty for the Safford Canyon project (see Item 6 - Contractual Obligations, Contingent Liabilities and Commitments, notes 4 and 6 on pages 16 - 17).

David C. Knight, a Director of the Company, also serves as President and a Director of C³ Resources, Inc., which holds 47.5 million common shares of Aurelio Resource Corp.

William L. Oppenheimer, a Director of the Company, also serves as a Director of C³ Resources, Inc., which holds 47.5 million common shares of Aurelio Resource Corp.

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11. SEGMENT INFORMATION

Through February 18, 2009 Company operated in two reportable segments, these being the exploration for copper and zinc on its Hill Copper-Zinc Project in Arizona, and the exploration for gold on its Gavilanes Property in Mexico. The Arizona business segment was sold to Telifonda (Cayman) Ltd. on February 18, 2009. Between February 19, 2009 and June 14, 2009 the Company operated in one reportable business segment, namely, exploration for gold on its Gavilanes Property in Mexico. Effective June 15, 2009 the Company was once again operating in two reportable business segments, these being on-going exploration for gold on the Gavilanes Property in Mexico, and, exploration for gold and silver in Nevada on the ten projects acquired from C³ Resources, Inc.

Following is the segment information for the periods ending September 30^th:


	Arizona		Mexico		Corporate		Total
As of and for the three months ended September 30, 2009:
Revenue	$	—	$	—	$	—	$	—
Depreciation expense		—		650		1,671		2,321
Mineral property expenditures		—		23,758		107,709		131,467
Operating loss		—		28,628		246,975		275,603
Other income		—		—		15,682		15,682
Interest expense		—		—		—		—
Net loss		—		28,628		368,512		397,140
Additions to fixed assets		—		—		—		—
Total assets		—		38,533		4,570,099		4,608,632
As of and for the three months ended September 30, 2008:
Revenue		—		—		—		—
Depreciation expense		945		685		2,529		4,159
Mineral property expenditures		101,302		3,093		—		104,395
Operating loss		138,792		9,387		225,196		373,375
Other income		20		—		2,677		2,697
Interest expense		59,681		—		372,268		431,949
Net loss		198,453		9,387		594,787		802,627
Additions to fixed assets		—		—		29,631		29,631
Total assets		3,364,277		45,607		479,870		3,889,754

	Arizona		Mexico		Corporate		Total
As of and for the nine months ended September 30, 2009:
Revenue	$	—	$	—	$	—	$	—
Depreciation expense		957		1,942		5,012		7,911
Mineral property expenditures		14,855		56,105		122,626		193,586
Operating loss		14,264		70,343		631,954		716,561
Other income		10,500		—		33,698		44,198
Interest expense		20,810		—		175,312		196,122
Net loss		24,594		70,343		2,362,431		2,457,368
Additions to fixed assets		—		—		—		—
Total assets		—		38,533		4,570,099		4,608,632
As of and for the nine months ended September 30, 2008:
Revenue		—		—		—		—
Depreciation expense		2,705		2,000		7,176		11,881
Mineral property expenditures		325,084		27,525		—		352,609
Operating loss		446,126		48,604		674,925		1,169,655
Other income		22		—		11,200		11,222
Interest expense		102,807		—		1,186,403		1,289,210
Net loss		548,911		48,604		1,850,128		2,447,643
Additions to fixed assets		5,200		633		30,851		36,684
Total assets		3,364,277		45,607		479,870		3,889,754

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	Arizona		Mexico		Corporate		Total
As of and since Inception through September 30, 2009:
Revenue	$	—	$	—	$	—	$	—
Depreciation expense		6,237		7,568		26,324		40,129
Mineral property expenditures		1,876,042		217,956		232,750		2,326,748
Operating loss		2,233,900		328,170		4,178,677		6,740,747
Other income		10,695		—		93,151		103,846
Interest expense		223,251		—		1,369,942		1,593,193
Net loss		2,446,475		353,327		7,398,425		10,198,227
Additions to fixed assets		—		11,188		63,726		74,914
Total assets		—		38,533		4,570,099		4,608,632

12. SALE OF ASSETS TO AND FINANCING ARRANGEMENT WITH A SHAREHOLDER

Amended Stock Purchase Agreement and Sale of Assets

On November 17, 2008, the Company entered into an Amended Stock Purchase Agreement (the “Amended Agreement”) with Telifonda (Cayman) Ltd. (“Telifonda”). Telifonda is a shareholder of the Company and has one representative on the Company’s current Board of Directors. On October 2, 2008, the Company had filed a current report on Form 8-K announcing that it had signed a letter of intent pursuant to which the Company had agreed to sell to Telifonda its wholly-owned subsidiary, Bolsa Resources, Inc., which owns the Hill Copper-Zinc Project, and also to sell Telifonda a 3% Net Smelter Returns royalty in the Company’s Gavilanes gold project. Finalization of these transactions was subject to the approval of the Company’s shareholders.

The total value of the transaction and the cash proceeds to ultimately be realized by the Company is $4 million.

The terms of the Amended Agreement became necessary in order for the Company to retain access to the cash being made available thereunder and reflected the rapidly-deteriorating global economic outlook in the fourth quarter of 2008, as well as the difficult debt and equity markets conditions affecting junior mining companies. The Company also believes that these amended terms also better reflect the fair values of the assets being sold to Telifonda.

Pursuant to the Amended Agreement and following shareholder approval, the Company sold all of the outstanding common stock of Bolsa Resources, Inc. to Telifonda in exchange for $2,500,000 cash. The Company retained a 3% Net Smelter Return Royalty (“NSR”) on all future precious and base metal production from the Hill Copper-Zinc Project (the “Bolsa NSR”).

All proceeds were accounted for using the cost recovery method and, accordingly, no gain was realized at the February 18, 2009 closing date. The Company was also entitled to recover certain Bolsa-related carrying costs it incurred during the period from August 15, 2008 to February 18, 2009.

The Amended Agreement requires Telifonda to complete a Bankable Feasibility Study within four years of Closing. Upon completion of the Bankable Feasibility Study, Telifonda would have a right to purchase the Bolsa NSR at fair market value on the terms set forth in the Amended Bolsa NSR Agreement.

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Should Telifonda fail to complete the Bankable Feasibility Study or otherwise maintain the 5,000+ acre land position, the Company retains the exclusive right to re-acquire the Hill Copper-Zinc Project by reimbursing Telifonda for its $2,500,000 investment and any of its out-of-pocket expenditures.

The proposed transaction also requires Telifonda to fund Bolsa Resources, Inc. in the initial amount of $8 million to facilitate further development of the Hill Copper-Zinc Project.

In addition to purchasing all of the common stock of Bolsa, under the terms of the Amended Agreement, Telifonda has also agreed to purchase a 3% NSR interest in the Gavilanes gold project for $50,000 cash (the “Minera NSR”) prior to December 31, 2009 which is expected to result in a realized gain of the same amount. The Company will retain the right to repurchase the Gavilanes NSR at fair market value on the terms set forth in the Gavilanes NSR Agreement. The Minera NSR Agreement was approved by shareholders as part of the overall Amended Agreement.

As of September 30, 2009, this agreement had not been executed.

Bridge Loan Agreement

In connection with the Amended Agreement, on October 1, 2008 Telifonda advanced $2,000,000 to the Company (the “Bridge Loan”) that was repaid upon the closing of the transactions contemplated by the Amended Agreement by offsetting the principal outstanding under the Bridge Loan against the cash consideration due under the Amended Agreement. The Bridge Loan was non-interest bearing, and was secured by all of the assets of the Company, including all shares of common stock held by the Company in its two subsidiaries, as set forth in the related General Security Agreement.

Of the proceeds from the Bridge Loan, $1,500,000 was used on October 1, 2008 to retire all outstanding Convertible Debentures as of September 30, 2008. The remaining proceeds will be used for working capital purposes.

Loan to The Company

As part of the overall transaction contemplated by the Amended Agreement and approved by shareholders in February 2009, Telifonda agreed to loan $1.45 million to a newly-created subsidiary of the Company, AIEX Corporation (the “NewCo Loan”). The NewCo Loan Agreement will be an unsecured loan and will be non-recourse to Aurelio. Interest will accrue at LIBOR + 3% over the term of the loan.

The Company intends to use the proceeds of the NewCo Loan facility to fund further exploration of its assets, as well as for other property acquisitions and general working capital.

As of September 30, 2009 the NewCo Loan had not been funded.

Respite Agreement and Amendment of AIEX Loan Agreement

A Respite Agreement and Amendment of Loan Agreement was entered into on February 18, 2009 by and among Aurelio Resource Corporation (“Aurelio”), AIEX Corporation (“AIEX”), a Colorado corporation that is a wholly-owned subsidiary of Aurelio, and Telifonda (Cayman) Ltd. (“Telifonda”).

Aurelio and Telifonda previously entered into a Stock Purchase Agreement dated September 30, 2008, as amended on November 17, 2008 (the “Stock Purchase Agreement”), and, in connection with the Stock Purchase Agreement (as amended), Telifonda agreed to provide to Aurelio (or its subsidiary, AIEX) a non-resource loan in the principal amount of $1,450,000 (the “AIEX Loan Amount”), repayable in accordance with the terms of a Loan Agreement dated February 19, 2009 between Telifonda and AIEX, (the “AIEX Loan Agreement”), as that agreement is further described in Section 2(b)(ii) of the Stock Purchase Agreement, as amended.

Simultaneous with the closing under the Stock Purchase Agreement (as amended), Telifonda also agreed to purchase a Net Smelter Royalty from Minera Milenium S.A. de C.V, a Mexican corporation (“Minera”) a subsidiary of Aurelio (the “Minera NSR”) for a purchase price of $50,000 pursuant to a Net Smelter Return Royalty Agreement (as amended) between Minera and Aurelio (the “Minera NSR Royalty Agreement”).

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Also simultaneous with the closing under the Stock Purchase Agreement (as amended), in accordance with Section 2(e) of the Stock Purchase Agreement (as amended), Telifonda agreed to reimburse certain expenditures made by Aurelio which the parties to the Respite Agreement agreed equals $265,523 (the “Reimbursement Amount”).

February 18, 2009 Respite Agreement and Note

In consideration of (i) a reduction in the interest rate under the AIEX Loan Agreement and (ii) an agreement by the parties hereto to delay the obligation of Aurelio to deliver the Minera NSR Agreement until full payment and satisfaction by Telifonda of its obligations under the Respite and Loan Agreement Amendment, Aurelio granted to Telifonda a respite of payment of the AIEX Loan Amount, the Minera Amount and the Reimbursement Amount in the aggregate amount of $1,765,522 (the “Respite Amount”) as evidenced by a note dated February 18, 2009 in the principal amount of $1,765,522 (the “Respite Note”).

The Reimbursement Amount plus all accrued and unpaid interest thereon shall be due and payable no later than May 31, 2009. The AIEX Loan Amount and the Minera Amount plus all accrued and unpaid interest thereon and the balance of any other unpaid amounts payable under the Respite Note, shall be due and payable no later than December 31, 2009.

Interest on the principal balance of the Respite Note shall be payable at the rate of (i) One Year US$ LIBOR per annum, commencing on February 18, 2009, and increasing to One Year US$ LIBOR plus 9% per annum commencing on the occurrence of, and during the continuance of, any Default as described in Section 2 of the Respite Note.

The Respite Agreement also provided for an amendment of Section 1(c) of the AIEX Loan Agreement such that interest on the principal balance of the AIEX Loan Note was reduced by 200 basis points to One Year US$ LIBOR plus 3% per annum.

Amendment to the February 18, 2009 Respite Agreement and Note

In partial consideration of an agreement by the Company to extend the due date of the payment due on May 31, 2009, Telifonda agreed to subscribe to a private placement financing in the amount of $166,667 (see Note 7 - Stockholders’ Equity).

Telifonda made an additional payment to Company on June 16, 2009 totaling $33,333 of which $13,603 was credited against interest due on the Respite Note as of May 31, 2009 and $19,730 was applied to a reduction in principal of the Respite Note.

Per the May 29, 2009 Amended Respite Agreement and Note, Telifonda will be obligated to pay $245,792 in principal (plus accrued interest from July 1 - September 30, 2009 on the Respite Note balance) to the Company on or before September 30, 2009, with the final $1,500,000 in principal (plus accrued interest) as scheduled on or before December 31, 2009. As of September 30, 2009, payments due pursuant to the May 29, 2009 Amended Respite Agreement and Note remained outstanding; the Company extended the September 30^th due date in exchange for certain cash payments received from Telifonda subsequent to September 30, 2009.

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Forward Looking Statements

Certain statements in this Quarterly Report on Form 10-Q are forward-looking in nature. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” or negative comparable terminology or by discussion of strategy.

The risks and uncertainties are discussed in greater detail in the Company’s other filings with the Securities and Exchange Commission, including, most recently, its Annual Report on Form 10-K. There may be additional risks of which the Company is not presently aware or that it currently believes are immaterial which could have an adverse impact its business. The Company makes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances that may change.

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Sale of Assets to and Financing Arrangement with a Shareholder

See Note 12 (“Sale Of Assets To And Financing Arrangement With A Shareholder”) on page 22 for a complete discussion of the chronology and current status of the various agreements between the Company and Telifonda Cayman (Ltd).

Overview and Going Concern Considerations

We continue to focus our efforts on the acquisition and exploration of mineral properties. To date, we have not discovered an economically viable mineral deposit on our mineral claims, and there is no assurance that we will discover or acquire one. Significant additional exploration, metallurgical analysis, engineering, permitting and economic feasibility analysis will be required before a final evaluation as to the economic and legal feasibility for our future development is determined.

Our financial statements for the three and nine months ended September 30, 2009 and the year ended December 31, 2008 have been prepared with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions as noted below currently exist that raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

The operations of the Company have primarily been funded by the sale of common stock and issuance of debt. Continued operations of the Company are dependent on the Company’s ability to complete additional equity and/or debt financings and to generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity and/or debt financings. Such financings may not be available or may not be available on reasonable terms.

We continued our property expenditures in the expectation of obtaining financing from one of a number of different leads we were pursuing. To date, these efforts have been unsuccessful, and we are now examining several new alternatives discussed below. Meanwhile, we have reduced our overhead expenditures to conserve our cash.

We do not have any additional financing arranged beyond that described in Note 12 (re: Sale Of Assets And Financing Arrangement With A Shareholder), and we cannot provide any assurance that we will be able to raise additional funding from the sale of our common stock or debt and, accordingly, there is a possibility that we may not be able to continue normal operations. In the absence of such financing, we will not be able to continue exploration of our mineral claims and our business plan might not succeed. Even if we are successful in obtaining additional financing to fund the next phase of our exploration program, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of our mineral claims following the completion of the work program. If we do not continue to obtain additional financing, we could be forced to sell or abandon some or all of our mineral claims and our plan of operations.

We may consider entering into joint venture arrangements to provide the required funding to develop some (or all) of our mineral claims. If we entered into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral claims to the joint venture partner. Even if we determined to pursue a joint venture partner, there is no assurance that any third-party would enter into a joint venture agreement with us in order to fund exploration of our mineral claims.

We have no revenues, have experienced losses since inception, have no operations, have been issued a going concern opinion by our auditors and continue to rely upon the sale of our securities to fund operations.

Plan of Operations

Our plan of operations for the next twelve-month period as outlined below is dependent on our obtaining additional financing under reasonable terms and conditions.

We plan to undertake the operations outlined below utilizing our existing management and field personnel and will contract for additional labor on a project basis as required. We do not anticipate making any major purchases or sales of plant and equipment as we intend to sub-contract the drilling programs and outsource the assaying, resource estimation, engineering and metallurgical studies.

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Nevada Projects

Between Closing (June 15, 2009) and the end of the third quarter, the Company’s focus was on marketing a number of the exploration projects acquired from C³ Resources, Inc. As of September 30, 2009, five projects (Crescent Valley North, Indian Creek, North Sleeper, Robinson Creek and Safford Canyon) had been farmed out, and two projects were undergoing due diligence reviews / evaluations by interested parties.

During the fourth quarter of 2009, the Company hopes to sell, option, lease or joint venture the Horse Creek, Sand Springs and Veta Grande projects. The Company will seek to vend its interests in various properties in exchange for up-front cash and stock payments plus significant work commitments over several years (and recurring cash payments), while ultimately retaining either a minority participatory equity interest or an NSR production royalty. Projects that are not sold / farmed out but are deemed worthy of retaining for future exploration work, may possibly see a reduction in land holdings in order to preserve working capital for drilling, trenching, etc. on other projects in the Company’s portfolio.

Company geologists are developing exploration programs and budgets for the each of the properties that the Company intends to retain 100% interests in. Bids are also being sought for an independent NI 43-101 quality resource estimate for the Iron Butte gold project. A decision on this work program and anticipated cost / schedule is anticipated to be made prior to the end of the year.

Gavilanes Property

In the third quarter of 2009, we made one option payment of $25,000 in order to keep the Gavilanes land purchase option in good standing. We may need to raise additional funds in order to make subsequent payments.

Our planned exploration program (subject to funding) during the next twelve months includes approximately 7,000 feet of diamond drilling to test several exploration targets on the Gavilanes Property. Based on our review of all the pertinent data available on the property, we are pursuing our goal of identifying a bulk mineable, open pittable deposit at Gavilanes. The budget for this drill program is approximately $375,000 (not including land costs), and should take three to four months to complete. If this program shows the expected results, we will then undertake a larger program of up to 10,000 feet of diamond drilling on the property that is anticipated to cost approximately $500,000.

Results of Operations

Revenues

We have had no operating revenues since our inception on February 19, 2004, through September 30, 2009. During the next twelve-month period, we do not anticipate generating any revenues.

General Operating Expenses

General operating expenses consist primarily of labor costs, including stock based compensation expenses, for officers, directors and administrative consultants and independent contractors. In addition, in its normal course of business, the Company incurs professional accounting and legal fees in its normal course of business, transfer agent fees and fees to maintain our offices. All such costs are included in general administrative expense.

We anticipate spending approximately $750,000 in ongoing general and administrative expenses over the next twelve months. Such expenditures exclude the costs that might be incurred in raising additional funding. The general and administrative expenses for the year will consist primarily of professional fees for our management, accounting and reporting expenses, audit and legal work relating to our regulatory filings, as well as transfer agent fees, promotion and investor relations activities, expenses related to the annual shareholder meeting, D & O insurance, and the costs of maintaining our executive office in Lakewood, Colorado and our field office in Culiacan, Mexico.

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Mineral Property Costs

Costs incurred during each of the three and nine month periods ended September 30, 2009 and 2008 pertain primarily to property maintenance payments and exploration activities that are described above. Costs vary from period to period based upon the timing of required payments and funds available to carry out planned exploration activities including drilling, assaying, geological and metallurgical evaluations.

Professional Fees

Professional fees pertain to contract labor costs related to field personnel conducting exploration and exploration planning activities. Variations from period to period pertain principally to available funding.

Interest Expense

Interest expense in 2008 pertains to the issuance of convertible debentures in February 2008 (which were subsequently redeemed / repaid in full as of October 1, 2008), including amortization of the discount attributed to recording these debentures at FMV as well as recognition of the beneficial conversion feature.

Liquidity and Capital Resources

At September 30, 2009, we had cash on hand of approximately $145,734.

We anticipate that our cash and working capital will only be sufficient to enable us to pay for the cost of a limited exploration program and for general and administrative expenses for approximately the next three to six months. Accordingly, our ability to complete our ongoing exploration activities and the next phase of our recommended work programs will be subject to us obtaining additional financing as these expenditures will exceed our cash reserves.

While one of our previous financings was a convertible debt offering, we believe that debt financing will not be a long-term alternative for funding additional phases of exploration as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund the next phase of our exploration program. In the absence of such financing, we will not be able to continue exploration of our mineral claims and our business plan will fail. Even if we are successful in obtaining equity financing to fund the next phase of our exploration programs, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of our mineral claims following the completion of the work program. If we do not continue to obtain additional financing, we will be forced to either sell or abandon our mineral claims and our plan of operations.

Cash provided by (used for) operating activities was $435,329 and $1,425,961 for the three and nine months ended September 30, 2009 ($401,097 and $1,697,579 for the three and nine months ended September 30, 2008), which reflects the costs of our operations for the period and, in 2009, the reduction of outstanding accounts payable pertaining to elimination of land acquisition payments and mineral exploration / development work in Arizona resulting from the sale of Bolsa Resources, Inc. Cash used in investing activities in 2009 and 2008 related principally to purchase of additional lands within the Hill Copper-Zinc project, option payments and general and administrative costs in Mexico, and land / exploration costs in Nevada.

We have funded our business to date from sales of our common stock and convertible debentures, and, more recently, the sale of our Arizona subsidiary. Gross cash proceeds from the sale of our common shares during the period from inception, on February 19, 2004, through September 30, 2009 totaled approximately $4.2 million (after adjustments when we acquired ARI), including $1 million in 2008. Gross proceeds from the sale of 10% Convertible Debentures approximated $1.5 million in February 2008. The Convertible Debentures were repaid in full at their face value of $1,500,000 on October 1, 2008 (refer to Note 12 - Sale of Assets to and Financing Arrangement with a Shareholder).

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We anticipate continuing to rely on equity sales of our common shares and / or issuance of debt in order to continue to fund our business operations. Issuance of additional shares will result in dilution to our existing shareholders. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue exploration of our properties.

Contractual Obligations, Contingent Liabilities and Commitments

See Note 6 on page 12 for a complete discussion.

Off-Balance Sheet Arrangements

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

Related Party Transactions

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. The most significant policy we have implemented is to capitalize the cost of acquiring patented mining claims and surface rights to properties. Our significant accounting policies are disclosed in Note 3 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for a Smaller Reporting Company.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation Of Disclosure Controls And Procedures

As of the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934, as amended (“Exchange Act”), Rules

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13a-15(e) and 15d-15(e)) under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and our acting Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective.

Changes In Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITES

None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of the Security Holders during the quarter ended September 30, 2009.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit 31.1 Certification of the Chairman and Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2 Certification of the acting CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2 Certification of acting CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: November 19, 2009								AURELIO RESOURCE CORPORATION
								A Colorado Corporation

								/s/ STEPHEN B. DOPPLER
								Stephen B. Doppler
								Chief Executive Officer

Date: November 19, 2009								/s/ FREDERIK W. WARNAARS
								Frederik W. Warnaars
								Interim Chief Financial Officer, Chairman, and Secretary

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Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting

AURELIO RESOURCE CORP 10-Q